US To Raise Over $100 Billion In Cannabis Taxes By 2025

It would help to restructure countries economically after the Covid-19 crisis

Since the UN recognized the medicinal properties of cannabis at the end of 2020, many states are raising the possibility of legalizing its pharmaceutical use. Even some countries have already shown some progress in their legalization for recreational use. These economies want to follow in the wake of Uruguay and, later, Canada, the world’s largest cannabis industry.

These states do not discuss its harmful psychoactive effects on health, but they have shown that the legalization and regularization of this plant brings great benefits to both the economy and society of the country. So much so, that cannabis contributed $ 11.032 billion to Canadian GDP .

These data have not been overlooked in government dispatches from the US, a direct competitor to Canada. Virginia has become the latest state to legalize recreational marijuana, following the path set by New York and New Mexico in March 2021. At the moment, the war for control of the industry in North America is controlled by the country neighbor. Canadian companies in the marijuana industry are valued ten times higher than their US competitors, according to Forbes .

However, the growth forecasts for the industry in the US are really interesting. National legalization could mean about $ 130 billion in tax revenue and about 1.6 million new jobs , as a recent New Frontier Data study ensures. Despite this data, which depends on a possible regularization, the United States expects to raise $ 105.6 billion in federal tax revenue in 2025, according to a report by the cannabis testing company New Frontier.

Investors have focused on cannabis
These figures not only affect the states, investors are already focusing on the large companies in the sector. With the election of Joe Biden as the new president of the United States, the value of the shares of these companies is on the rise. So much so that the Horizon Marijuana Life Sciences ETF, one of the best-positioned companies in the industry, has increased in value by 149% since Election Day.

For now, as marijuana is still illegal at the federal level, some investors are reluctant to invest in these companies. Furthermore, the number of companies listed on public exchanges is relatively small. However, if a national legalization process were to take place, these companies could be listed on all public exchanges in the country, improving their liquidity and opening up to greater investors .

“If the growth rates of the cannabis sector continue as they have done in recent years, investors are likely to express great interest in the industry,” US investment experts say from Investopedia .

Could help accelerate economic recovery
The legalization of the recreational use of cannabis would be a great boost for countries when it comes to restructuring their economies after the crisis caused by Covid-19. In fact, in Oregon, cannabis users spent $ 89 million on legal cannabis, an increase of 45% compared to the same month in 2019. This is not the first news to show the increase in consumption during the months of pandemic, 42% of the countries interviewed by the United Nations said that cannabis use increased during the health crisis.

Taking the example of the Great Depression in the United States, when alcohol was prohibited in the country, a large part of the population showed their support for the repeal of this prohibition in order to increase tax revenues and employment derived from its sale.

However, this legalization did not occur and the federal government is estimated to have lost $ 11 billion in alcohol-related taxes during the Prohibition years, according to Forbes.

Reduction of smuggling and the money invested in stopping it
This is one of the great points to take into account for Spain, since it is considered one of the largest distributors in Europe, where more and more Spanish hashish is consumed , a psychoactive derivative of the cannabis plant, as claimed by the Last European Report on Drugs. In addition to all the drug trafficking that occurs between the Andalusian and Canary coasts and the Moroccan coasts.

Despite the Special Plan for the Campo de Gibraltar that the Ministry of the Interior launched in July 2018, in order to reduce smuggling in the strait, the current amount of hashish from Morocco is equal to or greater than before this. initiative, according to data extracted by El PaĆ­s.

This drug trafficking not only brings with it the distributed drugs, but also leads to violence and deaths of civilians and security forces. An evil that governments stop with laws, whose implementation cost is 3.6 billion dollars a year in the US , according to a report by the American Civil Liberties Union. In fact, in this North American country, during the years of cannabis prohibition, there were more than 660,000 arrests for marijuana per year.

The number of police proceedings was such that only 3% of the cases went to trial. All of these expenses could be drastically reduced with the legalization of cannabis, saving countries millions in legislation and enforcement.

On the other hand, all the market share collected by drug trafficking would go to private companies controlled and taxed by the states or, directly, to public companies, as is the case in Canada. In Mexico, for example, which has just approved the recreational use of cannabis, an estimated 30% of drug cartels’ revenues derive from illicit marijuana trafficking.

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