Legal Marijuana Industry

Patrice Boston, Eric Steinbrunner, Matthew McDaniel, Elizabeth Duffey

Marijuana Industry Timeline

1800s

1930

1937:

1996:

1998:

2010:

2012:

Marijuana herbal extract for pharmaceuticals

States begin to outlaw marijuana

Federal government outlaws completely

Proposition 215 passes in California (medical)

Alaska, Washington, and Oregon follow

Proposition 19 declined in California

Colorado and Washington

(Graph, 2012)

States with Legalized Marijuana

Recreational UseColorado

• Amendment Number 64

• Regulated the same way as alcohol

• Must be 21 up to consume

• Commercial cultivation, manufacture, and sale of marijuana

Washington• Initiative Number 502

• One ounce or less if over 21

• Board meeting on licensing arrangements

• December 2013

(Peterson, 2013)

Porter’s Five Forces

(Porter, 1979)

Our Proposed Strategy on Industry Structure

• Industry leaders and foundation

• The general population and advocacy groups involved

• Government regulation

• Suppliers/Consumers of recreational marijuana

• Potential earnings

Industry Leaders

Vincent Keber, CEO Dixie Elixirs & Edibles

Jason Levin, Founder UpToke

Steve DeAngelo, President at Arcview Investment Network

Advocacy• National Organization for the Reform of Marijuana

Laws (NORML)

• Marijuana Policy Projecto Strategic Plan

Opponents

http://www.rollingstone.com/politics/news/legalizations-biggest-enemies-20130117

Public-At-Large

http://www.brookings.edu/research/interactives/2013/politics-of-marijuana-legalization

Government Regulations

The Wall Street Journal, “The Pot Business Suffers Growing Pains” April 22, 2013

Company Regulations

PepsiCo.com Distributioncenterjobs.com

Phillipsmachines.com

Suppliers

www.wbcsd.org

www.theatlantic.com

https://www.marlboro.com/

Show Me the Money

http://www.weedist.com/2012/07/wasted-potential-infographic/

Recreational Marijuana Comparisons

Tobac

co

Alcoho

l

Rec

reat

iona

l Mar

ijuan

a0

10

20

30

40

50

60

70

State/Local Taxes

Series1

Tobacco/Alcohol based on 2011 RevenuesRecreational Marijuana based on Projected

Revenues

Mil

lion

s

43.8

130.6

60

Users in Millions

tobaccoalcoholmarijuana

43.8

130.6

25

Users in Millions

tobaccoalcoholmarijuana

• “It’s time for the government to transfer money from organized crime to the public purse.” Stephen Easton, Frazier Inst. (2009)

Sales Potential

10111213141516171819200

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

Projections/25,000,000 Consumers

1 gram2 grams3 grams4 grams5 grams

Selling Price/ $ Dollars

Revenue/ $ Dollars

10 12 14 16 18 200

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

7,000,000,000

Projections/60,000,000 Consumers

1 gram2 grams3 grams4 grams5 grams

Selling Price/ $ Dollars

Revenue/ $ Dollars

• 2011 US alcoholic drink industry revenue:163.5 billion

• 2012 US tobacco industry revenue:

35 billion

• Cost of production for one gram of marijuana: 10cents (same as one gram of tobacco)

• Experts believe selling price of the regulated marijuana industry will need to stay at or below street value to decrease alternative means of purchasing.

Five Year Development Plan

• Year 1: Federal De-Regulation. • Year 2: State policies start to form. Only

boutique marijuana will only be around.• Year 3: Commercial manufacturing will start to

take place. Revenues est. $100 million.• Year 4: Advertising and marketing will begin.

Revenues est. $1 Billion.• Year 5: Companies start to form strategic

alliances to maximize profits: Revenues est. $5-9 Billion.

Questions?

Additional SourcesNORML.org//whitehousedrugpolicy.gov//drugabuse.gov//fibi.gov//usdoj.gov//Budgetary Implications of Marijuana Prohibitionshttp://www.businessweek.com/debateroom/archives/2010/03/legalize_marijuana_for_tax_revenue.htmlhttp://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=399http://alcoholism.about.com/od/faq/f/How-Many-People-Drink-Alcohol-In-The-U-S.htmhttp://www.cancer.org/cancer/cancercauses/tobaccocancer/questionsaboutsmokingtobaccoandhealth/questions-about-smoking-tobacco-and-health-how-many-usehttp://seekingalpha.com/article/1259221-identifying-the-gem-of-the-tobacco-industryNORML.orgMPP.orgBrookings.Edu