The legal marijuana industry is one of the fastest-growing industries in the nation. Businesses in Oregon, where sales of recreational weed will be legal beginning in October, are poised to cash in. (Medical marijuana has been legal there since 1998.) According to a recent report by New Frontier, a big data provider for the cannabis industry, the Beaver State's marijuana market will nearly double in size over the next five years.

By the end of 2015, New Frontier says, Oregon will have brought in a total of $257 million in pot sales. The company predicts that figure will increase to $464 million by 2020. That will make the state a worthy rival to Colorado, a now-well-established market where $700 million worth of marijuana was sold last year. 

"Our analysis has found that the Oregon market is showing great promise for business owners and investors. However, they need to be cautious of the state's evolving regulations and the large gray market, which are creating a great deal of uncertainty and competitive risk," Giadha DeCarcer, founder and CEO of New Frontier, said in a press release.

New Frontier says Oregon's emerging market has great potential for growth because of policies keeping barriers to entry low. The state does not place a cap on the number of licenses, unlike in states such as New York and Minnesota. Similar to Colorado's model, Oregon's license application and renewal fees are low. The kicker is Oregon's 25 percent tax rate, which is far lower than what businesses face elsewhere.

"Other states are watching Oregon's approach to taxes very closely to see how it will affect the market's performance. If Oregon's market performs well, it will force other states to reevaluate their high tax models, which are driving consumers away from the legal market," said John Kagia, New Frontier's director of industry analytics.

Eli Bilton, an entrepreneur who is now awaiting final approval to open three medical dispensaries around Portland, lauds how open Oregon has been to cannabusinesses. "Its regulatory environment is friendly and supportive of the industry," he tells Inc. "You are allowed to advertise your business, open multiple stores and operate as a for-profit business. Oregon has done an excellent job building a framework to support business."