There’s a new product out there that has risen remarkably from $4.6 billion in sales in 2014 to $5.4 billion in 2015. Those 2015 numbers mean legal medicinal and recreational sales of this product were higher than those of Girl Scout Cookies, Pringles, and Oreos combined.
The size of the market is projected to grow to $7.1 billion in 2016, according to a report by New Frontier and ArcView Market Research. And a number of celebrity endorsers have invested to try and get their piece of the pie, including Calvin Broadus (aka Snoop Dogg), Nick Lachey, and Willie Nelson.
Yes, the legal marijuana market is on fire, and rolling up profits left and right. The states that have legalized marijuana are seeing big increases in new tax dollars—like the almost $70 million collected by Colorado in the 2014-2015 fiscal year.
Old rules about weed are also going up in smoke.
The US federal government may still regard marijuana as illegal, but today four states — Alaska, Washington, Oregon and Colorado, along with the District of Columbia— have legalized pot for recreational use. This is in addition to the laws in 25 states which allow the use of marijuana for medicinal purposes.
As more and more marijuana is grown and sold legally across America, more and more money is invested — creating returns that the investors hope will grow like, well, er, weeds. And not only money, but technology is being added to the business strategy mix by the pot entrepreneurs.
Jordan McHugh is the co-founder of Best Buds, a Denver-based marijuana dispensary. He is actively searching for investors to help get his mapping service (think: MapQuest or Google Maps) improved, which can link those searching for particular strains of both recreational and medical marijuana to a particular dispensary near them. His goal is to bring three software developers in-house rather than outsourcing the code development in order to keep not only the technology, but more of the profits in-house as well.
Flow Kana, founded by Michael Steinmetz, is building a sustainable, sun-grown cannabis brand emphasizing craft farmers who are developing small batch boutique strains of marijuana. It’s the same “farm to table” concept being touted by producers and embraced by consumers of fruits and vegetables, simply applied to a new agricultural product. If you are within the delivery area, you can place an order from your laptop, iPhone, tablet, Android, etc. and in 30 minutes or so receive your choice of cannabis delivered direct to your door: that’s quite a bit faster than Amazon Prime.
There’s even a marijuana-themed online game: Grow Show allows players to compete against each other to cultivate the ultimate strain of digital cannabis. “The industry is trying to get away from the burnout images of losers at home,” says Brian MacKay of Grey Zone Entertainment, the developer of the game. And this kind of interactive technology may be just the way to do it. It could help move the concept of growing virtual pot to the same level of mainstream culture as the ubiquitous “Farmville” game your mom and friends are using to grow virtual corn and pigs online.
Not only are those interested in the marijuana market pushing to shift the current perception of their product to appeal to wider audiences, they’re also investing time and technology to try and anticipate the future of the industry.
Monthly magazine High Times has recently partnered with Omnicom Group’s trends research organization sparks & honey, to cast a wider net – trying to determine what current consumers are thinking and where the market may be headed. Sparks & honey interviewed industry experts – including High Times – and 1,000 people who had tried marijuana at least once (while living in a state where pot is legal, of course). They also used “social listening tools” to track how consumer’s perception of pot is changing.
With this information, sparks & honey created a report designed to help those wishing to enter (or increase their share in) the market.
“The report (was) really focused on identifying where culture is moving and how you can talk authentically and organically to a group of consumers who are going to be looking at marijuana in new and different ways,” said High Times Chief Revenue Officer Matt Stang. The goal is to help brands better engage with their audience through strategy and branding.
Among some of the interesting findings is that marijuana seems to be ready to grow in some very unexpected ways: into industries and market segments that go far beyond the stereotypical image of couches and Cheetos.
And Snoop Dogg is already following the scent of marijuana money. Snoop’s avowed goal is to be the “Martha Stewart of weed,”– bringing pot into the realm of “good things”.
The rapper’s new website MERRY JANE was established to help him achieve that goal.
Certainly you can find an assortment of smoking accessories ready for purchase, but for the homemaker that prefers to create his or her own? How about carving a pumpkin into a seasonally appropriate water pipe? Having a party for some fellow cannabis enthusiasts? Just grill up some marijuana-infused salmon—you’ll get more than just healthy Omega 3 oils!
Snoop isn’t in the project alone: Jim Baudino, vice president of business development at MERRY JANE, said, “Over 70 percent of millennials favor marijuana legalization, and we want to continue to inform people that cannabis is the thread that ties this generation together. It’s something we want to celebrate.”
The money is big, and the data points to even bigger potential. Not surprisingly, the Colorado Department of Revenue has taken an interest and developed its own report about the variables in the marijuana market. The report is very detailed with questions of marketing potency and what forms of cannabis are ‘equivalent’ to buyers, but one basic takeaway was:
The legal marijuana market works just like other markets.
Technical market analysis and data-gathering is the means that the Colorado government uses to ensure there is no ‘diversion’ from legal growing and selling processes. A company called METRC has created software and “intelligent” systems at the government’s request to track and monitor production and inventory from ‘seed to sale’. One of their strategies is to use RFID (radio frequency identification) to monitor the supply chain – shielding the sometimes fragile product from too much handling while efficiently gathering accurate data.
Sophisticated technology? Yup. Extensive data gathering andanalysis? Absolutely. Even though this is a controversial industry that operates in a somewhat shadowland legal environment (for the moment), the marijuana market is not unique. It operates like many other markets and businesses. And it’s just more proof of how essential cutting-edge tools and reporting is to business, any kind of business.
No matter what it is that you do, no matter what the size your business, and no matter what market you’re trying to enter or grow your presence in — you too can benefit from collecting data, analyzing trends, and using the latest technology. Change happens quickly, and sometimes it takes looking at a non-traditional market that is growing rapidly to see just how important technology and data can be.
If you are ready to grow your business to the next level, you should know about 5i Solutions, Inc.
5i custom-tailors technology solutions to your business environment, current workflows, and staffing levels. You can ensure that you are always looking at the latest version of each and every document, and the most up-to-date information important to your business. Track every change along your own supply line. Make sure you’re in the loop as environments and markets move in new and/or unexpected directions. We can keep data at your fingertips while meeting the regulations and security standards that may be required in your state, and allow you to be flexible if those regulations change. Let technology and data help you roll with the times and reach out for your piece of the Oreo, ahem, pie.
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