The recreational and medical marijuana (MMJ) market in North America continues growing by leaps and bounds, driven steadily forward by changing attitudes among the citizenry, as well as law makers regarding cannabis consumption. One of the major factors has been how much revenue the industry can contribute to state coffers in the form of taxation, and the variety of jobs created serving this burgeoning market form a strong secondary impetus for state legislatures to take a second look at passing, at a bare minimum, some form of MMJ legislation, which is often the first step towards broader legalization.
Cannabis has become quite the cash crop, raking in $14B a year in California alone, making it the number one cash crop in the state, which is saying a lot considering how much of the country’s produce and nuts come from California. California produces over 90% of the country’s artichokes, broccoli, cauliflower, celery and garlic, as well as fruits like plums and kiwis, even the lion’s share of walnuts come to us from this one state’s farms. In Oregon, only the state’s abundant apples continue to outrank marijuana as the largest cash crop today, further illustrating how lucrative the basic product for this yet-nascent industry has become.
The U.S. MMJ sector alone was valued at around $2.3B in 2014 according to ArcView Market Research’s latest comprehensive report, and the report also pegs the value within the next four years as more than quadrupling to around $10B. Given the roughly 38% growth rate of the MMJ sector since 2011, this projection seems well within reason and IBISWorld’s MMJ market research report tracks very well with the 2014 ArcView data, putting U.S. MMJ sector revenues at around $2B. The recent GreenWave Advisors report from October 2014 estimates that total U.S. retail marijuana sales revenue could rise to around $35B within the next five years if the substance is made legal in all 50 states, with a lower boundary around $21B if legalization proceeds at a more conservative pace.
The Congressional appropriations bill passed in early December of 2014 even placed landmark restrictions on the DOJ when it comes to going after states that have already passed marijuana reform laws, barring them from spending any monies on such activity, thus giving markets a clear indication of where things are headed. With MMJ currently legal in 23 states and D.C., and recreational sales in Colorado outstripping MMJ sales for the first time as of mid-2014, the underlying industry trend seems quite clear. Especially considering the shifting attitudes of U.S. citizens illustrated by the Gallup poll conducted in October, which showed a clear majority (52%) of Americans now favor marijuana legalization. This is the first time since Gallup started polling on the issue 45 years ago that a majority of those polled were in favor of legalization.
This glowing portrait of the industry’s underlying dynamics is why many investors are flocking to share price-accessible sector players like Nhale, Inc. (OTCQB: NHLE). Nhale is currently focused on pursuing a variety of acquisition opportunities across the medical and recreational cannabis markets, emphasizing targeted operations with a proven business model and the potential to make a significant impact. The company’s execution of a $10M debt financing deal with Toronto-based private investment group Four Twenty Investments, Inc. has set the company up nicely to vigorously pursue their previously disclosed acquisition strategy as 2015 kicks off.
The company is currently pursing acquisition opportunities in Colorado, Washington and Oregon, as well as up in Canada. The company even announced favorable results of talks with a licensed producer in Washington back in mid-December aimed at negotiating an LOI, even as sales in the state, where recreational marijuana stores only opened back in July of 2014, have jumped 400% and are on-track to hit around $200M within another year, according to analysis by Marijuana Business Daily. In Oregon, Nhale has executed an LOI to assess another prospective grower and the company currently estimates revenues could exceed $30M in 2015 if all of their deals currently under negotiation in states where recreational marijuana is already legal go through successfully.
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