8 Things Every American Should know about the Cannabis Industry

The western world has been on a steady roll towards drug legalization lately, with Canada being the latest country to legalize marijuana for recreational purposes. The US, however, was the first country in North America where marijuana could be bought legally for recreational purposes. But much is still unknown about the cannabis industry and many people still don’t realize how big it is at the moment. In this article, we’re going to give you a few facts every American should know about the marijuana industry and its repercussions.

Marijuana is Legal in About 50 Percent of the Country

Many may not realize it, but marijuana and its derivatives are legal in about 50 percent of the country in one shape or another. The first state to legalize marijuana for medical purposes was California over 20 years ago and 28 states have followed suit since then, with a handful completely legalizing it for both medical and recreational purposes.

Cannabis is Still a Schedule I Drug at the Federal Level

While tons of research has proven that legalizing marijuana at the national level would bring tons of money into the country’s economy (about 10 billion in extra tax revenue to be exact), cannabis is still considered a schedule I drug. This means that marijuana is still considered a substance with high chances of abuse and little redeemable medical properties.

What this also means is that marijuana still falls under tax code 208e, which was introduced by Ronald Reagan during the war on drugs era. The code was passed after a convicted drug kingpin tried to get deductions on some of the expenses related to his drug running operation. The code was created specifically to prevent future drug dealers from doing the same.

Under this code, people in the cannabis industry cannot deduct things like wages from their total income due to marijuana’s legal status at the federal level. However, they can still claim deductions on any costs related to actually buying and selling the cannabis. This includes things like inventory, any costs related to growing or buying weed, and shipping costs, for instance.

That’s why people who wish to get in the marijuana industry will need to get familiar with the tax code first if they want to avoid penalties. If you want to learn more about tax code 208e and what it means for you as a marijuana-related business owner, click here to learn more.

Crime Rates have Gone Down Following Legalization

While data still needs to be collected on this, it seems that there was a trend towards less crime in at least one state where marijuana was legalized for recreational purposes; Colorado. Research shows that the total number of burglaries saw a 10 percent decrease and that robberies decreased by three percent after recreational marijuana was legalized in the state. However, there was an increase in convictions related to public drug use due to a misunderstanding of the laws and stringent reinforcement from the local police.

There are Still Black Markets Operating

While the goal of legalizing marijuana was, in part, to stop black markets, there is still an underground market for marijuana. While the majority of marijuana sold in Colorado is done completely legally, there is still a considerable portion that is traded off the books. Many blame the heavy taxation for this demand.

Breeders are Pushing Innovation in the Sector

Even if humans started using and trading marijuana since 2700 BC, the plant is still very much being experimented on. And breeders are at the forefront of the innovations we are seeing in the industry. Breeders study and try to combine different strains of marijuana to come up with more potent and specialized strains.

The Market is Booming Like Crazy

While some have stated that they think that the industry is in a speculative bubble, there are hardcore numbers to back it up. A report that was released in 2013 showed that the industry nearly doubled from 2013 to 2014. The US market had over 10 billion sales in 2017 alone and it is projected that the global market for marijuana will soon be hitting the 3.14 billion mark soon.

Medical Marijuana is Still Bigger than Recreational Marijuana

While much has been said about legalization for recreational purposes, most of the sales are still at the medical level. However, this isn’t going to remain like this for long. As a matter of fact, it is estimated that the US medical industry will hit over 22 billion in total revenue by the year 2021 and should surpass medical marijuana sales as early as next year.

One of the many reasons behind this phenomenon is cost. Even if medical marijuana users can now access bigger and better dispensaries with a wider selection of products, they still stick with medical dispensaries because they get a variety of discounts. Also, in states like Colorado, the state tax is completely waived on medical marijuana. California medical users also don’t have to pay state tax on marijuana. These tax cuts could add up to 20 percent discounts in some cases, which continues to push the demand.

Dispensaries are Bigger than McDonald’s in Some Areas

The amount of dispensaries in legalized states is so high that they are surpassing Starbucks locations – and even McDonald’s in some states. There were so many dispensaries open in Los Angeles that the city seriously considered the idea of banning them in 2009. As a matter of fact, the city had nearly one thousand dispensaries during the period. Colorado, the other big legal marijuana state, had more people working in the cannabis industry than employed in law enforcement.


The marijuana industry brings with it tons of new opportunities, investors, and challenges. We still don’t know or completely understand what kind of effect legalization will have on the economy as a whole, but one thing is for sure, and that is that the market is showing no signs of slowing down.

What Next?

Recent Articles