It is as big as the end of Prohibition in 1933. If the marijuana-legalization movement continues on its current track, and the Trends Research Institute forecasts that it will, pot’s future is indeed bright.
It had a watershed performance at America’s ballot boxes in November. Today, recreational or medical marijuana use is legal in 28 states. That’s more than half the country. And several other states, as politically and socially disparate as Texas and Rhode Island, have legalized marijuana on their radar.
This momentum has investors encouraged over marijuana’s growing acceptance in healing and recreational circles. They see a booming industry, with enormous potential, just beginning to take off. And it’s not only investors; increasingly, state governments are warming up to the idea of legalized pot. They see a substantial economic boon reminiscent of the early days of casino-gaming legalization across the country.
The Trends Research Institute has underscored how powerful this trend will be. It named the rise of legalized marijuana a Top Trend for 2017. Reefer Money Madness, we forecast in December, will quickly evolve into a major industry. Its cultural and political influence, and especially its economic impact, can explode like legalized alcohol did at the end of Prohibition in 1933.
That’s why researchers, politicians, activists, Ontrendpreneurs® and investors are looking to cash in.
In making our forecast, however, we also cautioned that the road to prosperity will not be a straight, smooth ride. Opportunities will abound for investors — in some obvious areas and in other, more obscure ways. But there are political, legal and business land mines along the route.
And they’re already playing out early in 2017.
PASSING THE LAW, WRITING THE LAW
Passing the law is different from writing the law. Look no further than Massachusetts. It was one of four states — along with Nevada, Maine and California — that passed recreational-pot use by healthy margins.
But as soon as the state legislature reconvened in December, it delayed implementation of the law for six months. As the Boston Globe reported (28 December 2016):
It took less than an hour, and only about a half-dozen state legislators, to approve a bill that would overturn significant parts of a marijuana legalization law that 1.8 million voters approved just last month.
With no public hearings and no formal public notice, the few lawmakers on Beacon Hill passed a measure on Wednesday to delay the likely opening date for recreational marijuana stores in Massachusetts by half a year — from January to July 2018.
The legalization bill passed with 54 percent of the vote. That’s 1.8 million voters. But Gov. Charlie Baker has been a loud, relentless opponent of the bill. So, this legislative sleight-of-hand, a behind-closed-doors maneuver, had no opposition.
The institute saw this coming. More than two years ago, we forecast: “… as evidenced by myriad existing laws and regulations often written by political hacks and bureaucratic incompetents, look for distortions of what the simple pro-pot resolution majorities voted for, on a simple ballot resolution, to fit the hacks’ personal or special-interest agendas.” (Trends Journal, Fall 2014.)
As it stands now, retail stories in Massachusetts won’t open until at least summer 2018. Growing and possessing pot is legal. You just can’t buy it legally.
Cannabis advocates are concerned about the time the legislature has given itself to water down the law. That’s especially of note because the state has sanctioned more study of pot use in Massachusetts and its implications, which has supporters fearing that lawmakers will look for and find reasons to delay further or even derail the law.
Never mind that 1.8 million voters — that’s 54 percent — approved the law. Lawmakers now control how it’s written and implemented. It is a case study of why investors and pot enthusiasts must monitor how a referendum or law is passed and written. The political and procedural climate in states passing marijuana laws is critical. The range of differences is wide. For example, consider areas where recreational use is under review. There are some governments whose political majority reject marijuana as safe. They are positioned to develop arduous zoning requirements or costly processing and legal fees.
Moreover, they can create public-hearing requirements. Those regulations can pit pot dealers against skeptical residents. Most of all, they can impose burdensome taxes. They can subject retailers to long, costly bureaucratic processes.
“PEOPLE POWER” COUNTS IN THIS FIGHT
Polls in the last five years show public approval of legal marijuana is rapidly rising. An October 2016 Gallup Poll found that 60 percent of respondents approved. Gallup reported:
When Gallup first asked this question in 1969, 12% of Americans supported the legalization of marijuana use. In the late 1970s, support rose to 28% but began to retreat in the 1980s during the era of the “Just Say No” to drugs campaign. Support stayed in the 25% range through 1995, but increased to 31% in 2000 and has continued climbing since then.
