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

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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 Rohrabacher–Blumenauer Amendment the new “Cole Memo”?

Last week, Congress passed and the President signed a $1.3 trillion spending package that will keep the government funded through the end of September.

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Photo by Jomar on Unsplash

The deal included increased spending for the military, space exploration, and opioid addiction and research programs. The spending plan also included a provision, commonly known as the Rohrabacher-Blumenauer Amendment (RBA) that prohibits the U.S. Department of Justice from using federal funds to prosecute medical marijuana businesses in states that have medical cannabis laws.

With the repeal of the “Cole Memo” by Attorney Jeff Sessions in January, the RBA stands as one of the last protections state’s have against federal interference in their medical marijuana markets. Unfortunately, the RBA is only temporary and does not address states that have legalized recreational adult-use.

Several attempts to settle the issue once and for all have been introduced with bi-partisan support, but have failed each time in the House of Representatives. Rep. Pete Sessions (R-TX), Chairman of the House Rules Committee, has killed a number of bills that would bring the federal policy in line with states that have adopted marijuana policies.

Under the current Administration and with Republican control of Congress, it seems unlikely that a permanent federal solution is near. However, the industry can breathe a slight breath of relief between now and September.


Questions about the federal spending package and its impact on the cannabis industry? Reach out to us at info@thecannabisfile.com or click here.