The legal cannabis market in the U.S. is still in its formative stages. Roughly a quarter of the 50 states and Washington, D.C. have legalized marijuana for recreational purposes and almost half have legalized it for medicinal use.

Analysts see significant opportunities in the U.S. cannabis market, if federal regulators here legalize the drug. That could be huge for exchange traded funds (ETFs), including the, ETFMG Alternative Harvest ETF (NYSEArca: MJ) and the newly minted AdvisorShares Pure Cannabis ETF (NYSEARCA: YOLO).

“We estimate that the total US cannabis market, if legalized today, could be worth $28 billion, increasing to $41 billion by 2028 on a pre-tax basis,” Barclays analysts said in a note to investors,” reports CNBC.

Recent data indicate many Americans support cannabis legalization.

“The General Social Survey conducted by NORC at the University of Chicago found 61% of those surveyed supported legalization, up from 57% in 2016 and 31% in 2000,” reports Ciarra Linnane for MarketWatch.

Legal recreational cannabis

Some states are benefiting from legal recreational cannabis.

The Barclays analysts “looked at the three states where cannabis is legal — Colorado, Washington and Nevada — and found that tax revenues from pot are already ahead of alcohol tax revenues and, in the case of Colorado, already exceeding tobacco tax revenues,” according to CNBC.

However, critics may assert that in California, the largest U.S. state and a major grower of cannabis, legal recreational weed is not bolstering state coffers because of higher prices. Legal dispensaries in California typically charge high prices due to taxes required by the state. Those high taxes often prompt consumers to buy from illegal dealers, meaning California’s illicit marijuana market is still massive.

Down the road, there could be opportunities for investors in cannabis-related bonds.

According to CNBC: “While no bonds backed by cannabis tax revenues have been placed thus far, if federal approval is granted, the cannabis muni bond market will likely flourish, amounting to billions if not tens of billions of dollars, in our view,” Barclays said.

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