By now everyone in the booming cannabis industry ($7.1 billion this year, up 26 percent YOY) (http://nnw.fm/fOIJ9) has had a chance to react to the seemingly depressing DEA decision announced August 10 to not downlist marijuana from Schedule I (http://nnw.fm/3FEl5). Contrary to popular opinion though, the story is actually a positive one, which not only shows that the DEA is indeed moving in the indicated downlist direction (while focusing more heavily on important, actual problems like the opioid epidemic), but which was followed up only days later by a landmark ruling (http://nnw.fm/q9oMw) from the nation’s largest federal appeals court (9th Circuit). The unanimous ruling is a very clear indicator of the actual industry vector moving forward, which is dominated by sovereign states that are increasingly gravitating to the decriminalization camp (with their eyes on the fat tax revenues), and the DEA’s unambiguous position about letting states basically run the football on this issue.
All across the country brilliant entrepreneurs can read the proverbial hand writing on the wall and are doubling down on the future of this industry. In such eras, the contrarians, the people who have the vision and courage to see past antiquated modalities and recognize unserved market demand/opportunity – who have the right stuff to help foster an entire yet-nascent industry – are the names and brands that will be remembered by future generations. One such company is Arizona-based, privately-owned YiLoLife, Inc., which cut its teeth in the middle market as a highly successful supplier before recently opening a gorgeous new brick and mortar location in northern Phoenix, the MMJ YiLo Superstore.
The company has risen to prominence in a very short time, winning the accolades of MMJ patients in Arizona on account of its high quality selection of buds and flowers, as well as a growing menu of delicious infused edibles and beverages. YiLoLife has put its money where its vision is, too, committing $200,000 out of its own war chest to assist the Campaign to Regulate Marijuana Like Alcohol’s push for ballot access on the decriminalization issue. And as we go to the polls here in November, Arizonans have a very clear choice put before them in the form of Prop 205, which would transform an historically black market into a cash cow – a cash cow that would fund schools and facilitate more valuable law enforcement activities.
The DOJ cannot prosecute (spend funds) MMJ (medical marijuana) patients and providers according to the new ruling, so long as compliance with state law is maintained, even if said parties are violating federal cannabis laws. Pause for a moment and really let that sink in. This ruling takes a massive amount of heat off the equation and will allow venture capital to flow into the industry, easing fears that investments will be raided by the feds. And while you are reflecting on this, take the time to consider how fertile the soil in certain states has become for going beyond MMJ into legalization, states like Nevada and California. If the readily observable state-driven trend continues, we could be looking at a $44 billion industry by 2020, according to some estimates (http://nnw.fm/45lI2).
It is game on, folks. Whichever POTUS takes office in January, you can bet your bottom dollar we will see forward momentum in the cannabis sector, as both leading candidates have expressed compassionate stances on the issue. Many, many cash-strapped state budget planners, such as those in Arizona who are currently trying to tackle the new $9.6 billion budget (http://nnw.fm/zDNc9) ($9.1 billion last year) signed by Governor Ducey in May, will undoubtedly have an eye toward the financial successes of legalization in states such as Colorado. The Arizona state legislature’s Finance Advisory Committee, projects a $520 million deficit this fiscal year, with a budget shortfall similar to last year’s at around $1 billion. It just so happens that Colorado, which has already legalized and taxed marijuana, took in just a few million shy of exactly that same Arizona budget shortfall figure (http://nnw.fm/x0yIh). At any rate, Arizona lawmakers are hungrily looking at Colorado’s $135 million in taxes and license fees collected last year from legal cannabis sales (up a whopping 78 percent YOY), where sales were up 42 percent compared to 2014.
Current projections (http://nnw.fm/i7HKu) by the Arizona’s Joint Legislative Budget Committee indicate that legalization could result in around $53 million of additional tax and licensing revenue in FY19 and $82 million the year after (calculated using a 15 percent sales tax), with an additional $42 million just from normal taxes collected on the sales. According to this projection, that is nearly $28 million that would be earmarked for K-12 schools, and nearly $29 million for full-day kindergarten capabilities in 2020.
For more information, visit www.yilo.com