A new report finds that legal cannabis sales will continue to grow year over year. With $5.4 billion in sales in 2015, this year is expected to bring in $6.7 billion and $21.8 billion by 2020.
Crack all the stoner jokes you want, but America's homegrown marijuana industry is expected to bring in $6.7 billion in 2016, a new report estimates.
Across 23 states and Washington, D.C., recreational and medical sales have surpassed $5.4 billion in 2015, up from $4.6 billion the year before, according the fourth annual State of Legal Marijuana Markets report.
The ArcView Group, a cannabis investment and research firm, and New Frontier, a marijuana big data and analytics company, co-published the report, using data collected from government agencies, legal cannabis businesses, drug law reform advocates, and academic and medical institutions. The industry as a whole grew 30 percent year over year.
Adult use market sales, which is only recreational sales for anyone over 21, grew from $351 million in 2014 to $998 million in 2015, a 184 percent increase.
While marijuana is still illegal under federal law, legal medical marijuana markets have been opened across with Colorado, Washington, Oregon and Alaska opened recreational markets as well. Right now, 86 percent of Americans live in a state that allows some degree of legal cannabis use. A recent Gallup poll finds that 58 percent of Americans support legalization for adult use, up from 36 percent ten years ago. (A different poll by Harris found 81 percent of Americans support medical marijuana.)
The changing attitudes towards marijuana has given birth to the state-by-state legalization efforts that have brought a chunk of the industry from the black market into mainstream commerce. Colorado was the first state to legalize adult use in 2012 and its market has been open for only two years, bringing in $135 million in taxes from cannabis sales and license fees (up 77 percent from $76 million in 2014). In the next five years, Washington state expects to bring in $636 million to the state.
The members of ArcView's investor network invested $45 million into 66 companies in 2015. Last year also brought greater investments across the industry: country music artist Willie Nelson's cannabis company, Willie's Reserve, secured an undisclosed sum of private equity and Privateer Holdings, a cannabis investment firm backed by Peter Thiel's Founders Fund, raised $75 million to grow its companies, one of them being Marley Natural, which was formed with reggae star Bob Marley's living family members. Snoop Dogg, hip-hop artist-turned-investor-and-businessman, started pot-centric fund Casa Verde Capital with $25 million and also started his own marijuana brand named Leafs by Snoop.
The report says one of the major hurdles for the industry is banking. Due to the fact that marijuana is federally illegal, banks are apprehensive to serve marijuana and marijuana-related clients. The report found that only 30 percent of companies that touch the plant has a bank account while 51 percent of ancillary businesses have secured banking.
Looking ahead, the report says 2016 could be a big year for cannabis as seven more states could potentially legalize it: Arizona, California, Massachusetts, Maine, Nevada, Rhode Island and Vermont. Florida, Ohio, Missouri and Pennsylvania will vote on passing medical marijuana laws.
As more markets open up, demand is expected to rise 25 percent and the industry should hit $6.7 billion in sales this year. By 2020, nation-wide sales could reach $21.8 billion, the report says.
One of the major challenges that comes with this rapid growth, and one begging for an innovative startup to fix, is the industry's electricity consumption. The marijuana industry is most energy intensive agricultural crop produced in the U.S., the report finds. Growing cannabis indoors consumes one percent of the nation's electricity. To put that into perspective, one percent is equivalent to 1.7 million homes and costs $6 billion a year.
