7 Important Things You Should Know About the Cannabis Industry
Take a look at the news most days and you're likely to see a story about the fast-growing cannabis industry. In states where cannabis has been legalized, the industry has exploded, and with several states considering legalization in the very near future, more and more people have become interested in this growing economic sector. Here are a few important things that you should know about the cannabis industry, including information on the top jobs in the industry and how you can invest in cannabis businesses.
TABLE OF CONTENTS
- What Is the Cannabis Industry?
- How Does the Cannabis Industry Work?
- Cannabis Industry Jobs
- Why Work in the Cannabis Industry?
- How Big Is the Cannabis Industry in the US?
- Cannabis Industry Growth
- How to Invest in the Cannabis Industry
1 - What Is the Cannabis Industry?
Before we dive in deep on the ins and outs of the cannabis industry, it's a good idea to learn what the industry is and how it operates. At the most basic, the cannabis industry covers any activities that are related to the production and sale of different types of marijuana and hemp products.
Now that we have a basic definition to work with, let's cover a few other important facts about the cannabis industry. For starters, legal production, transport, and sale of cannabis is a relatively new industry, having only existed for about 20 years or so. Since the industry is so new, very few people understand how it works or why working in this sector can be so beneficial, which we'll explore a little later.
Another important thing to remember is that the cannabis industry covers several different products. Generally, when most people talk about the cannabis industry, they're referring to the sale of medical or recreational marijuana. While these transactions do make up a large part of the industry, the cannabis industry also includes products made from hemp, such as clothes, shoes, and soap.
So, as you can see, the cannabis industry is a lot more complicated than you might imagine at first glance. Several different products are involved in the industry, which means that cannabis operations can be just as complex as any large manufacturing business.
2 - How Does the Cannabis Industry Work?
After learning a little bit more about the cannabis industry, you might be wondering how the industry works. Like most industries, the answer to this question depends on which sector of the industry you're discussing.
In some ways, the cannabis industry works very similarly to the farming industry. Marijuana plants need to be grown and cultivated and then transported to their final destinations, which could be a dispensary or a medical research facility.
The cannabis industry also works like the retail industry in some ways. Imagine, for example, that you're visiting a dispensary for the first time and that you don't know what product you should purchase or what accessories you may need. In this situation, you'd probably ask one of the employees of the store for assistance just like you would when shopping for clothes or other retail items.
Legal issues obviously have a big impact on how the cannabis industry works. Laws related to cannabis vary from state to state, so if you want to break into this industry, you'll have to be very familiar with the laws in your state. For instance, in some jurisdictions, medical marijuana is legal, while recreational use is still illegal, which means you would only be able to open a medical dispensary and would need to make sure all your customers are legally allowed to use marijuana.
3 - Cannabis Industry Jobs
As you might suspect by this point, there are countless jobs in the cannabis industry, from entry-level positions to management jobs. Let's take a look at a few of the jobs available in this industry and why they're important.
Harvesters are in some ways the most important people working in the cannabis industry. They're responsible for several important tasks, including growing the marijuana plants, trimming the buds, and then packaging for delivery.
In dispensaries, there are several different jobs that are similar to those you would find in most retail shops. For instance, dispensaries will typically have a store manager who is responsible for overseeing the employees and making sure that the business runs smoothly. Dispensaries will also have cashiers to handle sales and some locations will have a budtender who can recommend certain types of cannabis to customers just like a sommelier would with wine. If you have a culinary background, then you may be able to find a job in the cannabis industry as an edibles maker. Edibles chefs can create a wide variety of foods incorporating cannabis, including candies, chocolates, and more.
Some other jobs you can find in the cannabis community include:
- Delivery Person: Responsible for transporting cannabis products between different locations. A cannabis delivery person will usually need to possess a clean driving record and be able to pass a criminal background check.
- Production Manager: Responsible for guaranteeing the quality of cannabis that winds up in dispensaries. This position may also have other management duties.
- Security Guards: Can work in virtually every cannabis business, including dispensaries and manufacturing plants.
4 - Why Work in the Cannabis Industry?
More and more people are seeking work in the cannabis industry and for very good reason. First and foremost, the cannabis industry is growing at a rapid pace and there seems to be no end in sight. As the number of states embracing the cannabis industry increases, so will employment opportunities and the chance to get into this booming economic sector on the ground floor.
Another reason to work in the cannabis industry is that it's very easy to earn a good salary, even in an entry-level position. Because the industry is so new, cannabis businesses are on the lookout for employees. While you'll need experience for management-type positions, virtually every other job is up for grabs and you can easily work your way up through an operation. Job stability is another big benefit of working in the cannabis industry.
If you decide to work as a bud trimmer, for example, you should be easily able to find work, especially if you live in a state with large grow operations. Also, because the industry is growing, more and more businesses are opening instead of closing, creating a high demand for qualified workers.
