[b]Virogen Inc. (VRNI)[/b], a holding company with specialties in data security and encryption technology, today announced the launch of its newest business unit, "The Cannabis Connection", which is intended to operate medicinal marijuana dispensaries in states that have legalized such operations, including California.
With an estimated current annual value of approximately $120 billion (legal and illegal) and expected continued easing of marijuana laws nationwide, the marijuana market appears to be headed for a period of dramatic growth. In California, The Cannabis Connection's home state, which represents approximately 10% of the overall U.S. market, 95%, or approximately $11 billion, of marijuana sales are made legally through medicinal marijuana dispensaries. The company's management has equated the current state of the legal marijuana industry to the post-prohibition U.S. alcohol industry, in terms of the massive consumer market, volume of consumption, market fragmentation and opportunity for profit.
It is the fragmented nature of the legal marijuana market that provides the greatest source of optimism for the company's management. This highly fragmented market is dominated by independent operators, many of whom were "dealers" prior to the legalization of marijuana, who invested minimal capital and operate their marijuana outlets in areas where overhead is low. It is the market fragmentation coupled with the relative lack of sophistication of existing operators that provide the company with its opportunity to consolidate existing outlets and operate a chain of dispensaries, all within an extremely short timeframe.
