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Marijuana has come a long way in 20 years, but it's no shoo-in for investors.
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This year marks the 20th anniversary of marijuana receiving its first state-level approval, when California gave cannabis the green light with Proposition 215. Since that 1996 approval, cannabis has spread like a weed, gaining legalization into other states and giving both patients and consumers hope that they would soon have access to both medical and recreational marijuana.
As we look at the marijuana industry today, a number of amazing facts and figures stand out. As objective observers, and investors, let's take a closer look at nine fast facts about marijuana, including one telling statistic.
Probably the most important fact regarding marijuana's expansion is that it's now legal in two dozen states -- nearly half of the union. The most recent approval came in mid-April when Pennsylvania Governor Tom Wolf signed a medical marijuana bill into law that had been passed back and forth between the state's House and Senate over the previous year. Pennsylvania's medical marijuana approval is also noteworthy because it was done entirely through the legislative process (i.e., without residents voting).
Of the 24 states that have legalized marijuana, four states -- Washington, Colorado, Oregon, and Alaska -- have approved the use of recreational marijuana for adults aged 21 and up. This is especially remarkable given that just a decade ago, only a third of the American public was in favor of legalizing marijuana. And as you'll see below, more states may be on the way.
Based on the latest nationwide poll from Gallup, a whopping 58% of the American public now supports the full legalization of marijuana. This ties the all-time high for marijuana support in a Gallup poll, and it's up dramatically from two decades ago, when support for the substance stood at just 25%.
If you thought full legalization support was high, you haven't seen anything yet. Based on a CBS News poll conducted in April 2015, 84% of those surveyed wanted to see marijuana legalized for medicinal use nationwide. It's not hard to understand why, either, with companies like GW Pharmaceuticals (GWPH +0.00%) showcasing the many uses of cannabinoids in early- and mid-stage clinical trials. For instance, GW Pharmaceuticals' Epidiolex helped reduced seizure frequency by more than 50% in two midstage studies for childhood-onset epilepsy in Dravet syndrome and Lennox-Gastaut syndrome.
Marijuana may also be primed for its biggest year yet in terms of expansion. Three states are guaranteed to vote on marijuana initiatives come November -- medical marijuana in Florida, and recreational marijuana in Maine and Nevada. Meanwhile, signatures are still being collected, and ballot initiatives debated, in a bounty of other states. Expansion is viewed as the key to prompting Congress to take up the debate over rescheduling or decriminalizing marijuana on a national scale.
Image source: Flickr user Cannabis Culture.
State-level legalization of marijuana has led legal sales of the drug to explode higher. In Colorado, legal sales of marijuana totaled $996.2 million in 2015, allowing $135 million in taxes and license fees to flow into the state's coffers. A decent chunk of this tax revenue is being used to boost the state's education budget, along with law enforcement and drug abuse programs.
Best of all, based on data released last week by the Colorado Department of Revenue, Colorado has sold $270 million worth of legal marijuana through the first three months of 2016. Although sales can be a bit lumpy on a month-to-month basis, Colorado is on pace to report around $1.1 billion in legal marijuana sales in 2016.
However, marijuana's growth isn't just a Colorado phenomenon. According to cannabis research firm ArcView Market Research, the legal marijuana market totaled $5.4 billion in sales in 2015, and it's on pace to grow to $6.7 billion in 2016. More importantly, ArcView believes the legal marijuana industry could grow at a compound annual rate of 30% through 2020. If this growth does indeed come to fruition, legal marijuana sales may total $22 billion by 2020.
In 1994, Dale Gieringer, Ph.D., of California NORML, extrapolated the job-creating capacity of the cannabis industry and determined that approximately 100,000 jobs could be created in the U.S. if marijuana were legalized nationwide. Things have changed a bit in the 22 years since this prognostication, and in Colorado alone, an estimated 10,000 new jobs have been created by the cannabis industry. In other words, 100,000 would likely be a very conservative estimate of the positive impact marijuana legalization could have on the U.S. labor market.
Image source: Flickr user Hobvias Sudoneighm.
Now for that promised "telling statistic." Despite marijuana's growing approval on a national scale, a recent poll conducted by Fortune and Morning Consult showed that if marijuana were legalized in their state, nearly three in five people (59%) wouldn't try it. Another 35% said they were likely to try it, and 6% either had no opinion or didn't know. Of course, 35% still gives the cannabis industry a large market to work with. However, it's an eye-opener that while nearly three in five support marijuana legalization efforts, three in five people also have no desire to use marijuana.
This last statistic is just another reason why I've questioned whether investing in marijuana stocks makes sense. Not only do a majority of Americans show no interest in trying marijuana, but marijuana businesses in general are struggling with a lack of access to basic banking services, such as checking accounts, which makes security and business expansion a major challenge. Marijuana businesses are also paying the price come tax time, given that they cannot take normal business deductions.
Despite these eight great statistics, marijuana's most telling statistic should give investors all the more reason to stick to the sidelines.