Colorado became the first state to legalize recreational marijuana on January 1, 2014. Police in Denver have written just four marijuana citations with no major incidents, despite hour-long lines for days at the 40 or so locations selling the drug. Meanwhile, the 15% excise tax and 10% sales tax on marijuana sales could raise upward of $40 million per year, which has already been slated for school construction funding.
Colorado's law states that only retailers with existing licenses to sell medical marijuana will be permitted to setup shop to sell recreational marijuana over the next two years. However, there are a growing number of opportunities in ancillary businesses ranging from growing operations supplying those retail stores to small businesses that specialize in cooking cannabis-infused edibles, like canna-butter.
Several public companies have also capitalized on the industry's recent expansion. Advanced Cannabis Solutions Inc. (OTCBB: CANN) recently purchased a 5,000 square foot functioning cannabis grow facility in Pueblo County, Colorado that it intends to lease back to the growing operation in order to generate recurring rent revenue for its shareholder. The company plans to implement a similar strategy for other growers while providing a consulting services and grow-support solutions to its tenants.
While Advanced Cannabis Solutions and GrowLife are primarily focused on helping growers, companies like MedBox Inc. (OTCBB: MDBX) are focused on the retail side of the business. The company's automated dispensing systems sit in restricted areas within medical marijuana dispensaries and enable operators to dispense marijuana in a way that's transparent and compliant with the medical marijuana industry.
In aggregate, http://mmj-index.com/ projects that these companies have a market capitalization in excess of $2.6 billion with nearly 600 million shares traded per day. Currently, its Marijuana Index (TM) includes 12 publicly traded companies including the aforementioned firms as well as other pure-plays like HEMP Inc. (OTCBB: HEMP), Medical Marijuana Inc. (OTCBB: MJNA), and Cannabis Sciences Inc. (OTCBB: CBIS), among others.
The successful legalization of recreational cannabis in Colorado could set the stage for both increased medical marijuana and recreational marijuana efforts nationwide. Many experts predict that the next big move will be the legalization of medical cannabis in New York which would be a landmark event for a state with a long history of cracking down on the drug in the past. In the end, these efforts could set the stage for greater tax revenue for governments and high returns for investors willing to assume the risks associated with the young industry.