A new figure has been making the rounds that has ganjapreneurs and cannabis investors on the west coast sitting up in their seat. The number is $23.3 billion, and it’s the latest economic estimate on just how much cannabis stands to be produced in California now that plant is coming out of the proverbial closet of prohibition.
Where did this number come from?
Last week, The Orange County Register deduced data sourced from California Department of Agriculture, Drug Enforcement Agency, Leafly.com, U.S. Department of Justice, Washington State Liquor and Cannabis Board, and Priceofweed.com to estimate current marijuana market production and values. The paper came up with a huge figure – one which places marijuana at the top of the state’s crop production, and would account for more market activity than the next five agricultural commodities combined. (Milk, almonds, grapes, cattle, and lettuce in California account for $22.2 billion annually.)
Veteran drug policy expert Phillip Smith explains how the newspaper arrived at its conclusion, but suggests the number may be a little high:
“The newspaper extrapolated from seizures of pot plants, which have averaged more than two million a year in the state for the past five years, and, citing the U.N. Office on Drugs and Crime, used the common heuristic that seizures account for only 10 percent to 20 percent of drugs produced. That led it to an estimate of 13.2 million plants grown in the state in 2015 (with 2.6 million destroyed), based on the high-end 20 percent figure.“It then assumed that each plant would produce one pound of pot at a market price of $1,765 a pound. Outdoor plans can produce much more than a pound, but indoor plants may only produce a few ounces, so the one-pound average figure is safely conservative.“The $1,765 per pound farm gate price is probably optimistic, though, especially for outdoor grown marijuana, which fetches a lower price than indoor, and especially for large producers moving multi-dozen or—hundred pound loads.”
While the newest number estimating California’s entry into the legal adult cannabis market could be overstated, there is no doubt that marijuana is already the state’s biggest cash crop, and it’s only going to get bigger.
Find out more on February 17th at the International Cannabis Business Conference in San Francisco, at the Hilton San Francisco Union Square. Join industry pioneers, leaders, investors and entrepreneurs who are forging the path of this exciting new trade enterprise.