The company XXXX is a company, which intends to enter a highly promising, yet nascent market of medical and recreational marijuana (aka ‘cannabis’) in the United States of America. Provided that the government of the country keeps the same political line in relation to cannabis, annual turnover of cannabis is expected to reach US$ 7.3 billion by the end of 2016, showing a 25% leap from 2015 figures (US$ 5.2 billion). Up to date, 24 states of the country authorized marijuana sale and consumption for medical use, recreational use, or for the both purposes concurrently.
Although the market is a particularly profitable one, the entry barriers are not yet high. On condition that the company develops a sound marketing campaign and find reliable suppliers, getting a serious market share is quite realistic.
The Marketing Environment
The Competition in the Industry
In the light of staggering growth of medical and recreational marijuana consumption in the United States, seeding and selling marijuana appears to be a lucrative business option. Generally, the market players can be categorized into the two primary groups. Large manufacturers, such as The ArcView Group, The Privateer Holdings, GW Pharmaceuticals or MedMen hold approximately 43% of the market (Caulkins et al 2015). The rest of the market is divided between medium and small marijuana manufacturers and dispensaries. At the same time, it is important emphasizing that large pharmaceutical giants, like Bayer or Pfizer are likely to grasp such opportunity as well (Huddkeston 2015). Therefore, focusing on a recreational aspect appears to be more attractive.
In general, despite the fact that competition in this nascent industry is intensifying every year, it is estimated that by 2020 the supply will be prevailing over the demand (Caulkins et al 2015).
Economic environment
The number of recreational and medical users of marijuana is gradually, but steadily growing in the United States of America. The research demonstrates that almost three percent of the United States population is regularly consuming marijuana to relax or to relieve the symptoms of a disease. Average annual spending of marijuana smokers fluctuate between US$50 – US$500, demonstrating that the customers have high purchasing capacity.
In addition, due to the fact that the benefits of cannabis consumption is actively advertised, the number of users is expected to double by 2020. Overall, on condition that no serious economic recession takes place, the economic environment will be favorable to the creation of such business (Walsh & Bennet 2015).
Political forcers
This business is strongly dependent on a favorable political environment. In particular, the Republican party of the United States is a fierce critic of recreational marijuana use. Thus, the political risks are significant. If a Republican candidate wins the White House Office in 2016, together with the Republican congressional majority he can annihilate legal foundations for this kind of business.
Legal and regulatory aspects
Marijuana consumption is banned in the United States on the federal level. However, the federal legislation provides local legislatures to allow conditional intake of cannabis on condition that a strong enforcement and controlling mechanism exists.
Despite the fact that some other states have pending marijuana authorization bills, there is always a possibility that the states may re-consider their attitude towards recreational marijuana, especially if the crime rates increase during the next years. Thus, constantly monitoring the legal framework is a fundamental element in this business.
Technological factors
Technology provides multiple new options for growing, processing, advertising and merchandizing the products. In particular, by adding chemicals the company can increase longevity of the product, while special applications targeted advertising can help the company to distribute its products among the interested groups.
Social and cultural factors
Works Cited
Caulkins, J.P., Kilmer, B., Kleiman, M.A., MacCoun, R., Midgette, G., Oglesby, P., Pacula R. & Reuter. (2015).Considering marijuana legalization: Insights for Vermont and other jurisdictions. Web. Retrieved from http://www.rand.org/content/dam/rand/pubs/research_reports/RR800/RR864/RAND_RR864.pdf
Huddlkeston, T. (2015). “5 companies with the biggest buzz in the marijuana industry”. Fortune. Web. Retrieved from http://fortune.com/2015/04/20/marijuana-industry-five-companies/
Walsh, J. & Bennet, W. (2014). Marijuana legalization is an opportunity to modernize international drug treaties. Web. Retrieved from http://www.brookings.edu/~/media/research/files/reports/2014/10/15-marijuana-legalization-modernize-drug-treaties-bennett-walsh/cepmmjlegalizationv4.pdf
