The Impact of Cannabis Being Federally Illegal
There is much written on this important topic. Cannabis is now legal in many states; however, cannabis remains illegal at the federal level. Yet, a simple Google search provides incredibly compelling facts to support legalizing cannabis federally.
Just like alcohol prohibition, Rand’s study shows cannabis prohibition pays for a massive, violent illicit market. The original goal of marijuana prohibition in the 1930s was to discourage use of it. Instead, the opposite happened. In the last 90 years, cannabis use exploded in the United States. Virtually any Americans who want to obtain cannabis today can find it. They just can’t buy taxed, tested, regulated herb.
The marijuana economy is worth billions
Estimates show the illicit marijuana economy is worth $30-$40 billion dollars. The cannabis industry “is likely to become a global multi-trillion-dollar industry, with early U.S. sales already generating billions of dollars,” as cited in “Mayors Across the U.S. Push Biden and Congress to Legalize Marijuana With A Focus On Racial Equity” article in Marijuana Moment, published September 13, 2021.
The economic benefits of legalizing weed are apparent, based on the first states that changed their legal positions. Overall, legal marijuana could mean a big push for state economies and big bucks for both the state and the federal governments.
Should marijuana become legal on a federal level, the benefits to the economy could be exceptional. A report from cannabis analytics company New Frontier suggests federally legal pot could generate an additional $105.6 billion in aggregate federal tax revenue by 2025.
Legalizing marijuana at the federal level is a meaningful avenue for raising tax revenue. An estimate by the Congressional Research Service projected that replacing cannabis prohibition with taxation and regulation could yield $6.8 billion in excise taxes alone. Certainly, a number of states’ experience demonstrates exactly that. For example, Colorado’s legal marijuana industry has brought in more than one billion dollars in tax revenue to the state since it abandoned prohibition. A portion of the tax revenue generated by a legal cannabis industry could be earmarked for police agencies, correctional facilities, drug rehabilitation centers, and crime prevention programs.
Several programs are both effective at reducing crime and are cost-effective as well. For every dollar spent on an evidence-based crime reduction or prevention program, several dollars are saved down the road in enforcement and correctional expenditures.
Federally legal marijuana reduces crime
It is reasonable to think this industry should be run by American business owners rather than drug cartels and drug gangs. Demand for marijuana has — and will always—exist. Whenever an in-demand product or service is made illegal, the black market will inevitably provide it. Criminal enterprises that deliver illicit goods and services do not use the law to solve problems and resolve conflicts. They use violence. Recent research shows legalizing marijuana reduces violence and trafficking associated with the illegal drug trade thereby, reducing the power and wealth of cartels and drug gangs.
In 2019, the FBI reported 663,367 cannabis arrests and citations — more arrests than for all violent crimes combined. Meanwhile, FBI data shows police only cleared 33 percent of rapes, 31 percent of robberies and 14 percent of burglaries by making an arrest. Data published in Police Quarterly shows a higher percentage of some crimes were solved after legalization in both Colorado and Washington.
Regulating cannabis like alcohol will replace the uncontrolled illicit market with a tightly regulated system. By legalizing and regulating cannabis, authorities can know who is selling it, where it is being sold, when, and to whom. In jurisdictions where cannabis is legal, it is produced and sold by legitimate, taxpaying businesses instead of drug cartels and criminals. These businesses will be required to test their products and adhere to strict labeling and packaging requirements that ensure cannabis is identifiable and consumers know what they are getting.
Marijuana prohibition is undemocratic
Around nine-in-ten Americans favor some form of marijuana legalization, according to an April 2021 Pew Research Center survey. An overwhelming majority of U.S. adults (91%) say either marijuana should be legal for medical and recreational use (60%) or it should be legal for medical use only (31%). Just 8% say the drug should not be legal in any form.
According to the latest Gallup poll, a large majority of Americans favor legalizing marijuana. As of 2019, 66% of Americans support legalization. Looking back at long term trends, the data shows attitudes about marijuana and its prohibition have changed dramatically during the past few decades.
A country that values liberty should not be punishing adults for using cannabis. Cannabis is far safer than alcohol, tobacco, and many medications. In a nation dedicated to “life, liberty, and the pursuit of happiness,” the government should not be tearing families apart over a plant that is safer than alcohol.
A likely explanation for the change in marijuana attitudes is that the public understands cannabis is a less harmful substance than other substances that are currently legal, such as alcohol or prescription drugs. Alcohol is by far a more harmful drug to society and the individual user as compared with marijuana. It follows that a large swath of Americans see criminalizing recreational marijuana use as unjustified or even hypocritical because many Americans drink.
Only regulation allows for control
Prohibition guarantees that cannabis will not be tested for purity and potency, creating the risk of contamination by dangerous pesticides, molds, bacteria, or even lacing.
Today, marijuana use is not completely harmless and the legalization of it is not without risk. Yet, the harm associated with marijuana use and legalization pales in comparison to prohibition. We will benefit from wiser critical thinking about this.
We are pleased to work with the professional companies creating new products and resources for those who can benefit from this burgeoning market. Feel free to contact us for support.
Don Hawley brings more than 35 years of comprehensive global financial and operational management experience to our cannabis and agricultural-based clients. Don has many years of experience in early-stage strategic planning, leading to well-thought-out business plans and related goal setting and management systems to achieve focused goals. His accounting, finance, and operational experiences include strategy development and implementation, company transformations, acquisitions and divestitures, financial and operational systems implementations, profitability, and cash flow improvement programs.