With more than 40 million jobless Americans, bankruptcies across the globe and the worst economic downturn since the Great Depression, governments could look to cannabis for a solution.
This extraordinary situation we are currently facing might be evocative of what unfolded nearly 100 years ago under the Great Depression, during which the US government faced unemployment numbers and a loss of tax revenues reminiscent of today’s figures.
“The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession” – Ahu Yildirmaz.
United States unemployment rate from 2000 to 2020.
In an act of desperation, the US Government made the unparalleled move to overturn the constitutional amendment and thus the repeal of Prohibition took place. Nearly ten decades later, we are finding ourselves in a worryingly similar situation – could the legalization and taxation of cannabis be the solution to economic recovery?
Whilst the health, societal, and safety implications of cannabis use have been amply documented, the fiscal impact of the legalization of cannabis might currently be just as important a topic as we are tackling the current economic climate.
Job growth in the legal cannabis industry compared to the fastest-growing occupations in America, from 2018-2028
The legalization has been an irrefutable success for both Canada and several US states. The former has seen a significant increase in the sale of cannabis in recent times with online and retail sales nearing a record CA$1 billion.
In the US the value of the industry is estimated to be worth a staggering US$43.9 billion in 2024 and, are currently supporting nearly 250,000 full-time-equivalent jobs – all whilst cannabis remains illegal on a federal level.
“There are more legal cannabis workers than there are dental hygienist in the United States.” – Leafly Cannabis Jobs Report.
The European countries continue to have a strict view on cannabis, hence why such few progressive steps are being made towards legalization. Europe is, by many, considered an extremely tough cannabis market to enter – and the hope of recreational legislation is far too optimistic.
The strict regulatory framework, rigid pharmaceutical entry barriers and the complex licensing conditions make the medicinal change a challenge.
However, the world is seeing some change, albeit under a highly regulated structure, as certain countries are gradually opening up pilot programmes for medicinal cannabis and limited personal use.
Namely, Luxembourg’s plan to legalize recreational use by 2021, as well as calling upon their neighbouring countries to relax their drug laws, was the most radical legislative change Europe has seen in relation to the legalization of cannabis.
Perhaps this was what Europe needed; as countries such as France, Denmark, UK and Australia are proposing referendums and bills to allay the strict regulations and thus open up for medicinal use.
The shifting attitudes towards legalization could alleviate the taboo associated with it.
Given the current economic slowdown, the potential to legalize cannabis on a federal level and thus bring in close to US$130 billion in tax revenue, is likely to be of significant interest to legislators and the presidential candidates.
Additionally, the estimates of potential tax revenues across European countries could be of great significance for government budgets and play a crucial part in cushioning the vast deficits that most of the countries in the EU-bloc will be left with on the other side of the corona-crisis.
Forecast of the European Cannabis Market
“We estimate the value of the global medical market to be US$62.7 billion by 2024″ – Prohibition Partners.
As the general sentiment among regulators has inched closer towards exploring possibilities of legalizing medicinal cannabis, the questions still remains:
Can the current pandemic serve as the catalyst to speed up the legalization process of medicinal cannabis – as increased tax revenues could be seen as an essential factor in mitigating the economic fallout?