In 2013, support for legalization reached a majority for the first time after Washington and Colorado became the first states to legalize the recreational use of marijuana. Since then, a majority of Americans have continued to say they think the use of marijuana should be made legal.
The trend is clear: A majority of the public is over its reefer-madness thinking. That clears the way for Reefer Money Madness to take over.
Yes, Massachusetts’ delay on implementing the legal pot law is a setback. Still, the Trends Research Institute forecasts that this and other examples to come are curves in the road, not roadblocks.
Consider Rhode Island, Massachusetts’ southern New England neighbor. As Massachusetts delayed action, Rhode Island was fast-tracking legalization. Its state legislature is exploring how it can advance legalization laws within the governing body, not at the ballot box.
Why?
Rhode Island sees the growth potential in Massachusetts and Maine. It needs to act fast to generate the same tax-revenue potential those nearby states will soon enjoy.
That’s the other critical dynamic that will energize Reefer Money Madness trends: States want the dough.
Look at Colorado. It’s emerging as the model template. Tax revenues from marijuana commerce exceed dollars from alcohol sales.
Looking back, states across the nation overcame the social stigma of legalizing gambling in their states. They were motivated by new revenue in other, especially nearby, states. Today, there are over 500 casinos in America. They generate about $320 billion in 39 states.
POLITICAL OBSTACLES?
Still, many pro-cannabis advocates are concerned the Trump administration may impose federal laws outlawing marijuana use and sales, thus slowing the state-by-state legalization trend. Most prominent of these concerns is how Attorney General Jeff Sessions could derail legalized marijuana’s progress by waging a war against recreational use.
Our analysis: With higher priorities on the front burner, we forecast Trump will not squander resources waging a Marijuana War. And, while Trump has stated that legal recreational use was “bad,” and he felt “strongly about it,” he also said: “In terms of marijuana and legalization, I think that should be a state issue, state by state.”
And more importantly, since we forecast the greatest profit potential for marijuana is on the medical front, Trump is well aware and strongly supportive of its medical benefits.
He said he was “in favor of medical marijuana 100 percent. I know people that have serious problems and they did that… it really does help them.”
While marijuana’s trend line may be approaching a dividing line, what is indisputable is that considering its revenue stream into state coffers, resistance to its momentum will be weaker than its surging acceptance. Thus, it will prove a good bet for politicians, advocates and investors… trumping any social, health or political pushbacks.
PLANTS FEED US; CAN THEY HEAL US?
As forecast, the other high-potential dimension of legalized marijuana is in the medical arena.
For generations, pot advocates have touted pot’s medicinal and healing effects. The claims have not been subtle. There’s across-the-globe consensus among pot enthusiasts and alternative healers that cannabis has effectively treated everything from neurological disorders to cancer and depression. And even some conventional health practitioners agree.
These same voices have long touted marijuana’s effectiveness in treating the potent nausea that follows chemotherapy. It also aids in killing pain in general. And it can soothe some symptoms of multiple sclerosis and related diseases.
But the science to support these claims has been spotty, erratic and inconclusive. It’s also virtually non-existent in the United States. That’s because cannabis research is restricted by federal law except under very specific circumstances.
Still, the intensifying focus — and measured successes — in making pot legal is clear. And it’s triggering renewed interest in studying both its benefits and ill effects.
That prompted the National Academies of Sciences, Engineering and Medicine in January to produce a massive report on marijuana. It analyzes the results of 10,000 disparate studies.
The good, bad and clearly unknown story about pot’s beneficial uses is meticulously detailed. The report does not show definitive proof of pot’s ability to cure cancer and other diseases. It also was unable to disprove many of those claims, either.
The report did confirm that marijuana effectively treats pain, nausea (as a symptom of chemotherapy) and multiple sclerosis. Those are long-held beliefs among pot supporters.
The report identified several negative effects. They include increased risk of driving accidents or bronchitis. But it found no evidence that cannabis use increases the risk of lung cancer.
The study’s biggest finding is clear: So much remains unknown about marijuana’s medicinal effects.
RESEARCH EXPLODING WORLDWIDE
Despite that massive report, more current research is proving encouraging for marijuana.
And research is exploding across the globe.
