What Is The Economic and Social Impact of the Federal Ban on Cannabis? Congressional Democrats Release Short Report Describing the Barriers and Opportunities


This week, the Democrat staff of the Congressional Joint Economic Committee issued a short report highlighting the economic benefits of the national cannabis economy.

The report highlights what many in the industry and public already know – support for the legalization of adult-use is at an all-time high across the country. While over 30 states have moved towards some form of legal use, the federal ban continues to present significant barriers to the industry’s growth. Some interesting points made in the report include:

  • 66% of Americans support legalization of adult-use, up from just 12% in 1969.
  • Industry sales totaled  more than $8 billion in 2017
  • Sales industry wide are estimated to reach $11 billion in 2019, and $23 billion by 2022
  • There were over 9,000 active cannabis business licenses in 2017, with the industry employing more than 120,000 people

With the positive economic and job growth created by the industry, significant barriers created by the federal ban exist. I would add here that in California, the ability of local jurisdictions to prohibit cannabis business activity is an additional barrier. Among the many challenges created by the federal ban, the report highlights the following:

  • A lack of basic financial services available to cannabis business creates security issues, as well as general barriers to paying for basic business expenses, i.e. employee salaries, rent, etc
  • The federal ban has created an unfair advantage for non-cannabis/illicit businesses over legal ones. Section 280E prohibits cannabis business from deducting ordinary business expenses, creating an estimated tax rate of 40% – 70%; more than twice the average non-cannabis business tax
  • The ban also creates a barrier to acquiring financial capital to start or grow a cannabis-based business
  • Finally, the ban continues to restrict patient access to medicine that has proven to effective in treating a variety of ailments and illnesses

The report goes on to discuss the social impacts of cannabis that is well worth reading, and ends on this note:

“The growth of the cannabis economy presents opportunities for greater job creation, more tax revenue, and better patient care. But current conflicts between state and federal law threaten to impede social and economic growth. Going forward, lawmakers and regulators should prioritize solutions that promote greater research into the health effects of cannabis and reduce regulations that restrict the industry’s ability to conduct business.”

What are your thoughts on the report?

Do you have questions related to economic impact of the cannabis industry? Do you want to know how to share this information in an effective way before legislators and decision-makers? Contact Ashley at ashley@ampublicaffairs.com to discuss.

Is the “Partisan” Divide Over Cannabis Crumbling?

Photo by mahdis mousavi

Over the past week, the Democrat vs. Republican divide on cannabis appeared to weaken as a prominent Republican made an announcement signaling a level of support for medical and legal adult-use of cannabis.

Last Wednesday, former House Speaker John Boehner announced that he had joined the board of a national cannabis business, and shared that his views on cannabis have evolved over the years to support legal use of medical marijuana. The announcement by was 180 degree turn from a few years ago when Boehner took a hardline stance against legalization. While some say Boehner’s change of heart is merely a reflection of his opportunity to cash-in on a growing industry, others believe that his evolved stance reflects the changing attitudes of Americans and marijuana.

Aside from the various and significant medical benefits of cannabis, one of the direct benefits of legalizing marijuana use is the opportunity to create good paying jobs for people, especially in rural areas.

In a review of Colorado’s legal cannabis industry by New Frontier Data, a cannabis research firm, over 18,000 new jobs were created in the first  three years of legalized use. Of those, nearly 13,000 were full-time positions directly involved in the cannabis sector, and the remaining were created in auxiliary services such accountants, construction, legal, real estate, and other business services.

In California, two studies from the University of Pacific found that the potential for strong economic output and job creation in Sacramento and rural Calaveras County are significant. In their analysis, both Sacramento and Calaveras County were expected to create several thousand new jobs for two regions that have seen relatively stagnant job growth over the last decade. While these reports focused on two specific areas in California, their general assumptions could be applied to many of the rural counties and cities across the state.

Moving forward, as city councils and boards of supervisors debate whether or not to allow cannabis businesses in their jurisdiction, the positive economic impact and job creation potential has to be a part of the discussion.

Questions on how to get involved with your local city council or board of supervisors? Contact us here or at info@thecannabisfile.com.