There is a certain rush in doing forbidden things. If we inclined that way as kids, we may well have enjoyed eaten apples we stole from the neighbor’s orchard, more than those available freely from the cooler. For many of us, marijuana started as something we tried as a teenage dare. And we truly enjoyed procuring it illicitly if we fancied ourselves as James Deans.
Writing in Forbes, William Langbein says we have a way to go with replacing traditional marijuana supply chains, which still rely on informal social structures to connect. For better or worse, California has chosen the route of separate licenses for farming, distributing, and selling. Moreover, as 1 January 2018 approaches, we still do not know exactly how these licenses will work.
We are also going live with an unconnected supply chain. No wonder William Langbein begins his piece as follows: “While many expect sales of marijuana for recreational use to take off in January, when California will allow existing dispensaries to sell to adults, growth should be gradual next year before accelerating over the next three years, according to investors and advisors”.
We are inclined to agree his vision that 2018 will be a year for ‘building the infrastructure and freeways’ to connect California farms to dispensaries, and dispensaries to recreational users. However, we will also have to come to an arrangement that grants these participants access to the financial sector, before we can talk of cannabis really being in business.
Thus, BDS Forecasts is confident things will come together with state recreational sales reaching $4.3 billion annually by 2021. This will however come at the cost of medical marijuana, which they expect will fall by $1.5 billion by then. We found their article ‘Cannabis Boom Shows No Signs of Quieting in Colorado’ an inspiring vision of what may happen in California once we have the paperwork done.
The Silicon Valley dot coms that make the real money, generally speaking get to market early. William Langbein cites Tom Adams, Managing Director of Investment Research at BDS Analytics saying: “The companies that enter the earliest have a five-year head start to lock up market dominance – and to attract bids from major agricultural firms and retailers – before federal law likely will be modified to legalize marijuana sales.”
Business and real estate are both about location, location, and location again. Those who make real money from cannabis in California will be those that snapped up the best “beachfront locations”, wherever these may be. Local communities will undoubtedly cap the number of licenses. While the consumer uptake will be initially slow, the time to prepare license applications is therefore now.