U.S. Startups Jumping Headfirst Into the Marijuana Industry
The next great American gold rush is upon us. Vast, open land awaits the right eager businessperson to stake out their plot of land. This time, the gold is green -- and the products include plastic baggies, vaporizers and mobile apps.
Yes. The marijuana industry is where the opportunities are. (More coverage of the emerging industry from AOL Jobs contributor David Rheins.)
Those getting into the marijuana industry today are getting a leg up on the growing wave of competition. The New York Times recently covered the industry that is now receiving financial backing from several networks of investors that are ready to plunge millions into the industry. A concurrent Times editorial series called for the legalization of marijuana.
At this point, the widespread legalization of marijuana looks now to be more of a 'when' rather than an 'if'. Personal convictions aside, the numbers don't lie. Debates can arise over whether Colorado's decline in highway fatalities is enough to outweigh the bump in pot DUI arrests in legalized states. However, there is no debate when it comes to facts and figures; Americans love their marijuana.
In a 2014 United Nations Office on Drugs and Crime report, the United States ranks third in the world for marijuana use. With 14.8% of Americans using marijuana, the country is only behind Zambia (17.7%) and Iceland (18.3%) in consumption. In 2013, estimated American pot sales came in at about $1.5 billion. That is not a novelty figure. In fact, 2014's projection is expected to almost double to $2.6 billion. By 2018, $10 billion.
A successful businessman already, Garett Fortune, founder of FunkSac, became involved in the industry after seeing his brother use marijuana to reduce his nearly 30-pill-a-day combination to ease his terminal cancer pains, The Times reports. After his brother passed, Garett expanded his odorless waste bag business, OdorNo, to cover odorless, childproof marijuana baggies.
With a conviction for the industry and the acumen to capitalize on an industry need, FunkSac placed itself ahead of the rush. Now waiting government approval, the start-up already has orders from 17 of the 22 states currently allowed to distribute marijuana. Garett estimates that FunkSac already has hundreds of thousands of orders that should reach $2 million in first-year sales.
From pot connoisseur robots at dispensaries and hospitals (to answer all your questions) to marijuana strain databases that rival IMDB in industry depth, every facet of marijuana use is seemingly getting capitalized. Current products like smokeless vaporizers are receiving upgrades to become more sleek and burn quicker. Legal delivery services are becoming a regular occurrence as well. If full-scale legalization continues to approach reality, we are most likely not too far away from having a marijuana version of Seamless in most major cities.
The problem facing a national delivery service is what is facing the entire industry: legality. With each state varying, and the federal government continuing to identify it as a Class I drug, investors are often leery to get involved in a business that may not be able to expand beyond state lines for some time. Furthermore, banks are still hesitant to accept marijuana money, which causes a potentially risky money management system for all parties involved.
Even if an investor is interested, many larger companies are waiting to get involved. While the views on marijuana do seem to be shifting, there are still large amounts of Americans that believe marijuana is where it should be in terms of classification. These people are customers that large companies don't want to risk losing. Instead, that risk is coming from small businesses.
If profitability and legalization continues to trend up, big businesses may come calling soon.