NEW YORK (MainStreet) — Retail marijuana industry sales could reach $21 billion by 2020, and combined sales for medical and adult use could total $35 billion once marijuana is legally sold in all states, including the District of Columbia, according to a new study. But the cannabis industry a long way to go to catch up to other sin substances.

“The horse has left the stable, and by 2016 there will be even more favorable economic impact resulting from legalization, such as tax revenues and job creation,” said Matt Karnes, author of the study and managing partner with GreenWave Advisors.

The GreenWave Report, "State of the Emerging Marijuana Industry," also found that if Florida residents vote to legalize medical marijuana on November 4, the state could rake in an estimated $260 million in 2016 and $1.3 billion by 2020.

We want investors to be ready for the imminent changes that will profoundly impact investment strategies in the marijuana industry,” Karnes told MainStreet.

Those imminent changes include rescheduling by the Drug Enforcement Agency (DEA) and the Controlled Substances Act (CSA).

“These changes will have significant impact because banking regulations will be less restrictive, allow easier access to capital and businesses will be able to take tax deductions for operating expenses that are disallowed under current law,” Karnes said.

Federal legalization is expected to further enable industry maturation over time.

“What we don't know is how much of the business and projections are simply revenues from the illicit market shifting to the legal market and how much new growth there will be predicated on the maturation of the industry and product,” said Adam Laufer, co-CEO with MJ Holdings (MJNE), an investment firm that finances dispensaries and grow facilities.

Distribution and convenience of purchase are important factors in the growth of an industry, and cannabis has nowhere near the distribution of alcohol and tobacco, which are available for purchase at hundreds of thousands of locations. Still as the cannabis product matures, the industry will broaden and mature.

“Maturation of the industry has to do with market penetration, saturation and logistics, whereas maturation of the product relates to product engineering, ease of use, reliability and dependability as it relates to dosage, consistency of quality and user experience,” said Laufer.

In the meantime, at a projected $35 billion, marijuana has a long way to go to catch up with current sales of spirits, beer, wine and cigarettes.

“Marijuana products are not currently designed, engineered, packaged and marketed for the mass market,” Laufer told MainStreet. “Unless and until marijuana is treated as a peer to alcohol and tobacco under the law, the products with more markets and fewer regulations will always have an advantage.”

Annual sales revenues in 2013 for liquor was an estimated $72 billion compared to $293 billion for cigarettes, $28.9 billion for wine and $96 billion for beer, according to Karnes’s GreenWave study.

“The proliferation of pre-packaged, ready to consume cannabis products with reduced levels of THC would likely result in the eventual increased consumption and higher revenues comparable to the tobacco industry,” Laufer said.

--Written by Juliette Fairley for MainStreet