5 - How Big Is the Cannabis Industry in the US?
Although the cannabis industry is relatively new, it has already grown to an impressive size. Let's take a look at a few numbers so you can see just how large the cannabis industry actually is in the U.S.
In 2016, the cannabis industry had an estimated market size of $7.06 billion. Most of this money was generated by the medical marijuana segment and marijuana buds were the dominant type of product. In 2017, the cannabis industry earned between $9.2 billion and $12.9 billion depending on the analysis, an astounding increase in only a year. While this amount of money pales in comparison to the largest industries in the U.S., such as the health care sector, it is still very impressive, particularly in an industry that's still in its early stages.
Revenue isn't the only way we can get an idea of the size of the cannabis industry. For example, you can determine an industry's size by how many full-time jobs it supports. By current estimates, the cannabis industry supports between 125,000 and 160,000 full-time jobs, as well as thousands of part-time positions. These numbers will almost certainly grow as more states legalize medical and recreational marijuana.
We can also take a look at tax revenues generated by cannabis businesses to get an idea of the overall size of the industry. Because tax rates vary between states, it's hard to get an exact number on how much tax revenue was collected from cannabis businesses, but by some estimates, between $3.8 billion and $4.8 billion was generated by these businesses. Impressive tax revenues are one of the main reasons that some states are considering legalization.
6 - Cannabis Industry Growth
As you can see, the cannabis industry is already relatively large even though it is only fully legal in a handful of states. Excitingly, experts predict that the industry will experience rapid growth over the next 10 years, both in the United States and across the world.
After careful analysis, BDS Analytics has determined that by 2027, spending in the legal cannabis industry will reach $57 billion. An important note is that it is projected that most of this money will be spent on recreational, or adult-use, marijuana, instead of medical marijuana, which is different from current patterns.
In their analysis, BDS Analytics also stated that the majority of this spending will take place in the United States. An estimated $9.2 billion was spent on legal cannabis in the U.S. in 2017, and by 2027, this number is expected to increase to $47.3 billion. While most of the spending increase will take place in the United States, growth will be even more impressive across the globe. In markets excluding the U.S., $52 million was spent on legal cannabis in 2017, and in just a decade, this number is expected to explode to $2.5 billion.
Several reasons exist for this projected growth, but the primary factor is the increasing willingness of large countries to pass legislation related to medical marijuana. After Canada and multiple U.S. states legalized medical marijuana, several other countries followed suit. A decreasing stigma regarding the use of recreational marijuana has also led many analysts to predict that legalization of recreational use will increase, which will contribute to the growth of the industry.
7 - How to Invest in the Cannabis Industry
The impending growth of the cannabis industry provides an exciting opportunity for investors. If you get into the cannabis industry now, it's possible that you'll eventually receive a huge windfall, the dream of every investor. If you're not familiar with investing, however, it can be hard to know how to choose the right investments. Fortunately, with the right strategy, you should be able to take advantage of the future cannabis industry boom.
One of the best ways to invest in the cannabis industry is to purchase stocks in a cannabis grower. With a product such as cannabis, it's usually better to invest in the supply side than the demand side, and there are plenty of grower stocks from which you can choose. Ideally, you'll invest in a cannabis grower that is showing increased production but hasn't yet gotten the attention of other investors. When the industry grows and demand for cannabis increases, your stock should significantly increase in value.
You could also invest in a dispensary if you're interested in profiting from the cannabis industry. Depending on your goals, there are two methods you could choose for investing in a dispensary. First, you could purchase stock in a company that owns and operates dispensaries in different states. For most people, this is the easiest solution since it will be mostly hands-off. If you live in a state where cannabis is legal, you could also purchase and operate your own dispensary, which is certainly more time-consuming but can be very rewarding.
Some investors may want to purchase stocks in a drug-maker that focuses on cannabis-based products. Currently, medical marijuana is the largest revenue generator in the cannabis industry and should still be very profitable in the future. In the U.S., 33 states have legalized the use of medical marijuana, significantly more than states where recreational use is legal. Investing in a drug company can result in impressive returns, especially if the company creates a drug that finds wide usage.
Investing in a cannabis marketing company is also a sound strategy. As recreational use is legalized in more states and countries around the world, companies will need to hire marketing agencies to help advertise their products. Also, most states and countries have very strict rules for how marijuana can be advertised, making this a specialized industry. Marketing for the cannabis industry is likely to experience exciting growth over the next few years, so investing in one of these companies can be an excellent choice.
The cannabis industry is one of the fastest growing sectors of the economy, and even large corporations are taking notice and putting their money into the industry. Thanks to increased legalization and decreased social stigma against marijuana, the cannabis industry is ready to explode and there's still time for you to get in on the ground floor. Whether you want to work in the industry or you're thinking about making an investment, getting into cannabis sooner rather than later is a good decision.