Is the “Legal” Cannabis Market in the US Going to Continue to Grow?
Today [1,4,2018], it was reported that the Trump administration will free federal prosecutors to enforce federal marijuana laws more aggressively by rescinding the “Cole memo”, effectively threatening to undermine the legalization movement that has been implemented in several US states.
Today [1,4,2018], it was reported that the Trump administration will free federal prosecutors to enforce federal marijuana laws more aggressively by rescinding the “Cole memo”, effectively threatening to undermine the legalization movement that has been implemented in several US states. 29 states and the District of Columbia currently have laws broadly legalizing marijuana in some form, be it for recreational or medical use. Colorado, Oregon, Washington and Alaska have had a recreational marijuana market for some time, while California, Massachusetts, Maine, and Nevada all passed measures in November 2016 legalizing recreational marijuana.
In October of 2017, Strategies Unlimited released its latest horticultural lighting report, which broke out the potential market for cannabis in North America amongst other products like ornamental and fruits and vegetables. It was my assumption that a republican federal government would not try to supersede state’s rights and regulate existing markets within their borders, especially when an October 2017 Gallup poll found that 64% of Americans (72% Democrats, 67% independents and 51% Republicans) support the legalization of Marijuana.
While we do not know what the impact of this will necessarily be on this “growing” industry, it most likely will not be positive. Legal cannabis growers can already face steep hurdles in setting up operations, including cumbersome state regulations, difficulty in obtaining financing and strict operations controls. The uncertainty and fear created by potential raids by the federal government and potential jail time are not good for business, to say the least.
The potential impact for horticultural lighting companies could be very negative. From our research we estimated that there were approximately 7.7 Million ft2 of legal commercial cannabis growing area in the US in 2016 and forecasted that this area would cover approximately 30 million ft2 by 2022, with LED fixtures accounted for less than 7% of all installations.
This led us to the conclusion that there is a huge potential for LED technologies to penetrate into the market, especially as LED fixture prices continue to decrease, our understanding of plant photobiology increases, and as LED would allow for more flexibility and control of production. Due to these factors and others, we forecasted that the horticultural lighting market for cannabis in the United Stated would be worth over $400 Million by 2022, with LED fixtures making up more than 71% of the total of the market.
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