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The United States has a problem. Many states are cash poor and are struggling to find new sources of revenue not detrimental to the environment and which create jobs. Colorado and Washington State, however, have the solution to this problem and it is called marijuana.
With the first year of legalized marijuana on the books, Washington State recorded more than $260 million in marijuana sales and $70 million in taxes, which is approximately two times higher than what was expected.
According to the Washington State Liquor Control Board (soon to be named Liquor and Cannabis Board), there are roughly 160 shops open that have sold more than 23,000 pounds of marijuana. The average price dropped from $25.12 per gram in August 2014 to $11.52 in June 2015.
In April 2015, Governor Inslee signed a law that goes into effect this month that will bring the medical marijuana market in line with the recreational marijuana market, and consolidate the old three-tier excise tax into a single 37% tax. This will help owners fighting to breakeven due to falling prices and high taxes.
Sky has not fallen
One year after legalizing marijuana, Washington State has seen increased revenue and less crime. Mark Cooke, campaign policy director for the ACLU of Washington, said that the doomsday theorists were completely wrong. During the last year, the number of violent crimes, DUIs and car accidents have decreased.
Cooke said, “At this point, I think we can say fairly safely the sky hasn’t fallen. Some of the doomsday scenarios of huge increases in DUIs and youth marijuana use haven’t yet appeared.”
A recent report by the Drug Policy Institute indicates that cannabis-related offenses for adults 21 and older have decreased by 98%, while pot-related convictions were down 81%. The Washington State Poison Control Center and the Washington State Patrol said there was a slight increase in the number of marijuana-related emergencies and impaired driving cases.
Outlook
The cannabis industry is in its infancy in Washington State and we believe that the state’s recently proposed tax decrease will attract new market participants. We expect revenue to continue to grow at incremental rates until the number of dispensaries in the state levels off.
We expect to see more state markets open during the next few years which will prove to be a major a catalyst for this industry and investors need to act now and get in on the ground floor!
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