CHICAGO -- Just because Chris Walsh is editorial director of Marijuana Business Daily, don’t expect him to show up to events in tie-dye.
“This is a professional industry now,” he said during his closing session at CSP’s Total Nicotine Conference, pointing out that his company’s cannabis trade shows are filled with “thousands of people in suits and ties.”
Though it’s not yet legal for convenience-store retailers to get into the cannabis industry, Walsh shared his “30,000-foot view” on where the industry is headed and how convenience might play a role. Here are six key insights for retailers:
2016 Election Could Be Important
Come November, as many as 11 states could have recreational-marijuana initiatives on the ballot. “Pay attention,” Walsh said. “This will move quickly.” Though federal legalization is likely at least five years out, more than 50% of Americans support recreational marijuana, he said. “At some point, legislatures will have to address that.”
Part of the reason states and the public at large are embracing medical and recreational marijuana has to be their huge earnings potential. Walsh estimates the industry will generate $14 billion to $17 billion in 2016, thanks to marijuana sales, tourism and services required by the industry (such as security, lawyers, banking, etc). If cannabis were to be legalized federally, that number could skyrocket to as much as $45 billion.
Wide Consumer Base
Forget the stoner stereotypes: Walsh described recreational- and medical-cannabis consumers as “really all over the board,” from businessmen and soccer moms to seniors using it for medical reasons. “Baby boomers are huge for this industry,” he said, pointing out that internal surveys suggest marijuana consumers spend an average of $1,800 a year on the category.
There have been lots of rumors about Big Tobacco entering the marijuana business if and when it’s federally legal. “Absolutely, Big Tobacco is looking at this,” Walsh said. “It’s perfect (for them): They know how to cultivate crops, they know how to market adult products, they know how to distribute.” He sees it playing out the way the beer category does: some big, mass-produced options but also a thriving craft scene of “mom and pop” players.
Only One 'Gas' Retailer
Convenience retailers cannot take advantage of these big profits and wide consumer base due to provisions in state laws requiring that marijuana retailers sell only cannabis products (and not alcohol, tobacco, or food). Walsh said one retailer—Gas and Grass—had found a way around this by having one entrance for its convenience store and one entrance for its marijuana store.
Advice to Retailers
Walsh said it probably will be at least 10 years before the convenience industry can enter the marijuana space—but potentially interested parties should start planning now. “Learn the industry first,” he said. “The more you can learn now, the more you can develop a plan, the better.”