Cannabis Testing Companies get Green Light from BofA Merrill Lynch

Bank of America analysts are skipping the typical marijuana stocks and instead they are focusing on the cannabis testing companies. The life sciences tools as they call them could be a $50-$100 million market by 2020.

The BofA estimate for this market is much smaller than other analyst estimates and they readily note that their figure is conservative. Other third party companies like GreenWave Advisors peg the figure in the $800-$900 million range. That forecast includes revenues from testing, consulting and other services for a market that could range anywhere between $35-$100 billion. ArcView Research believes the cannabis industry could reach $35 billion by 2020.

The BofA analysts come at the smaller figure by cost of goods sold (COGS) at about 20% of revenue in a $7.6 billion medical marijuana market. Then they assume tools will cost about 3% based on comments from companies like GW Pharmaceuticals. That makes medical cannabis testing only a $50 million opportunity.

– Read the entire article at Forbes.