Most notably, Israel is recognized as a world leader in researching the medicinal benefits of cannabis. Israeli scientist Dr. Raphael Mechoulam was among the first to identify cannabidiol (CBD) in marijuana plants and the molecular composition of tetrahydrocannabinol (THC). Those chemicals help determine how cannabis creates intoxicating effects.
Over the years, Mechoulam’s groundbreaking research resulted in the Israeli Ministry of Health’s medical cannabis-research program. Though marijuana is illegal in the country, Israel jump-started medical research into cannabis ahead of most countries. It’s now engaged in some of the most prominent research in this area.
Example: In just the last few months, Shaare Zedek Medical Center in Jerusalem received government permission to develop the first clinical trials of cannabis use to treat autism.
Other Israel-based initiatives are studying marijuana’s potential in treating cancers in children, neurological disorders, intestinal diseases and pain.
Moreover, a government committee in Israel has given initial approval for the country to begin exporting medical marijuana. The Israeli Parliament will ultimately decide the fate of this decision. If approved, the economic boost to Israel-based producers would be especially fruitful, given the country’s stellar credentials in studying and developing marijuana products for medical use.
Elsewhere, scientists are finding CBD helps a range of medical conditions. Initial studies reported by the National Institute on Drug Abuse indicate CBD can reduce inflammation, shrink malignant tumors, ease anxiety and protect against neurodegenerative diseases. It can even reduce symptoms of psychosis.
For many in the alternative-healing world, science eventually will confirm what they’ve always espoused: Plants feed us. They can heal us.
But in the political and legal worlds, medical marijuana faces some of the same curves and twists in the road as does recreational pot.
Medical-marijuana states are already restricting the number of licenses granted for physicians to write prescriptions for medical-use marijuana. Some states are creating bureaucratic hurdles for physicians and medical institutions to navigate. New York’s law, for example, is restrictive and overly bureaucratic. It’s why only 600 or so physicians, in a state of 20 million people, are licensed to write marijuana prescriptions. And cannabis producers are finding it difficult to do profitable business there.
But other states, such as Colorado and Washington, are more effective in handling medical marijuana. And as the prohibition on cannabis comes to an end, more models for effectively writing and implementing legalized pot laws will emerge. Other states will have guidelines to more efficiently implement their own laws.
INVESTORS EAGER TO CAPITALIZE
As more states wrestle with legislation to enact recreational- and medical-pot legalization, entrepreneurs aren’t waiting.
The legal marijuana market is around $7 billion, according to New Frontier and ArcView Market data. But pot’s actual retail landscape in the United States is six or seven times larger. The illegal market, estimated conservatively at $50 billion, must be factored in.
That’s where investors see Reefer Money Madness.
A wide variety of marijuana-based products will be created, packaged and marketed with key demographics in mind.
Oil-, food- and beverage-based products will be especially popular. As we reported in December: “We forecast sharp growth in food- and beverage-infused marijuana products. These are becoming easier to produce at wider profit margins, are growing in popularity and are more easily branded and marketed, appealing to consumers put off by pot as a smoking product.”
Spin-off businesses will include boutique pot hotels and hemp gift shops. They will help drive growing segments of legal-pot states’ leisure and tourism businesses.
Production operations and retail outlets will grow. That will drive the need for the equipment and training to produce the products. This is a particularly promising investment area. New machinery, and the acumen to run it, will emerge as a critical need.
But we forecast, as well, that this fledging industry’s immediate future will be ruled by quality and innovation. Quality is determining the right strands and blends to create the desired effect. Innovation will be needed to understand how to package and market a growing variety of products.
Pure entrepreneurism at a small-business level is driving growth now. It will help shape the industry landscape that goes national — and then global.
But as legal pot becomes more pervasive, so does corporate interest. As we wrote two years ago: “Legalizing marijuana would, in effect, create an industry that would enable government’s long regulative arm to reach into and, eventually, play party favorites with Big Pharma and other established mainstream companies.” (Trends Journal, Fall 2014.)
Look at the produ
ct development. Look at business and marketing models being developed by pot’s first generation of Ontrendpreneurs®.
Multinational corporations are already using their models to set the foundation for future profits. TJ