Your Guide to Making Money in the Multi-Billion-Dollar Marijuana Market
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How big is the marijuana market?

Marijuana is illegal at the Federal level. Therefore, it is difficult to collect accurate statistics on the marijuana market. Alcohol is regulated, and producers pay taxes on the amounts they produce. Therefore, economists can make reasonably accurate estimates of the size of the alcohol market. This is not possible with marijuana because producers are not licensed and there are no taxes levied, other than general sales taxes, in the cases where it is sold through store front operations. Throughout most of the United States, the entire marijuana market is underground and therefore deliberately hidden from anyone who might want to get details. The bottom line is that we really don't know how big the market is.

Therefore, here are the various guesses at the size of the market. Each has its own merits and rationale. Just for comparison's sake, the market for brewed beverages in the US is a little over $100 billion.

Other Estimates

Jeffrey Miron estimates the national marijuana market at about $10 billion per year.

Dale Geiringer of California NORML estimates the market in California to be about $3-5 billion. If California is about ten percent of the national market, this would indicate a national market of $30 to $50 billion.

Jon Gettman estimates the size of the domestically grown marijuana crop at about $35 billion, based on DEA figures. Note that this is just the estimate for the dollar value of marijuana grown within the United States. It would not include imports. He has estimated the total size of the national market at around $100 billion.

The officials involved in CAMP (Campaign Against Marijuana Planting) have estimated that they seized $7 billion worth of marijuana in California alone. Federal Government officials have estimated that, at best, they only seize about ten percent of the crop. That would put the size of the market at about $70 billion, minimum, if California was the only place growing it.

There are no estimates for the dollar value of the marijuana that is imported from other countries. Even the US Government does not attempt to offer figures. By any method of estimate, it would have to be in the billions.

Our Research

Marijuana Business News has done its own research by surveying the marijuana clubs currently operating in the Los Angeles area. Because our research is limited to the Los Angeles area, we cannot make estimates for anywhere but the Los Angeles area. We expect to release the details of these surveys in 2008.

From our survey, we would now estimate that the sales of the combined marijuana stores in the Los Angeles area (geographically, from about the 10 Freeway north to the top of the San Fernando Valley) is probably at least $1 billion to $1.5 billion per year. It should be noted that this is the estimated sales for the openly operating medical marijuana clubs. These are clubs that advertise openly in local papers and on the Internet. Many of them have catalogs of their current products on the Internet. People who buy from these clubs must either be qualified medical marijuana patients, or they must be registered caregivers for qualified patients.

Our estimate does not include any sales through more "traditional" methods -- the black market for marijuana that has always existed. It is difficult to tell what percentage of marijuana users go through the trouble of obtaining medical marijuana recommendations. Obtaining a recommendation requires a visit to a doctor and the paying of a fee, usually around 100 dollars. Marijuana is generally freely available through the black market so many people just don't bother. Also, some don't want to have paperwork that connects them with marijuana.

As nearly as we can determine, the biggest portion of the marijuana market is NOT serviced by these clubs. The biggest portion of the market apparently still goes to "traditional" dealers, by a margin that we would estimate as two or three to one. That is, the medical marijuana clubs may service only a third or less of the total market.

For example, most clubs report that they have only a handful of clients who are under 25. The majority of the clients of these clubs are over 30, and many are over 40. They are typically baby boomers, who are settled with jobs and families and like the convenience and the selection afforded by the marijuana clubs. They are tired of running around to friends' houses to get their marijuana.

Considering those factors, the total market for marijuana in one limited area of Los Angeles could be estimated at a minimum of $2 billion to $3 billion dollars per year, and maybe more. If this is correct, we believe it would argue in favor of Jon Gettman's estimate of a national market in the neighborhood of $100 billion.

We will publish a report on our findings, with our rationale for the numbers, in 2010.

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