Did you know that legal marijuana is the fastest growing industry in the U.S.? How about the fact that if legalization is adopted by all 50 states, it could become larger than the organic food industry? When you consider that the organic food industry brings in around $50 billion annually—well you get the picture.

24/50 states have already legalized marijuana for medicinal purposes, so the U.S. is already halfway there.

States that have legalized marijuana for medicinal purposes. ©2016 Websavant LLC. All Rights Reserved.

States that have legalized marijuana for medicinal purposes.

cannabis-industry-revenue-2016

Researchers from The ArcView Group, a California-based cannabis industry investment and research firm, have pioneered market research around this commodity, and have uncovered some exceptionally fabulous nuggs of data. Most notably:

    • In 2014, the U.S. market for legal cannabis grew by 74%, from $1.5 billion up to about $2.7 billion. 
    • This growth didn’t slow in 2015. Annual sales jumped another 17%, up to $5.4 billion. 
    • This year, the cannabis market is predicted to grow by another 25%, putting it at a prospective $6.7 billion in total U.S. sales by the end of 2016. 

Noticing a trend? There’s way more where that came from.

ArcView also just released its fourth edition of The State of Legal Marijuana Markets report (a must-read for anyone that wants to jump on the cannabusiness bandwagon), along with the prediction that the legal cannabis market will see a bona fide $21.8 billion in total annual sales by 2020.

Energized by this data, we decided to do a little bit of competitive intelligence research to fuel our own curiosity—who are the key players in the space, what does their equity financing look like, and where is the most room for opportunity in a market that is getting more saturated by the day?

To no surprise, we found that the cannabis industry is still very much the wild west. Most of the saturation really lies in medicinal product delivery and production categories, though most of these guys are small shops defined by legislative (and therefore, regional) boundaries. In the chart below, you get a nice snapshot of today’s key players and market growth from 2010 to now.

©2016 Websavant LLC. All Rights Reserved.

In our research, we also spent a lot of time analyzing the messaging and brand strategy of the competitive landscape, because as marketers, we know that sometimes the full version of the story reveals itself when you read between the lines. We discovered that though many B2C companies in the space speak formally to medicinal users, the hidden nod to cannabis enthusiasts is blatantly present. So much in fact, that some websites, like EazeMD and its rival Meadow, will even prompt you to obtain a medical marijuana license (also known as a “green card”) via your smartphone in 10 minutes or less.

Get-Meadow-2016

www.getmeadow.com

Also curious about the average amount of capital required of cannabis start-ups trying to successfully enter the market, we looked into this data over the past five years. Using history as a predictive model, new entrants should expect to raise somewhere between $5-8 million in equity funding on average, depending on their unique value proposition and market niche. However, there is a lot of industry disparity, with the lowest fundraiser, Two Cubes, Inc. in the 5-figure range ($20K) and the highest, Privateer Holdings, in the 8-figure range ($82M).

©2016 Websavant LLC. All Rights Reserved.

It’s no doubt that the cannabis market has seen explosive growth in recent years, but we can’t deny that it still feels a bit like we’re at a college pregame—you know, solo cups, Franzia and beer bongs. Any average Joe in Silicon Valley can throw up a Wix delivery website and call himself an entrepreneur, but we’re betting our chips that those willing to play the long game will receive the greatest payout.

Think NYMEX. Think USFE. Think full blown commodities exchange (hint: we’ve got our eye on Amercanex, and so does Wall Street). That’s where this industry is headed. The future is now, and we’re excited to have a front row seat to the action.

(Featured Photo: “Woman smoking marijauana” via Creative Commons Attribution 2.0 Generic)