California: Legal Cannabis Potentially a $5-Billion Boon to Economy, Study Finds

Cannabis Boon

By Michael Bachara
Hemp News

With the passage of Proposition 64, California’s looming legal recreational cannabis market could total more than $5 billion in annual sales, according to a study by the University of California Agricultural Issues Center.

The university’s study, which was contracted by the the state’s Bureau of Marijuana Control, forecast that legal recreational sales will make up 61.5% of California’s total cannabis market and legal medical cannabis about 9%. About 29% of all cannabis consumers may stay in the illegal market.

In 2016, medical cannabis sales accounted for about a quarter of California’s $7.7 billion annual yield from the combined legal and illegal marijuana markets. The study estimated the state’s legal recreational cannabis market will reduce medical marijuana sales from $2 billion to $600 million.

“We projected that when legally allowed, slightly more than half of the demand currently in the illegal adult-use segment will quickly move to the legal adult-use segment to avoid the inconvenience, stigma, and legal risks of buying from an unlicensed seller,” the study noted.

"State officials developing the regulations hope to gradually persuade the vast majority of cannabis users to go through the legal market," said Lori Ajax, director of the state Bureau of Marijuana Control, the group that hired the center to look at the new rules economic impact.

“It’s going to take some time,” Ajax said. “While it’s unlikely that everyone will come into the regulated market on Day One, we plan to continue working with stakeholders as we move forward to increase participation over time.”

Aggregate annual sales in medical marijuana were $2 billion a year (about 25% of total marijuana sales) and sales in the illegal market were $5.7 billion (75%), the analysis estimated.

California’s regulations for the adult-use and medical marijuana sectors are expected to be in force by January 2018.

Photo Source: LA Times