Marijuana farming in the US: The legal commercialization of weed

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  Quantumrun Foresight
• July 6, 2022

Insight summary

The ambiguity in US marijuana farming laws post its 2021 federal legalization is a hurdle, yet it hasn't stopped producers from honing their cultivation methods to ensure high-quality output. Despite the regulatory maze, the gradual unfolding of legalization across states is setting the stage for more enterprises to delve into marijuana cultivation, fueling market rivalry and broadening consumer choices. Looking ahead, widespread legalization might ease commercial farming regulations, prompting more research and possible collaborations to mitigate marijuana misuse.

Marijuana farming context

Laws in the US surrounding marijuana farming are still unclear despite the federal legalization of the plant in 2021. However, both big and small marijuana producers are refining their farming processes to ensure the sale of high-quality products. As legalization and decriminalization gradually occur in the country’s different states, more businesses will start the process of marijuana farming, increasing market competition and providing improved options to consumers. 

Legal sales of marijuana were almost USD $17.5 billion in 2020, despite it only being legal in 14 states at the time. Surveys have projected that the illegal marijuana sector is worth nearly USD $60 billion. As of 2023, people can grow controlled amounts of marijuana in states where the plant is legal. However, the process is highly regulated, and the federal government can shut down any of these illegal operations. Meanwhile, to produce medical marijuana, growers require a permit. 

Furthermore, each state has specific rules. For instance, in Michigan, people with permits cannot grow marijuana within 1,000 feet of a park. For commercial marijuana farming, permit costs can be upwards of USD $25,000. With the number of licenses limited, obtaining permits for commercial agriculture is highly costly and competitive.

Disruptive impact

Many businesses are still perfecting the marijuana farming process, including research on characteristics like the optimal amounts of ultraviolet light to increase the concentration of tetrahydrocannabinol, the active ingredient in marijuana. In addition, many technologies used for commercial marijuana farming are adapted from commercial agriculture and horticulturalists. 

Meanwhile, marijuana decriminalization and legalization will likely pave the way for home-owned businesses to enter the market, increasing market fragmentation. In Canada, for example, local businesses have sought to connect with their customers personally to improve their profits. Smaller companies could seek to develop higher-quality products to increase their profit margins over large marijuana suppliers. 

If the legalization of marijuana occurs countrywide in the US, regulatory bodies will potentially relax the rules for commercial marijuana farming, allowing it to operate on a basis similar to commercial greenhouses. Marijuana companies may invest more capital into their research and development departments to develop more consistent crops. Companies may consider partnering with psychology associations to mitigate the negative effects of marijuana use, particularly on those who may be susceptible to the more negative effects of marijuana.  

Implications of increased commercial marijuana farming

Wider implications of increased commercial marijuana farming may include: 

• Disused tracts of agricultural land being converted into marijuana plantations.
• The federal government and state administrations increasing the amount of tax revenue they collect from the marijuana industry. 
• The possible elimination of large-scale illegal marijuana growing and distribution operations, cutting off a significant source of capital for the illegal drug trade. 
• The development of novel strains of marijuana with unique chemical properties.
• Enhanced research on the therapeutic effects of marijuana, potentially leading to the replacement of opioids for long-term pain management. 
• Increased job opportunities within the sector, including implementing agricultural technologies to promote sustainability and efficiency.

Questions to consider

• Do you think it is possible to over-prescribe marijuana for medical purposes?  
• What are the possible disadvantages of the increasing popularity of legal marijuana?
• Is marijuana legal in your country? Do you think it should be legalized at all?