Impact of Canada’s Marijuana Legalization on the United States

Canada became the second nation in the world and first G7 nation to legalize cannabis as 100+ retail locations open on October 17, 2018 from Newfoundland to British Columbia enabling any adult to purchase and consume marijuana. This is a watershed moment as other countries will look to Canada’s lead in their own legalization efforts.

In the United States, politicians, entrepreneurs, and investors will reflect on why federal prohibition was enacted in the first place, why we’re ceding a big opportunity to create jobs and business to foreign control, the impact of loss tax revenue for an existing supply chain that’s benefiting only criminals, and, perhaps most importantly, a product that can improve and enhance the lives of millions of Americans.

History of Marijuana in the US and Federal Prohibition

Today, 29 states and Washington, D.C., have legalized medical marijuana, and 8 states plus D.C. have legalized it for recreational use. On the national level, the federal government has continued to cling to a policy that has its origins in racism and xenophobia and whose principal effect has been to ruin the lives of generations of people. However, growing consensus around the issue suggests that legalization—or rather, re-legalization—could be in America’s future.

According to Wikipedia, the legal history of cannabis in the United States pertains to the regulation of cannabis for medical, recreational, and industrial purposes in the United States. Increased restrictions and labeling of cannabis as a poison began in many states from 1906 onward, and outright prohibitions began in the 1920s. By the mid-1930s cannabis was regulated as a drug in every state, including 35 states that adopted the Uniform State Narcotic Drug Act. The first national regulation was the Marihuana Tax Act of 1937. Cannabis was officially outlawed for any use (medical included) with the passage of the Controlled Substances Act (CSA) of 1970.

Thing is, the drug wasn’t always prohibited. Anglo-Americans and Europeans have known about marijuana’s medicinal benefits since at least the 1830s. Around that time, Sir William Brooke O’Shaughnessy, an Irish doctor studying in India, documented that cannabis extracts could ease cholera symptoms like stomach pain and vomiting. By the late 19th century, Americans and Europeans could buy cannabis extracts in pharmacies and doctors’ offices to help with stomach aches, migraines, inflammation, insomnia, and other ailments.

Despite its medical usefulness, many Americans’ attitudes towards cannabis shifted at the turn of the century. This was at least partly motivated by Mexican immigration to the U.S. around the time of the 1910 Mexican Revolution, according to Eric Schlosser, author of Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market.

“The prejudices and fears that greeted these peasant immigrants also extended to their traditional means of intoxication: smoking marijuana,” Schlosser wrote for The Atlantic in 1994. “Police officers in Texas claimed that marijuana incited violent crimes, aroused a ‘lust for blood,’ and gave its users ‘superhuman strength.’ Rumors spread that Mexicans were distributing this ‘killer weed’ to unsuspecting American schoolchildren.”

Even though there was no evidence to support claims that marijuana had a Jekyll-and-Hyde effect, 29 states outlawed marijuana between 1916 and 1931. The Marihuana Tax Act of 1937 essentially banned it nation-wide despite objections from the American Medical Association related to medical usage.

Big Opportunity to Create Jobs, Business, and Taxes

According to Arcview Market Research and its research partner BDS Analytics, over the next 10 years, the legal cannabis industry will see much progress around the globe. Spending on legal cannabis worldwide is expected to hit $57 billion by 2027. The adult-use recreational market will cover 67% of the spending; medical marijuana will take up the remaining 33%.

The largest group of cannabis buyers will be in North America, going from $9.2 billion in 2017 to $47.3 billion a decade later. The largest growth spread, however, is predicted within the rest-of-world markets, from $52 million spent in 2017 to a projected $2.5 billion in 2027.

The cannabis industry employs between 125,000 to 160,000 full-time workers, according to Marijuana Business Daily. It’s expected to add another 340,000 full time jobs by 2022, reflecting an estimated growth of 21 percent per year.

Those careers run the gamut, from individuals who are growing plants to those who work for “ancillary businesses” that don’t involve coming into direct contact with weed, such as providing legal services.

During the fiscal 2017, Washington state collected $219 million in legal pot income and licensing fees. Last year, weed taxes, plus revenue from licensing and fees, hit $247.4 million in Colorado.

New York City Comptroller Scott Stringer told CNBC that legal pot in New York could create a $3.1 billion market.

Marijuana Can Improve and Enhance the Lives of Millions of Americans

Marijuana is transcending its stoner culture stigma. Many investors see a lucrative market opportunities in an industry that could bridge health and wellness, drinks, recreation, and medicine. They also heralded cannabis-derived products as substitutes for alcohol, opioids, or sleep aids.

Cannabis has always been a recreational drug. Now, it is becoming a more widely accepted social substitute to alcohol, a trend proven by declining reported alcohol use and increasing cannabis use incidence among college-age adults.

One major component of the legal cannabis industry is the CBD market. CBD is the part of the cannabis plant that doesn’t have any psychotropic effects, and is usually used for medical purposes opposed to recreational. The plant extract, often consumed as an oil under the tongue, is now the featured ingredient in high-end products including coconut oil, body lotion, face serum, olive oil, jam, bath scrub, cold brew coffee, sports salve, lip balm, infused water, gummy snacks and dog treats. CBD is becoming so mainstream that even Coca-Cola may have interest in a CBD drink.

There have been many modern anecdotal reports of medical benefits of marijuana. The biggest hoopla began with AIDS patients in the San Francisco Bay Area. The support for treating AIDS with marijuana was so strong that it ultimately led to California legalizing marijuana for medical use in 1996. Now, a modern epidemic is the opioid crisis that has pervaded much of the US.

Experts have proposed using medical marijuana to help Americans struggling with opioid addiction. Now, two studies suggest that there is merit to that strategy. The studies in the journal JAMA Internal Medicine, compared opioid prescription patterns in states that have enacted medical cannabis laws with those that have not. One of the studies looked at opioid prescriptions covered by Medicare Part D between 2010 and 2015, while the other looked at opioid prescriptions covered by Medicaid between 2011 and 2016.

The researchers found that states that allow the use of cannabis for medical purposes had 2.21 million fewer daily doses of opioids prescribed per year under Medicare Part D, compared with those states without medical cannabis laws. Opioid prescriptions under Medicaid also dropped by 5.88% in states with medical cannabis laws compared with states without such laws, according to the studies. The studies is yet another indication that cannabis clearly has medical applications, especially for those who suffer from pain.

The irony in all of this is that legalization has been the answer to our government’s “War on Drugs.” The government can provide oversight to ensure that products are safe to consume, and that the profits will feed back into the community as opposed to criminals.

Case in point is alcohol prohibition in America in the early 20th century. When alcohol was made illegal, people continued to drink despite the fact that it was more dangerous because production was unregulated. Instead, organized crime won because they took over the supply chain and profited enormously. Once the government re-legalized alcohol, consumers could count on consuming safe, consistent products with easy access. Organized crime went bust while sales became fully taxable, funneling funds back into our communities. I believe we’ll see the same with marijuana.

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