The cannabis industry is blowing up. And by blowing up, I don’t mean another 6-month long rush like there was one with Bitcoin. It is not a fad or a trend which is bound to meet its demise because the popularity eventually died. It is a market that is predicted to be here to stay.
Here, we talk about the triggers of the cannabis revolution, countries that are spearheading the change, the economic implications, and also the global impact.
What Triggered This?
It all initially started with major states in the United States of America pushing for cannabis legalization, and then some going ahead and doing it. Some of these states include California and District of Columbia where recreational use is legal and in others like Arizona, where the substance is legal for medicinal use only.
However, the number of states are few and far between which is why the credit for the marijuana legalization wave is not currently with the USA. It’s with its neighbor – Canada.
In October 2018, Canada became the first major country to bring the hammer down on marijuana prohibition. This means that marijuana use for medicine and recreation is now legal in Canada. And that’s a bigger deal than you might think.
That’s because Canada is a G-7 country. Now, G-7 countries are a group of 7 countries in the world that represent the 7 largest nations based on economies. In comprehensible numbers, they represent 58% of the total wealth in the world and 46% of the world GDP.
And it’s popular knowledge that marijuana is not only a big deal for free recreational users but also a major economic and tax driver for countries. This means, large money and investments are involved in this decision. But what is this money, where does it go, and what are these large investments?
The Economics
Eliminating an illegal marijuana market is one of the first impacts a good government policy could have. The elimination of these underground markets means companies coming under taxed services, which is a huge bonus for governments.
From the get-go, marijuana legalization is bound to benefit the state in terms of finances because of the taxes it will bring in. A cannabis data analytics firm, called New Frontier Data released a report that said that immediate legalization of marijuana in the United States would bring in USD 131.8 billion in tax revenue between 2017 and 2025.
Many may overlook, but there is also serious entrepreneurial value in the marijuana industry. This means that new companies will come up, which will invest in growing marijuana. They will create jobs and there will an increase in income and overall growth due to the creation of a new industry.
From farmers to technology experts to retailers and distributors, the industry has a lot to be tapped into. Again, according to New Frontier, an additional 1.1 million jobs could be created by legalizing marijuana.
In Canada, according to a Deloitte study, after legalization, even if marijuana prices go up by up to 10%, consumers won’t mind paying for it. With an average of $ 8.98 per gram, the country could generate USD 7.7 billion in sales in 2019 itself.
The study has also shown that an overall uptake in sales of cannabis is bound to happen because legalization normalizes the buy and use of a substance. A study also shows Online Dispensary in Canada is one of the fastest growing businesses.
Also, once there is an increase in the volume in users across the board, it will lead to more affordable rates down the line, as the sellers will be making huge money due to the large quantities being sold.
Apart from money earned, there will also be money saved. Today, because of illegal marijuana use, there are millions of dollars being spent on law enforcement and illegal market crackdowns in the United States.
The American Civil Liberties Union found out that legal control on marijuana costs the US government approximately $3.6 billion a year. Once legalized nationwide, these costs could be dropped by a huge margin.
Why Would a User Switch To Legal Channels?
One of the biggest concerns for a user to get on the legal market would be what if they can not afford the product. Moreover, some users may not want to abandon their existing suppliers. But, according to Deloitte research, having the right offering of quality, price, and safety, is enough for them to switch over.
“High product quality and integrity, as well as a range of competitive price points will be needed to persuade the current consumers to move their purchases over to legal sources.”- Deloitte, 2018 Cannabis Report
Actually, the problem, especially in Canada could be the quite opposite where there might be a shortage of legal weed supply. There are (or could be in the future) initial bottlenecks, where there aren’t enough approved farmers and this could result in a shortage in official retail stores. But, so far, it has not been a pressing concern.
The Typical User
According to the research conducted by Deloitte, there will be a significant gradient between the type of people who currently consume marijuana and those who will consume the substance once it becomes legal.
Current marijuana users are young and early experimenters. They usually range between 18 to 24 years of age and their consumption of marijuana is known to be a by-product of their risk-taking tendencies. Cannabis use is currently hush-hush situation or a less frequented reality by an older demographic, but this could change.
After the legalization in Canada, a typical marijuana user is supposed to be in the 35-54 bracket and a “conservative experimenter”. They are likely to use the product openly for recreation. Possible reasons to use include – to de-stress, to reduce anxiety, to improve mood, induce better sleep, and even as an alternative to alcohol.
A shift in the demographic and open use could put an end to the stigma and taboo that have been popularly associated with the use of marijuana. It could become a more accepted form of intoxication-based recreation. And once adults who use the substance responsibly educate their future generations, the conversation around cannabis are bound to be healthier.
The Future
After Canada’s radical nationwide legalization move, there is no doubt that the world is watching. With such hefty economical benefits for the government, policy experts and bureaucrats are keeping a tight pulse on the industry.
Apart from official channels, the social context under which the recreational use of weed operates in also changing. The younger populations are becoming more responsible about consumption while older demographics are more aware and open to consumption.
So, it seems Marijuana is finally breaking away from the stigma it has been carrying around for so many years, although its benefits are yet to be fully explored.
Image Credit: Huffington Post & Cnbc.com
