California Recreational Marijuana Could Be $6 Billion Industry

shutterstock 44678827
shutterstock 44678827

If voters pass Prop 64, California recreational marijuana could become a $6 billion industry by 2020.

ArcView Market Research’s report predicts that California recreational marijuana would generate $1.6 billion in revenue in its first year alone.

Proposition 64, if passed, would legalize the recreational use of marijuana for adults over the age of 21.  The law would also set packaging, labeling, and advertising standards for the marijuana industry. A 15% excise tax would go into effect as well as a cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce of leaves.


A similar measure failed with voters in 2010.  However, recent polling indicates that approximately 64% of respondents support legalizing recreational marijuana in California. Prop 64’s passage is not a guarantee as there is a strong campaign against the initiative.

Even without recreational marijuana, California accounts for close to half of the legal marijuana market.  Prop 64’s passage would create a much larger market in the Golden State.

“We think the activation of the adult-use market in California will undoubtedly make California the new epicenter in cannabis,” said John Kagia, executive vice president of the cannabis analytics company New Frontier.

With the tax revenues for other states outperforming analysts’ projections, California may take in more money than the current projections.  This could be very useful in trying to provide needed services to state residents.

Despite the state’s reputation for loose medical marijuana laws, Kagia believes that California can actually conduct a recreational system better than Washington and Colorado.

“There’s going to be a professionalism of the industry, an emphasis on innovation once the market is legal in California that will dramatically accelerate the industry in a way that legalization [efforts] in Colorado and Washington haven’t been able to do,” Kagia said.

As the most populous state in the country, California could drive others to adopt recreational marijuana programs.  Four other states will also be voting on legalizing recreational marijuana, and three others will vote on medical marijuana in November.