The State of Washington moved today to increase in the number of retail licenses by 222 to a total of 556.  The rules governing the move will be announced in early January. Despite concerns about too much supply already, the state justified its move by using analysis provided by BOTEC Analysis Corporation, which published ” Estimating the Size of the Medical Cannabis Market in Washington State” yesterday.

BOTEC, which stands for “back-of-the-envelope calculation,”, is based in Los Angeles and focuses on drug policy and crime and justice issues.  Its Chairman, Mark A.R. Kleiman, is a Professor of Public Policy and the Director of the Crime Reduction & Justice Initiative at New York University’s the Marron Institute, a member of the Committee on Law and Justice of the United States National Research Council, and co-editor of the Journal of Drug Policy Analysis. He is listed as an author along with Steven Davenport, Brad Rowe, Jeremy Ziskind, Nate Mladenovic, Clarissa Manning and Tyler Jones.

The report explained its methodologies and provided a range of estimates, broken down by medical, retail and black market:

What is somewhat startling is that the medical market, projected to be $480mm, is much larger than the approximately $100mm implied by collected tax revenue for fiscal 2015 (ending 6/30/15).   BOTEC suggests a timing lag, as their estimate is through 12/31, but that dispensaries may be “grossly under-reporting their actual revenues for tax purposes.”

Download the BOTEC REPORT

Note:  We amended the last paragraph from “recreational market, projected to be $460mm” to read “medical market, projected to be $480mm”

Exclusive article by Alan Brochstein, CFA

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email