California is one of 11 US states to legalize recreational marijuana so far, but in terms of sheer scale, the Golden State dwarfs its competition.

In fact, the California marijuana market is the largest in North America. With a population of more than 39.5 million and a recreational cannabis industry that has only begun to establish itself, California represents the greatest opportunity for companies looking to carve out a place in the legal cannabis industry.

The California cannabis market brought in US$2.51 billion in sales in 2018, according to data by BDS Analytics, leading all other US states by a wide margin. California beat out second-place Colorado by a full 60 percent. As licensed California businesses continue to gain ground on the black market, the legal industry is expected to see further growth, with analysts like BDS Analytics projecting the state’s market to hit US$7.7 billion by 2021. As the fastest-growing segment of California’s cannabis industry, value-added cannabis products such as concentrates, extracts and edibles are expected to help drive this growth. Value-added cannabis products accounted for 39 percent of the state’s legal cannabis sales in 2018.

“The California market is undeniably massive in terms of population and total available market,” said Andrew Berman, CEO of Harborside (CSE:HBOR). “California also has amazingly rich terrain and micro-climates that are ideally suited to grow cannabis. In addition to the benefits of the landscape, the state also has a government that’s legislatively focused on developing and nurturing the industry.”

 

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California’s cannabis regulatory framework offers one key advantage not afforded in other legal cannabis jurisdictions like Washington state or Canada: the allowance of vertical integration. With some restrictions, California allows cannabis companies relative freedom to set up wholly-owned supply chains, distribution networks and retail storefronts. Vertically integrated cannabis companies are able to maximize the efficiency and cost-effectiveness of their operations, enabling easy scaling of their operations.

The California cannabis industry’s greatest asset is its climate. Conditions are ideal for cannabis cultivation due to the same factors that have made it so successful as a wine-making region. The state’s warm climate, rich soils and abundant sunlight all enable high-quality outdoor production viable at a low cost. California’s range of microclimates allows for the cultivation of a range of diverse strains within relatively close proximity, including the Emerald Triangle, where a warm climate mixes with a Pacific Ocean breeze to enable terpene-rich cannabis cultivation.

California’s Emerald Triangle has been the epicenter of United States cannabis culture for decades leading up to legalization. The plant’s roots in the state go back to the late 1950s and early 1960s, when Humboldt, Mendocino, and Trinity Counties became home to a thriving countercultural community. This cohort quickly discovered that the region provided the perfect growing conditions for high-quality outdoor cultivation, as well as a rough natural terrain that kept their crops safe from prying eyes. Throughout the 1960s, this high-quality cannabis spread throughout the state and beyond, creating California’s reputation for premium cannabis.

Like California’s wine industry, the state’s cannabis industry is set to complement one of its most important industries: tourism. The Golden State is visited by an average of 260 million tourists each year, who altogether spend an average of US$122 billion annually. Many of these tourists come from places without legal cannabis, giving California’s famous bud an obvious allure. Earlier recreational cannabis states like Colorado and Washington have already seen the rise of cannabis tourism, providing California with an opportunity to capitalize on two of its most famous industries. California’s thriving wine tourism industry currently generates US$7.2 billion each year. Just as visitors flock to the Napa Valley to tour vineyards and enjoy wine under the California sun, the Emerald Triangle is expected to attract tourists looking to enjoy California cannabis straight from the source.

California marijuana brands

Harborside is a cannabis company with deep roots in California’s cannabis culture and activism. Founded in 2006 by influential cannabis activists Steve DeAngelo and dress wedding, Harborside was one of the first licensees in California’s medical cannabis market. The company is vertically integrated with retail, production and cultivation operations throughout the state. As one of the most established cannabis companies in California, Harborside estimates that the company controls a three percent share of California’s retail market.

California marijuana offers one of the largest opportunities across the United States, and companies are working to carve out market share. Cannabis edibles company Nutritional High (CSE:EAT,OTCQB:SPLIF,FWB:2NU) has made establishing a dominant foothold in the state a top priority, acquiring California-based distribution company Calyx Brands. Vaporization specialist Orchid Ventures Inc. (CSE:ORCD) has already begun to capitalize on California’s lucrative market.

Takeaway

California has more to offer cannabis companies than any other legal jurisdiction. The state offers world-class growing conditions, a stable regulatory climate, a strong cannabis culture and the largest customer base in North America. With optimal growing conditions and a cannabis-friendly state government, California offers a unique opportunity for American cannabis companies aiming to establish their consumer base.


Disclaimer: This INNSpired article was written according to INN editorial standards to educate investors.

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