Future Emerging Market of Recreational Marijuana in the American State of New York

Research by Sarah Gojecki

New York

Rapid increase of in private sector jobs:

2.9% since February 2014

Financial capital of the world

New York Entrepreneurial Advantages:

Important business spirit

Direct access to capital

Major innovative drive

Social Behaviour

Consumption Comparison to Alcohol

Society’s Support

Recreational Consumption

Health Consequences

Social Surplus

Consumption Comparison to Alcohol

“As has been well documented, I smoked pot as a kid, and I view it as a bad habit and a vice, not very different from the cigarettes that I smoked as a young person up through a big chunk of my adult life. I don’t think it is more dangerous than alcohol”

-Barak Obama

Freeman, N. (8 Feb 2011). Parliament Lights No More! President Obama Finally Quits Smoking. Observer. Retrieved from http://observer.com/2011/02/parliament-lights-no-more-president-obama-finally-quits-smoking/

Consumption Comparison to Alcohol

Alcohol Prohibition will help our prediction on the legalisation effect on recreational consumption of cannabis

Marijuana prohibition has been just as ineffective, inefficient, and problematic as alcohol prohibition (Effective Arguments …, 2014)

Legalization is providing a less harmful alternative to alcohol

Society’s Support

Alcohol is socially accepted

Society’s Approach

Media exposure to marijuana.

Social Behavior Comparison

Grandmas Smoking Marijuana for the First Time

Jon Stewart highlights the irony of some statements in the media

Today we are experiencing a shift of social norms.

Consuming cannabis is on the way to be socially acceptable

Society’s Support

The great pot experiment, Legalising a drug is harder than it looks. (12 July 2014). The Economist. Retrieved from http://www.economist.com/news/united-states/21606851-legalising-drug-harder-it-looks-great-pot-experiment

A shift is currently happening concerning the way society views marijuana consumption.

Increase the size of the market

Recreational Consumption

Keloland Attacks Medical Cannabis, Ignores Real Drug Crimes and Real Issues. (8 Ap 2015). Dakotazfreepress. Retrieved from http://dakotazfreepress.com/2015/04/08/keloland-attacks-medical-cannabis-ignores-real-drug-crimes-and-real-issues/

• THC, or tetrahydrocannabinol, is the

chemical responsible for most of marijuana's

psychological effects.

• THC stimulates cells in the brain to release

dopamine, creating euphoria

• Users typically smoke to obtain a "high"

Substitutes

Complement

s

Social Behavior Comparison

Alcohol and Marijuana are both consumed in a social environment social ‘tools’ bringing people together

Alcohol and Marijuna are nonetheless a drug: affect normal thinking process have benefits and

consequences due to consumption

No overdose death due to marijuana

marijuana might be a preferred substance the long-run

transfer part of the value from alcohol industry to recreational marijuana industry

Social Surplus

“The current feeling is a bit like the dotcom or the green-tech booms […] only it also brings freedom and saves money in criminalization. This industry is going to make the world a safer place. It'll also create a lot of work in post-recession America”-Troy Dayton, co-founder and chief executive of cannabis investment company the ArcView Group

Transparent transactions from taxes on marijuana increase the image of the industry and will most likely yield in a higher demand.

Legal Overview

2005 Colorado legalized marijuana

Washington legalized marijuana

2014 New York decriminalized marijuana

2015 February

Washington D.C. legalized marijuana

Alaska legalized marijuana

July

Orgeon legalized marijuanaNELSON, S. (12 November 2014). Pot Legalization: Gateway to What? U.S. News. Retrieved from http://www.usnews.com/news/articles/2014/11/12/pot-legalization-gateway-to-what

Demand and Supply

Disposable Income

Government

Regulations

Competitive Landscape

• Limited number of licenses

• High price of licenses

• High number of applicants

High Competition

• Each business must grow 70% of its marijuana

• Barriers to entry in the industry increase

Products

Innovative delivery systems for THC:

Edibles provide a more convenient and familiar product to consumers, thereby stimulating consumer demand for marijuana products.

