California Recreational Pot Legalization Could Be Worth Billions

California Recreational Pot Legalization Could Be Worth Billions
File photo by Kelsee Becker/L.A. Weekly

By 2007, so many medical marijuana dispensaries had opened in Los Angeles that the City Council imposed a moratorium on new shops.

In the next few years, illegal collectives mushroomed, and it was reported that there were more pot shops than Starbucks locations in the city.

It was more than a decade since voters had passed Proposition 215, the groundbreaking initiative legalizing medical cannabis, and more than five years after the state Legislature clarified some rules for patients and collectives with Senate Bill 420.

It was, frankly, a bonanza for weed sellers. It was California's green rush.

The big question now is whether it could happen all over again if voters, as some expect, legalize recreational marijuana in November.

The Adult Use of Marijuana Act (AUMA), backed by Silicon Valley billionaire Sean Parker and Lt. Gov. Gavin Newsom, would allow Californians 21 and older to buy and hold up to an ounce of weed at a time.

A new report, "The State of Legal Marijuana Markets," by cannabis business analysis firm New Frontier, in partnership with ArcView Market Research, says California's legal pot revenues could more than double following what many describe as "adult-use" legalization.

The legit medical-marijuana market in the Golden State was worth $2.7 billion in 2015, the report concludes. In 2020, if adult use goes into effect, that figure could be a whopping $6.6 billion, the report said.

Despite what critics have described as the conservative nature of AUMA — it doesn't necessarily open the door for more dispensaries or legalize delivery in towns where it's not legal — the report's author believes there could indeed be a second green rush in California if it's enacted in 2018.

John Kagia, director of industry analytics for New Frontier, acknowledges that AUMA might not expand the retail scene in America's largest pot market, L.A., where city law imposes strict limits on the number of shops.

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But he said it could increase demand by eliminating barriers, such as a doctor's recommendation, to cannabis. "One of the things full adult-use legalization does is normalize it a step further," Kagia told us.

And media attention could increase marijuana tourism, he said.

"California, being one of the most important tourism destinations in the country, it would be a very significant canna-tourism market if it passed adult use," Kagia said.

Eight percent of tourists in Colorado visit a dispensary, the "State of Legal Marijuana Markets" report found. If that were applied just to Los Angeles, which had 45.5 million visitors last year, it would amount to 3.6 million tourists sampling the local greenery.

"Within the adult-use market," Kagia said, "we tend to see the greatest opportunities for long-term growth."

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