The Washington cannabis sector is exploding thanks to companies like GreenStar Biosciences Corp. (CSE: GSTR), but Nevada is catching up
The cannabis market in the United States is growing and more states allow the medicinal and recreational use of marijuana. States are benefiting from new regulations as it attracts investors from Canada where recreational marijuana has been legal for some time.
GreenStar Biosciences Corp. (CSE: GSTR) invested in the current cannabis market leader in Washington state, Cowlitz, that produces high quality products at affordable prices. GreenStar specializes in making local competitors great. They helped to facilitate Cowlitz’s success with a cultivation technology obtained through another partnership with Progressive Herbs Inc. (Capri), which helped them grow high quality cannabis cheaper and faster than any other company on the market.
As a result, Cowlitz regularly brings a quarterly revenue of $4 million and growing. Last year (2018), the company recorded a revenue of $14.6 million which represents tremendous growth from $600,000 five years earlier. Cowlitz’s branded products are available in approx. 20% retailers across the Washington State.
As Washington state is well on track to generate profits, other states are catching up. While Massachusetts has been slow to implement its legal cannabis recreational sales program since the 2016 election, Nevada has been very quick to implement its plan and started selling cannabis for recreational use as early as July 2017.
This was very quickly adopted by Nevada consumers, with sales in excess of $200 million in the first six months. The brilliant start was made despite difficulties for the manufacturers in meeting the enormous demand and at the same time fulfilling the testing requirements.
Only a limited number of companies were able to obtain licenses. In Nevada, only established medical cannabis companies were able to obtain one of the coveted licenses, limited to 172, during the first round of applications. The state of Nevada released a total of 61 licenses, roughly the same number as the 64 previously issued licenses. Alone 31 licenses went to Clark County in Las Vegas.
According to estimates by BDS Analytics, the Nevada market grew much faster than expected in 2018, reaching revenues of approximately $580 million, as opposed to the $369 million originally assumed. In 2019, the market is expected to grow to more than $650 million due to stable high demand and the launch of new licensed companies.
Tourism remains a positive driver for demand for the cannabis market in Nevada. Over the past decade, more than 40 million tourists per year have visited Las Vegas. This is about 13 times the population of Nevada.
Canaccord’s experts believe that cannabis consumption is a complement to Las Vegas’s wide range of entertainment. Canaccord analysts believe that cannabis companies with their brands in Las Vegas will be able to promote their brands beyond national borders through exceptional retail stores or high quality consumer products. According to analysts, the Nevada market will grow to nearly $1 billion by 2022.