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The Green Gold Rush 

Keeps on Rushing

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Legal cannabis could be America's fastest growing industry. Americans bought $4.6 billion worth of legal cannabis in 2014, $5.4 billion in 2015, and this year, Americans are expected to spend $6.7 billion on legal cannabis. See where this is going? Sales are expected to hit $21.8 billion just four years from now, in 2020.

Nonmedical adult use sales – so-called recreational use – more than doubled from 2014 to 2015, from $351 million to $998 million. The Oregon Liquor Control Commission's impending licensure of recreational cannabis stores later this year should help ensure another huge jump in recreational sales for 2016.

These forecasts are estimates provided by two cannabis investment firms: ArcView Group in San Francisco and New Frontier Data in Washington, DC. They are based on state tax receipts and sales data from cannabis businesses. The Wall Street crowd is all atwitter.

According to CNNMoney, there are already dozens of publicly traded pot stocks. With the emergence of national cannabis brands, several are ready to immediately move into potential new markets such as California and Massachusetts. Clearly, cannabis is going corporate.

This year may be the tipping point in legalization. Already, 86 percent of Americans live in states with some form of legal use. This year, seven states are considering legalization of medicinal or recreational use. Several other states have sent officials on listening tours to places such as Colorado with the goal of bringing back recommendations on legalization legislation.

The industry faces some unique challenges. The two most immediate challenges are the higher tax rates and restricted access to banking services, issues that Oregon Rep. Earl Blumenauer has championed in Congress. In addition, the possibility of a policy change toward cannabis after the presidential election and potentially industry-stopping litigation before the Supreme Court loom large over the industry for some investors.

However, as best as anyone can tell, legal cannabis sales are rapidly catching up to illegal cannabis. In 2012, experts estimated illegal sales to total between $15 to $30 billion in the United States. If legalization is to be a success, the volume of illegal sales will need to drop as legal sales climb. The next presidential administration will likely undertake a detailed analysis of this issue to inform the ongoing legalization conversation at the federal level.

Despite soaring adult cannabis sales, teen cannabis use is down slightly over the past five years. That's according to the 2015 Monitoring the Future Survey, which is a nationwide survey of 8th, 10th, and 12th graders conducted yearly by the University of Michigan and the National Institute on Drug Abuse. This contradicts claims by members of Congress such as Rep. Andy Harris (R- Maryland), who said last year that "relaxing [cannabis] laws clearly leads to more teenage drug use."

The nascent cannabis industry is still in the early days of legalization, but these numbers show an underestimated demand and a large existing market with no manifest down side.

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