Another item to add to the list of disrupters we discuss in class- the cannabis industry. Although federally it’s not legal, certain states have moved forward with approving it’s for medical and/or recreational use. It’s hard to deny the potential economic benefit. In the first month that Nevada legalized the substance they generated more than $3.5 million in tax revenue. It’s projected that that will grow to $120 million over two years. It’s amazing how allowing legalization such as this opened a revenue channel that simply did not exist beforehand!
Startups and investors have been quick to realize the untapped potential of the market. In states where there is legalization brick and mortar recreation shops, medical dispensaries, delivery services, and web services have been popping up constantly. Leafly, a Seattle startup, is like a Yelp for marijuana. Users go on the site to rate both shops and products they have used. The company makes revenue through advertisement sales. It generates more than 13 million unique visitors per month — 75 percent come from the U.S., with 25 percent abroad. Leafly has even expanded with a German- language version as well as adding more news/lifestyle content to the site. Delivery companies like Eaze’s just received $27 million in investment capital. We are seeing a huge influence of technology in this sector. It’s no surprise that tech venture capitalists are getting in on the fun. This collaboration between tech and service is a big win for customers of the industry.
With any disrupter there is bound to be some roadblocks. Similar to Uber/Lyft going into new states and cities there are certainly some legal barriers to the cannabis entry given the grey area between state vs federal law. There are also high costs associated with being in this business. In the State where legal there are strict rules and regulations for the growing and maintaining the farms which grow the production. The shops pay an extremely high amount of taxes to be in business. Nonetheless those in business successfully are seeing the benefits. Customers are willing to pay the higher prices than black market prices. This is because of the service they receive in stores/online, the vast amount of options available, and having confidence in the safety and purity of their purchase. I am excited to see the legalization rollout in other states as the economic benefits is more than there. Simply given this substance the green light has led to a new disruptive industry (pun was definitely intended)!
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