Industry Performance

Legalization of recreational

marijuana cultivation contributed

to the boom during the 2014 year,

as revenue rose an astounding

54.7% (Industry Performance,

2015).

Investable market is valued at nearly $3 billion 

Industry Performance. (2015). IBIS World.

Industry Performance

Industry is currently in the

quality growth of its life cycle

Growing at a faster rate than the US economy

Recreational marijuana cultivation contributed to the boom during the 2014 year revenue rose an astounding

54.7%

Industry Outlook. (2015). IBIS World.

Investment Opportunities

“I never thought I’d see more people invest in marijuana than smoke it”-Fidelman FIDELMAN, M. (11 April 2014). Why Legalizing Medical Marijuana Will Make Investors Extremely Wealthy. Forbes. Retrieved http://www.forbes.com/sites/markfidelman/2014/11/04/why-legalizing-medical-marijuana-will-make-investors-extremely-wealthy/2/

• The illegal marijuana market is valued at $50 billion •The legal, investable market is valued at nearly $3 billion

Considering, the minimum of 10 states planning on passing legalization in the near future important transfer in value from the illegal to the legal market.

Investment Opportunities

Different sectors of investment may be thought of when it comes to federal legalization as cannabis as a whole is currently illegal.

Hemp may be used to make: Textiles Paper Paints Clothing Plastics Cosmetics Animal feed Other.. How to distinguish marijuana males from females. (2001). Alchimia. Retrieved from

http://www.alchimiaweb.com/blogen/distinguish-marijuana-males-females/

Cannabis

Hemp Marijuana

Risks

“But this has never been done before. There is no Marijuana Business for Dummies book”-Tripp Keber

REMNICK, D. (27 January, 2014). Going the Distance. The New Yorker. Retrieved from http://www.newyorker.com/magazine/2014/01/27/going-the-distance-2

Newness of the industry Uncertainty

“Although the industry itself is expected to grow like a weed, the vast majority of companies operating in it are unprofitable, and most have terrible balance sheets”-KristofKRISTOF, K. (2014). Just Say No. Kiplinger's Personal Finance, 68(4), 35.

?Prediction Future Market

How many people will be consuming marijuana, and how much? What states stand to benefit most from growing it? Will big business take over its production and sale, or will it remain in the hands of independent growers and dealers? And how large, in dollar terms, might this whole sector end up?

U.S. retail cannabis sales are estimated to rise more than five-fold over the next five

From an estimated $2.2-$2.6 billion in 2014 to $7.4-8.2 billion in 2018

Balancing Convergence

lose interest in marijuana:

'forbidden fruit' aspect" removed

consume larger quantities

because it is now legal

Federal Legalization

Would allow to Do business in more than

one state

Transport product across state lines

Open a bank account banks obey regulations

laid down at the federal level

Federal Legalization

“It is important that tobacco control advocates and the public understand the clandestine research and analyses that the tobacco industry has conducted regarding potential marijuana legalization as well as the tobacco industry’s role in turning cigarettes into the world’s most widely used delivery system for the addictive drug nicotine, the leading preventable cause of death, to prevent the industry from repeating this history with marijuana if given the opportunity”-Barry et al.BARRY, R. A., HIILAMO, H., & GLANTZ, S. A. (2014). Waiting for the Opportune Moment: The Tobacco Industry and Marijuana Legalization. Milbank Quarterly, 92(2), 207-242. doi:10.1111/1468-0009.12055

The entrance of existing big corporations in the market would have an important impact on existing shops and would also change the majority of the competitive landscape characteristics.

Federal ban acted as an infant industry protection allowing businesses to learn by doing.Federal legalization would force businesses to face an international competition.

New York’s Eventual Legalization

New tourism opportunity Job creation Increase real estate

market Increase State’s GDP

New York can learn from Colorado and Washington mistakes and reduce short-term time adaptation

New York would rapidly become the most important state in the recreational marijuana business.