Legalization of Marijuana: A Lucrative Business Opportunity?

If ten years ago I told you that the pot business might be the next legal Gold Rush, you probably would have asked me what I was smoking.

Today, marijuana can now be legally used for medical purposes in twenty-three states and Washington, D.C., and full legalization is heading to the ballot in Alaska and Oregon. A U.S. marijuana advocacy group recently took steps to begin raising money for a campaign to legalize recreational marijuana use in California in 2016, an attempt to follow in the footsteps of Colorado and Washington, the first U.S. states to legalize commercial sales of the drug to all adults over 21. In fact, according to Marijuana Policy Project Executive Director, Rob Kampia, regulating and taxing marijuana like alcohol makes sense, as its prohibition in the past has been ineffective, wasteful and counterproductive.

The winds of change in the marijuana industry have brought with them a bunch of investors and enthusiastic entrepreneurs, all of whom hope to profit from the legalization of the drug. The legal marijuana industry is slated to grow to $10.2 billion over the next five years, driven by demand for products like marijuana concentrates, non-smoking technologies like vaporization, edibles and capsules, and oil extracted from raw cannabis.

Legalization of marijuana is also encouraging the emergence of ancillary businesses to support the supply chain, such as insurance, security and e-commerce companies. Marijuana has been proved to have application in the medical field to reduce or control the effect of various diseases like cancer, epilepsy and seizures, multiple sclerosis, post-traumatic stress disorder and traumatic brain injury.

Since its legalization in Colorado in January of this year, the number of people licensed to work with the plant has grown from 6,000 to 11,289 over a period of just six months – a number that is only slightly less than the count of auto mechanics in the state. Colorado has issued licenses for more than 200 recreational marijuana shops, which are highly popular among tourists. This has also encouraged the appearance of tour companies and marijuana-serving bed-and-breakfasts.

The marijuana industry is now providing employment to hundreds of other people who have found work on the edges of the industry selling water systems, soil nutrients, lighting and accounting services. Additionally, it has led to innovation in the tech industry, with many start-ups offering marijuana-related mobile apps.

Going by all these facts, the marijuana industry seems to be in the beginning stages of growth and you might be tempted to jump onto the bandwagon. However, you need to be aware that this is a heavily regulated industry that carries high costs without the guarantee of success. In order to get a license, you would need to find financial capital that state inspectors would approve, lock in a legal business location, and be prepared for long delays. You will also need to remain on your guard, as loosened laws will probably create new possibilities for fraud. Nevertheless, for those with the will and gumption to succeed, this could prove to be a highly lucrative, though risky opportunity.