A new report has found that the legal cannabis industry in the US was worth $6 billion in 2016. Not bad for a government-unfriendly, black market-based business. But as investors pour money into these cannabis ventures, are they just chasing the next billion-dollar market, or are they being overly cautious?
Santa Ana’s Cannabis City, the first dispensary in the state to receive a license to sell marijuana, officially opened its doors to the public on Saturday, while the US marijuana legalization movement remains on the verge of a major victory. The world’s biggest legal pot market was poised to open on Monday, as Washington state and Colorado residents began to legally purchase cannabis that is more potent and easier to access than it had once been.
Cannabis brings in a lot of money in US states that agree to legalize it. That’s the message marijuana advocates have been saying for years, and they take every opportunity to make it a selling point. Some of the most recent figures show that the sale of cannabis products could become one of the largest tax revenue generating intoxication markets in the United States. According to a new study by the Marijuana Policy Project, marijuana sales have generated about $7.9 billion in tax revenue since 2014. At the same time, local governments have received hundreds of thousands of dollars. In other words: If states need a new source of revenue, legal weed is the answer. If the amount of money spent on cannabis in the U.S. is impressive, why are advocates so surprised when they see reports that continue to show that marijuana profits are rising every year? Of course, marijuana sells like hotcakes. Cannabis is now legal in more than half of the United States for a variety of reasons, and in 17 of those states it can be sold just like beer. People no longer have to go to the black market to buy weed, although many still do, creating a situation where money that was spent on illegal sources becomes legal. There is also a novelty factor associated with the cannabis market. People who have never used marijuana before (or those who tried it in their youth) tend to turn to legal weed because it appeals to them to some degree and there is little or no risk. They want to be bad without having to face the law. They seem to want to blend in with the cool kids. Studies show that more people try weed for the first time when it is legal. Since the introduction of the legal recreational cannabis market in Canada a few years ago, the number of people trying cannabis for the first time has increased dramatically. Studies show that more people try weed for the first time when it is legal. / PICTURE TEOLAZAREV / ISTOCK / GETTY IMAGES PLUS One of the things that… What’s unique about this survey is the number of respondents who indicated they were consumers for the first time, said Michelle Rotermann, a senior analyst at the Canadian Department of Health Analytics, in a 2019 interview with CBC News. So they began, in this case, in the post-legalization period. More users – more money. But a few years ago, something strange started happening to weed. The alcohol and tobacco industries have begun to take an interest. Some of these companies have even invested large sums of money to participate. Beverage producers like Constellation Brands, which makes Corona and Modelo, have invested billions of dollars to gain a foothold in the ganja market. Meanwhile, Molson Coors, Anheuser-Busch and Boston Beer Company have also taken action. Imperial Brands, the maker of the Kool and Winston cigarette brands, also intervened. Just recently, Philip Morris, the maker of Marlboro, said it was monitoring the marijuana market to see where it was. These big companies with deep pockets are growing cannabis in anticipation of the moment when the US federal government finally legalizes the plant. And that’s something that could happen in the next few years. Democrats in the Senate will try to legalize marijuana across the country this year. Senate Majority Leader Chuck Schumer plans to introduce a bill for comprehensive cannabis reform soon. Federal legalization is so close that the alcohol and tobacco industries have formed a national lobby to influence a change in federal cannabis policy. Beverage producers like Constellation Brands have invested billions of dollars to gain a foothold in the ganja market. / PHOTO MARIANVEJCIK / ISTOCK / GETTY IMAGES PLUS This development seems to have scared the hell out of all cannabis enthusiasts. After years of touting the significant revenue potential of marijuana, cannabis advocates now want legalization without capitalism. It is a false dichotomy to assume that we only have two options: Keep locking people up for marijuana or immediately roll out the red carpet for big national companies to take over the market, wrote Shalyn Tittle, vice president of the Coalition of Colored Cannabis Regulators and a leading practitioner at Ohio University’s Center for Drug Policy and Law Enforcement. Interestingly enough, limiting the involvement of the alcohol and tobacco industries in cannabis production is exactly what Schumer wants to do. He made that clear when he announced that cannabis reform is a Democratic priority. But instead of urging Congress to create a taxed and regulated national market, proponents now want the delegates to ease up and let the states determine the best course of action. Lawmakers should give states time to enact fair policies and in the meantime prevent Big Tobacco and other unscrupulous players from dominating the market, Tittle said. It remains to be seen how Schumer plans to legalize cannabis at the federal level while avoiding a capitalist bloodbath. While weed is divided between those who want justice for decades of brutal drug war tactics and those who just want to sell marijuana and enjoy the profits, it seems unlikely that weed will stay alive without being exploited in the same way as alcohol and tobacco. It seems even more unlikely that the cannabis industry will survive another 20 years without the big corporations jumping in and swallowing it whole. I think it should be a lesson to be careful what you ask for. Weed will become legal, and the draft will likely mimic the big money ideas that the cannabis advocacy community has been selling for decades.