Cannabis Market Share

March 1, 2016

 

Federal financial restrictions are devastating on marijuana entrepreneurs and the tightened regulations have lead to black markets and prohibition. According to a Newsweek article the market is split up into three segments and here is the breakdown:

  1. Medical 480M 37%

  2. State-licensed recreation 460M 35%

  3. Illegal 390M 28%

It’s hard to say how much the illegal market’s share is due to its underground nature of illicit activity.  States like Oregon who have implemented hikes in sales tax of up to 25% have been exposed the threat of illicit entrants who are selling product at lower prices make a large worthwhile profit. In response to illegal operations threatening legitimate firms who are honestly paying the federal and state taxes there have been ideas of lowering tax rates accross the board. Oregon and Washington have looked to Colorado who is using this very solution and the home of the Rockies has lowered taxes on marijuana effective 2017 from 10%-8% on the state-side. The illegal activity is centered around underground cannabusinesses who deliver and skip out on the high tax rates in order to meet the demand of drive-to-pop home deliveries. Lowered tax rates could slow this illicit activity and could eventually even out the market when the underground dealers decide that its profitable and worthwhile to pay taxes and follow policy.

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