If California voters legalize recreational marijuana this November, the state's legal market is projected to be worth nearly $6.5 billion by 2020, according to a market research report released this month by data firms New Frontier and Arcview Market Research.
That would make the Golden State's recreational cannabis industry bigger than the GDP of dozens of other countries, according to the CIA World Factbook. The list includes Monaco, Suriname, Somalia and Fiji. And the projected figure doesn't include the California's medical marijuana market, which the report says would be worth approximately $2.53 billion in 2020. Combined, the industries would top the GDP of Haiti.
It's no surprise that California will become the world's largest marijuana industry given that the Emerald Triangle - the northern region of the state that includes the counties of Humboldt and Mendocino counties - is already the top cannabis-producing region in the world, according to the report. Still, the estimated value of the market is staggering.
The figure, of course, is based on a lot of variables, including the introduction of pot cafes, cannabis fitness clubs and other venues that allow semi-public consumption. The estimated value also depends on the success of delivery services broadening consumer access to marijuana by dropping off orders at their homes.
Steve DeAngelo predicts a steep price drop
So will the numbers pan out? It's too early to say, but Steve DeAngelo - one of America's foremost cannabis advocates and entrepreneurs - poured a bit of cold water on the projections in an interview conducted for the report. He predicts that legalization will see a steep drop in the price of cannabis in California.
"I think that anybody not incorporating significant price reductions into their business plans over the next several years is going to be suffering a lot of pain," DeAngelo told New Frontier. "There is no doubt that in California, we will see, like we have seen in other legal markets like Colorado, a very significant drop in the price of cannabis. I think that is going to happen."
But DeAngelo isn't opposed to the price drop.
"I think that it is a very good thing to happen. If you talk to most medical cannabis patients and ask them what their biggest problems with cannabis are, they will tell you the price."
However, losses stemming from the price drop could be offset if the industry opens up to interstate markets. Right now, Colorado, Oregon and the other states with recreational marijuana regimes cannot legally sell cannabis to each other. But if future reforms in America's marijuana laws opened up trade, the demand for California's legendary cannabis from out-of-state consumers could be another boon for the Golden State's industry.
But the real question is whether or not legalization will pass. "I think the cards could fall either way," Hezekiah Allen - Executive Director of the Emerald Growers Association - told New Frontier.
"I think California is more than ready to end prohibition. A strong majority of people are ready to see an end to prohibition and an end to the war on drugs. Unfortunately, this is outside of the interests with deep pockets running an initiative that stands in the face of a relatively popular state legislature."
So the issue might come down to whether or not the pro-legalizers can out-maneuver prohibitionists leading up to Election Day 2016.