You may not realize it, but the legal weed industry is among the fastest-growing in the United States. Marijuana Business Daily released a report last year entitled "Marijuana Business Factbook 2017" that called for a whopping 45% legal pot sales growth in the U.S. in 2018 and an aggregate tripling in sales between 2016 and 2021 to approximately $17 billion. The big bump in 2018 is a result of California opening its doors to recreational marijuana sales, as well as organic growth in existing legal states.
Favorability toward cannabis has been a big reason why sales are soaring, as well as why marijuana stocks have doubled or tripled in value over the trailing year. Respondents across five national polls since April 2017 have overwhelmingly favored the idea of legalizing pot for adult use. A separate poll from the independent Quinnipiac University this past August found that 94% of Americans are behind the idea of legalizing medicinal cannabis, compared to a mere 4% who oppose the idea.
The number of U.S. cannabis jobs may more than double between 2017 and 2021
However, the view most people have of the pot industry is probably very linear. They simply see growers, distributors, and retailers, when in reality there's much more. There are consultants, delivery companies, supply chain management providers, processors, venture capitalist, event planners, and so much more that I'm not even mentioning here. You could rightly say there's a "canna-verse" out there that's probably going unnoticed by most of the American public and investors.
Last year, this budding U.S. industry accounted for $9 billion in sales, according to Tom Adams, managing director of BDS Analytics, and more importantly, the industry employed 121,000 people. By 2021, BDS Analytics is estimating that cannabis industry employment in the U.S. will more than double to 292,000 people. That represents a compound annual growth rate in American weed-related jobs of roughly 25%. What industries do you know of where the labor force is expected to grow by 25% a year? My guess is not too many.
What's truly unique about the dazzling growth the cannabis industry has delivered is that it's done so with the federal government maintaining its Schedule I classification on the drug. Schedule I substances are wholly illegal, highly prone to abuse, and are deemed to have no recognized medical benefits.
Jeff Sessions is waging war on the pot industry
A number of loose rules and state regulations have thus far fostered an environment that's allowed the pot industry to thrive. For instance, the Rohrabacher-Farr Amendment (also known as Rohrabacher Blumenauer) ensures that the Department of Justice can't use federal dollars to prosecute medical marijuana businesses that are operating in legal states.
Similarly, between August 2013 and early January 2018, the Cole memo, which was drafted by former Deputy Attorney General James Cole, was in effect. This memo provided a loose framework of rules that states would have to abide by in order to keep the federal government from intervening. Some of these factors including keeping adolescents away from pot and ensuring that weed grown in a legal state stayed in that state.
Unfortunately, many of these protections for the cannabis industry are paper thin, and current Attorney General Jeff Sessions is doing what he can to tear them down and wage war on the industry. Last year, Sessions sent a letter to a few of his congressional colleagues requesting that the Rohrabacher-Farr Amendment be repealed, with no luck. He did, however, manage to rescind the Cole memo on Jan. 4, 2018, suggesting that it overstepped its bounds when implemented. Its removal clears the way for state-level prosecutors to use their discretion in bringing charges against persons and businesses operating in legal states.
Though 29 states have legalized cannabis in some capacity, including eight that have green-lighted adult-use weed, it's unclear what the future will hold for these states considering Sessions' recent war on pot.
Could Canada become the new marijuana job mecca?
Even assuming the U.S. legal weed industry continues to grow, its ceiling remains limited as long as Sessions, and arguably Donald Trump, are in office. No matter what the polls suggest, it's pretty clear this administration isn't going to give reform the time of day.
However, it just so happens that our neighbor to the north, Canada, could become a breeding ground (or should I say budding ground) for cannabis job growth.
Canada legalized medical weed back in 2001, and it's currently in the process of reviewing legislation that would legalize recreational marijuana by August 2018. Progressive parliament members easily outnumber conservatives in Canada, and the federal government has already worked out a two-year tax-sharing agreement with the provinces. The path is clear for Canada to become the first developed country in the world to green-light adult-use pot.
For example, Canopy Growth Corp. (CGC 10.74%), the largest pot stock in the world by market cap, currently has 665,000 square feet of growing capacity across seven facilities. Canopy Growth is also in the process of constructing or developing 3.7 million square feet of growing capacity in British Columbia. Once complete, these more than 4 million square feet of growing capacity, not to mention Canopy Growth's multiple distribution channels, could be direct and indirect sources for job creation.
According to Alison McMahon, the founder and CEO of Cannabis At Work, approximately 150,000 jobs are expected to be added by the cannabis industry in Canada over the next couple of years.
If you're looking to take advantage of the green rush as an investor, take the hint and keep your eyes focused on Canada.