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Legal marijuana sales, dispensaries around the US, recreational and medical
Legal cannabis sales to hit $6.7 billion in 2016
The dispensary area at Columbia Care, one of New York City's first medicinal marijuana dispensaries, is seen, Wednesday, Jan. 6, 2016, in New York. New Yorkers with cancer, AIDS, Parkinson's disease or other qualifying conditions will be able to obtain medical marijuana as early as Thursday, 18 months after lawmakers passed what is considered one of the strictest medical cannabis programs in the nation. (AP Photo/Mary Altaffer)
In this Tuesday, Oct. 20, 2015 photo, cookbooks for use with marijuana are available inside of Salveo Health and Wellness, a licensed medical cannabis dispensary, in Canton, Ill. (AP Photo/Seth Perlman)
A sample of cannabis is shown in a sniffer at Shango Premium Cannabis, in Portland , Ore., Thursday, Oct. 1, 2015. Oregon marijuana stores have begun sales to recreational users, marking a big day for the budding pot industry in the state. Some of the more than 250 dispensaries in Oregon that already offer medical marijuana opened their doors early Thursday to begin selling the drug just moments after it became legal to do so. (AP Photo/Timothy J. Gonzalez)
NEW YORK, NY - JANUARY 07: A man leaves Columbia Care, the first medical marijuana dispensary in New York City on January 7, 2016 in New York City. The law allowing medical marijuana was signed by Governor Andrew Cuomo in 2014; the law stipulates that the legal marijuana may not be ingested by smoking it. (Photo by Andrew Burton/Getty Images)
Corey Young, a founder of courier service CannaRabbit LLC, picks up a delivery of marijuana from a dispensary as part of a wholesale transfer in Denver, Colorado, U.S., on Friday, March 27, 2015. CannaRabbit and peers are rushing in as regional truckers and nationwide haulers United Parcel Service Inc. and FedEx Corp. steer clear of transporting marijuana on concerns over the lack of nationwide clearance of a practice that is still illegal in most states. Photographer: Matthew Staver/Bloomberg via Getty Images
WASHINGTON, DC - MARCH 8: Takoma Wellness Center is a family run medical marijuana dispensary in Washington, DC. Employee, David Malpica, sets up the dispensary room before business hours on Sunday, March 8, 2015. (Sarah L. Voisin/The Washington Post via Getty Images)
Marijuana sits on a counter after being delivered to a dispensary by the courier service CannaRabbit LLC in Louisville, Colorado, U.S., on Friday, March 27, 2015. CannaRabbit and peers are rushing in as regional truckers and nationwide haulers United Parcel Service Inc. and FedEx Corp. steer clear of transporting marijuana on concerns over the lack of nationwide clearance of a practice that is still illegal in most states. Photographer: Matthew Staver/Bloomberg via Getty Images
LOS ANGELES, CA JULY 05, 2014 --- Shoppers lined up at one of many pot vendors stall at cannabis farmers market organized by California Heritage Market at West Coast Collective, a marijuana dispensary in Boyle Heights. (Photo by Irfan Khan/Los Angeles Times via Getty Images)
Vendors and growers prepare their displays for card-carrying medical marijuana patients attending Los Angeles' first-ever cannabis farmer's market at the West Coast Collective medical marijuana dispensary, on the fourth of July, or Independence Day, in Los Angeles, California on July 4, 2014 where organizer's of the 3-day event plan to showcase high quality cannabis from growers and vendors throughout the state. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Containers of the medical marijuana product known as 'Wax' are displayed at Los Angeles' first-ever cannabis farmer's market at the West Coast Collective medical marijuana dispensary, on the fourth of July, or Independence Day, in Los Angeles, California on July 4, 2014 where organizer's of the 3-day event plan to showcase high quality cannabis from growers and vendors throughout the state. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Customers wait in line early in the morning at Amazon Organics, a pot dispensary in Eugene, Ore., to purchase recreational marijuana on Thursday, Oct. 1, 2015. Oregon marijuana shops began selling marijuana Thursday for the first time to recreational users who are at least 21 years old, marking a big day for the budding pot industry. (AP Photo/Ryan Kang)
In this Oct. 20, 2015 photo, Shamay Flaharty, of Lewiston, Ill., who has multiple sclerosis and is hoping cannabis will help ease her pain and headaches, leaves with Eric Sweatt, partner and manager of Salveo Health and Wellness, a licensed medical cannabis dispensary, in Canton, Ill. Illinois will begin its first medical marijuana sales within the next two weeks. (AP Photo/Seth Perlman)
In this Wednesday, July 29, 2015 photo A.J. Lessa, of Cumberland, R.I., a patient advisor at the Thomas C. Slater Compassion Center, arranges marijuana products in a display case at the center in Providence, R.I. Rhode Island officials say revenues from taxing and regulating medical marijuana have been lower than projected in the two years that dispensaries have been legal. (AP Photo/Steven Senne)
This photo taken March 28, 2014 shows Cherry City Compassion, a medical marijuana store in Salem, Ore. Until now, medical pot shops have operated in a gray area. That's changed under a law passed last year that legalizes medical marijuana dispensaries so long as they apply for and are granted a license. (AP Photo/Chad Garland)
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As the industry grows and more black markets become legitimate state-by-state, entrepreneurs will find more and more opportunity.
"Many in the business and financial sector have taken a 'wait and see' approach to the legal cannabis industry," says Troy Dayton, CEO of The ArcView Group. "The new data confirms what pioneer investors and entrepreneurs suspected. Legalization of cannabis is one of greatest business opportunities of our time and it's still early enough to see huge growth."