The U.S. Economy Needs a Booster Shot. Here’s What Federal Cannabis Legalization Could Do.

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In February 2020, the United States recorded a peak in monthly economic activity—another high-water mark in a period of economic expansion that began in July 2009. Then, in March 2020, the bottom fell out. 

The COVID-19 pandemic will be remembered for the profound loss of life both directly (from infection) and indirectly (through excess mortality). In addition, it’ll be remembered for the incredible damage it wrought on our nation’s economy: massive job loss and layoffs, reduced household spending, shuttered businesses and halted industrial manufacturing. 

In the months before President Roosevelt took office in 1933, the 21st Amendment was passed, ending Prohibition. While legal alcohol itself didn’t pull the economy out of the Great Depression, excise taxes collected on alcohol funded much of FDR’s New Deal—which was responsible for righting the ship of the American economy. 

In the same way, federal cannabis legalization provides opportunities for the United States to increase the number of businesses, expand international trade and protect consumers—an incredibly valuable opportunity as the United States recovers from the worst economic recession since the Great Depression. 

The Economics of Legalization

Federal legalization of cannabis would spur the creation of all kinds of businesses—from cultivation, processing and other plant-touching businesses to supply chain, logistics and ancillary businesses of all kinds. 

The potential economic impact is clear: According to a study conducted by New Frontier Data, federal cannabis legalization could result in $128.8 billion in tax revenue and create 1.6 million new jobs. 

With initiatives to address climate change and heal our economy, we’re in need of tax revenue—and cannabis legalization is a proven, accessible way to generate it. 

Further, national legalization will allow for small businesses to access critical loan and banking services to help grow their businesses, hire more individuals and support the local economy.

Consumer Safety and Transparency

Safety regulations for cannabis—contaminant thresholds, heavy metal presence, pesticides and more—vary by state. And in closely packed-together states that have recently legalized cannabis for recreational use, like New York and New Jersey, consumers could simply drive across state lines to purchase their desired product, even if it’s outlawed in their own home states due to its composition, contamination levels or growing practices. Without federal legalization and oversight, there’s no unified regulatory system to guarantee consumer protections nationwide.

Additionally, high-THC cannabis and federally legal low-THC cannabis products (like hemp and CBD) currently operate under different state-by-state and federal regulatory systems. Cannabis is cannabis—and to ensure a safe level of consumer protection for both medical patients and recreational consumers, low-THC cannabis and high-THC cannabis need to be held to the same standards.  

Federal regulations for potency, contaminants and manufacturing practices will force processors and cultivators to create a superior product since they’ll be competing nationwide, not just in-state. And regulations like this are great opportunities for mom-and-pop shops to shine with their adherence to regulations and commitment to a superior product. 

Legalization is Good for International Business Relations

Right now, only two countries have legalized cannabis nationwide: Uruguay and Canada. But as more and more nations legalize—and rest assured, they will—the U.S. has an opportunity to emerge as a true leader. Mexico, Israel, Italy, South Africa, Belize and the Netherlands have either deemed cannabis prohibition unconstitutional or are making concrete moves to legalize in the next 24 months. With a bill introduced by Senators Booker, Wyden and Schumer that aims to reform cannabis laws in the U.S., our country may not be far behind. 

Before any of that happens, we need time to bulk up our supply chains, iron out the kinks and ensure we’re providing a world-class, superior and laudable product.

Preparing for Federal Compliance Starts Now

We’ve explored in depth the ways that federal legalization will impact our economy and consumer safety. If you’re a new entrant to the cannabis space and want to ensure your business is ready to thrive in a more highly-regulated industry, we urge you to explore good manufacturing processes and bring in skilled auditors to help you develop quality management systems, avoid contamination and more. 

Federal cannabis legalization could be just the boost our battered economy needs. And anything that boosts consumer protections, provides regulatory framework, positions us for success on an international stage and results in over a billion dollars of tax revenue sounds like a good plan to us.