The State of Marijuana in California for 2016
So as it turns out, some of our journalists are out there in the field this week doing some more boots-on-the-ground research in the Pacific Northwest on the commercial “marijuana industry“. We’re finding it quite hard to wrap our heads around this thing from the perspective of investors. No, we’re not talking about the 57 marijuana stocks we highlighted, many of which are over-the-counter garbage. Nor are we talking about all the venture capital firms out there that are funding exciting startups like the “Uber of weed”, Eaze. We’re talking about the nitty gritty details like the actual numbers that give us some insights into the market. During our research, we queried any number of dispensaries out there to learn more about who is making the money and where this whole thing is going. Here are some interesting anecdotes:
- The number of growers in Washington State is extremely disparate numbering ~1,000.
- Almost all growers were black market growers prior to legalization.
- The hope for a small dispensary is a $100K a year income for the owner working 12 hours a day. That number is now looking more like 60K.
- Taxes are somewhere in the 30% range
- One dude thinks that his career in marijuana sales will take off once he moves back East
What we found was that most these dispensaries have drastically different messages to send about the state of marijuana in Washington State. What Washington State needs is a startup like Eaze to start gathering data at the actual point of purchase. Remember we talked about the Eaze, the “Uber of weed”? Well they hit us up with an incredibly detailed report that we thought would be worth sharing with our readers.
The State of Marijuana in California for 2016
Eaze has over 250,000 customers with an order happening about every 30 seconds, up from every minute in 2016. Here’s a look at which regions are growing the most in the State of California:
While this doesn’t tell us that much, what it does let us know is that Eaze is collecting data from over 100 cities and can aggregate this at every level, even so far as looking at what all those Mountain View software engineers (and these days, bio engineers) are getting up to when they go out for lunch. In earlier versions of this report, we saw Eaze actually making a few observations about Silicon Valley such as the health focus which is leading to vaporizing (it’s where you heat weed up instead of smoking it) being more popular than actually smoking. Maybe they felt a bit awkward spilling the beans about this with their own VC being a smoker? We’re not sure, but they did provide some insights into the astounding growth in vaporizing as seen below:
Above we see an over 400% growth in vaporizer use for 2016 with 1 in 5 orders having a vape product and 1 in 3 users having tried a vape product at least once. For all you investors who don’t actually puff the magic dragon, here’s some terminology explained:
- Flowers – This is the actual marijuana buds that you smoke, or that funny smell you detect on your employees when they come back from lunch
- Edibles – You may have heard of “pot brownies”? What this means is that marijuana is placed in cookies or candies and then you eat it and get a longer high than smoking.
- Vapes – This should excite you as an investor because it requires an initial outlay for a vaporizer (plus, you can vape weed in the bathroom at work and nobody can smell it… or so we’re told):
And then you need to keep buying cartridges for the vaporizer that contain the marijuana active ingredient (THC).
Investors call these “consumables” and they’re what made Gillette such a powerful brand before the likes of Dollar Shave Club started kicking the isht out of them.
So the question becomes, who is buying all this marijuana? This is where marketing people should start getting really excited. We’ve noticed here at Nanalyze that when it comes to weed and technology, the fairer sex just isn’t that interested in either but that’s changing. Look:
So we’re seeing a huge uptick in female marijuana consumption alongside a growing contingent of baby boomers who are slowly catching on to the fact that all that fun they had in their youth behind the school gymnasium can be had once again just by picking up a smartphone and using it to order weed with. Also note here that the monthly recurring spend for boomers is significantly higher than other demographics. Why get someone to buy a $20 pack of razor blades every month when you can just get them to give you the equivalent of a small car payment every month?
Now here’s where investors should really pay attention. Check this out:
So not only did the vast majority of “patients” drink less alcohol but these same patients who cut down on their drinking were more likely to spend that money on vaporizers as opposed to “flowers”. Another feel good piece of data along these same lines was that of those people who “used opioids for pain management”, 95% of them used less once they started buying medical/recreational marijuana. We’re not sure how they were able to measure this (survey perhaps) but given the epidemic of opioid abuse affecting the United States, this is a very good thing.
Every single piece of data in this article came from the good folks at Eaze who were kind enough (get it?) to let us use it for this article. If you want to learn even more exciting info about the state of marijuana in California, pop on over to Eaze and read the entire report. There’s more great info for all you pot aficionados out there like which are the top strains being sold in the State of California (Gorilla Glue took first position) and which days people buy the most weed (4/20 won’t surprise you with a #1 position but the others might).
We’re wondering just how long it will be before Eaze opens up this massive “big data” or shall we say “bud data” set for everyone to see. Everyone with an expensive yearly subscription that is.
Here at Nanalyze, we complement our tech investments with a portfolio of 30 dividend growth stocks that pay us increasing income every year. Learn how to build your own dividend growth stock portfolio in our report on Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.