California Legalization of Recreational Marijuana to Benefit LED Grow Light Industry


A day before the U.S. presidential elections 2016, Californian voters passed a Proposition 64, which legalizes adult marijuana usage for recreational purposes.

Despite legalizing medical marijuana usage in 1996 under Proposition 215, recreational marijuana remained illegal till recent in California.

The proposition which is also known coined as Adult Use of Marijuana Act by supporters was approved by 55.75% of voters or about 3.17 million votes, while the remaining 44.25% of voters did not support the act, according to statistics compiled by California Secretary of State.

Under the proposition recreational use of marijuana will be legalized for adults aged 21 years or older. Individual are even permitted to grow six plants in a private home as long as the area is sealed off from public and not visible from a public place.

Legalization of marijuana in California is projected to spur market demands for LED grow lights such as the lights seen in the photo installed by Philips Lighting in other horticultural applications. (Philips Lighting/LEDinside)

Moreover, adults can legally carry 28.5 grams of marijuana and 8 grams of concentrated marijuana, but smoking a marijuana joint to relax in public or facilities for children, such as schools, day care centers, and youth centers is strictly prohibited. Smoking a cannabis joint is also strictly off limits when driving in a vehicle, or in places where cigarette smoking is traditionally banned.

The Proposition 64 also will create two new taxes levied on cultivation and retail prices of cannabis. Revenue proceeds from the taxes will be invested in drug research, treatment, enforcement, and health and safety grants. Tax revenues will also be used to address marijuana, youth programs, prevent environmental damage from illegal marijuana production.

The two new excise taxes on marijuana include a cultivation tax of US $9.25 per ounce for flowers and $2.75 per ounce for leaves, while certain medical marijuana sales and cultivation will be exempted. Another 15% taxes will be placed on the retail price on marijuana which would generate new tax revenue of US $1 billion, estimated Business Insider.

The Bureau of Marijuana Control will regulate the usage of marijuana and licensing permits for retailers to sell the recreational weed.

LEDinside projected LED grow light revenue from 2015-2020 (left), and global regions LED grow light market share (right).

Implications of the Act’s approval on LED grow light industry

Californian voters approval of the ballot measures will create one of the largest market for marijuana products in the U.S, reported Los Angeles Times.

Passing of the bill is expected to generate hundreds of thousands of new jobs in California, Business Insider quoted Max Simon, of Green Flower Media saying.

Some of these jobs will fall into marijuana cultivation, and with higher taxes imposed on growers, LED grow light demands will be on the rise as cultivators of cannabis aim to lower production costs with more efficient lighting.

The U.S. has been a top LED grow light export destination, mainly due to growing market demands from its cannabis cultivation industry as more states legalize medical and recreational use of weed, based on data compiled by LEDinside.

Manufacturers have shipped large volume of LED grow light modules to U.S. that is assembled into luminaires for vertical farms, and following California’s legalization of the recreational drug, the future market outlook of this niche lighting market will be positive.

LEDinside estimates the U.S. LED grow light market value is worth US $575 million in 2016, and will grow to US $1.42 billion, based on LEDinside estimates. The U.S. LED grow light market has a 32% share of the global LED grow light industry, in 2016.

LED grow light market demands in U.S. are expected to soar from 2016 onwards, as more states legalize recreational weed. In the Asian market supply chain, Taiwan, Japan and Korean manufacturers have been picking up pace in the market. Taiwanese EPI-wafer manufacturer Epistar’s AlInGaP LEDs and Everlight that specializes in LED grow light packaging are projected to benefit from these recent developments in U.S, projected LEDinside.

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