NEW YORK (MainStreet) — Full legalization of marijuana across the U.S. is projected to be a larger success than the organic food industry, and if so Whole Foods could very well jump on the band wagon.
“It's possible that Whole Foods could be the Whole Foods of Cannabis,” said Troy Dayton, CEO of the ArcView Group.
When asked on a panel if Whole Foods would ever sell cannabis, Whole Foods CEO John Mackey reportedly said only if the plant was legal to use and the local community approved.
“John Mackey said he could definitely see a gourmet cannabis section at Whole Foods,” Dayton told MainStreet.
The 3rd ArcView State of Legal Marijuana Markets report found that if legalized nationwide, the marijuana market would surpass the $33.1 billion organic food industry by about $3 billion.
“I’ve studied the growth of the nutrition and the organic food industries for years,” said Patrick Rea, executive editor of the study. “I believe the cannabis industry will be an even bigger opportunity. Yet, there are risks associated with a fragmented and nascent industry that is growing so fast.”
The analysis further found that consumers purchased $370 million worth of cannabis products in 2014 in Colorado and Washington.
“States that already had medical cannabis laws but nascent or not yet open markets began to open and mature, such as Arizona,” said Dayton.
Arizona was the fastest growing major marijuana market last year, expanding from $35 million in sales in 2013 to $155 million in 2014.
“Most of the stores opened in 2014, and those that started in 2013 had a chance to have a full year of operation,” Dayton said.
The report predicts that 14 more states will legalize adult use, and two more states will legalize medical use in the next five years.
These new markets plus maturation of the existing markets will create a $10.8 billion annual market potential by 2019.
“With Oregon and Alaska coming on line soon and with the potential of six states including California going legal in 2016, legalization will be the largest driver of market growth going forward,” said Dayton.
Overall, the U.S. market for legal cannabis grew 74% to $2.7 billion and some $30 million per year in total goes to educational and political work for non-profits working on cannabis issues.
“Donations to the political effort have remained flat because of a sense of inevitability to legalization, but it will take more donations to actually win,” Dayton said.
Concentrates and various infused products are one of the biggest drivers of users shifting from the illicit market to the regulated market.
“That’s because they can get infused products that are unavailable in the illicit market,” said Dayton.
Among the national brands emerging in the industry according to ArcView are Open Vape, Dixie Elixirs and Bhang Chocolate.
“No big exits have occurred yet so people are investing in something where there is no track record of people making a lot of money on their investments,” Dayton said when asked about risks.
-Written for MainStreet by Juliette Fairley