Why is it so difficult to legalize the pot in the United States? – The crazy fool

The marijuana industry has emerged as a key global target in recent years. Last October, Canada became the first industrialized country in the world to legalize cannabis for recreational purposes.

At the same time, in our south, Mexico gave medical marijuana the go ahead in June 2017. Today, more than 40 countries around the world allow a doctor to prescribe cannabis in Canada. medical purposes.

And yet, in the United States, it's really a mixed bag. On the one hand, a record number of Americans (66%) are now in favor of the idea of ​​legalization at the national level. We found that this support resulted in the legalization of medical cannabis by 33 states, 10 of which also allow consumption by adults. If cannabis were entirely legal in the United States and Canada, it would almost certainly be the most lucrative herb market in the world.

On the other hand, the US federal government has not lost sight of its point of view on marijuana and has maintained its Schedule I classification. Clearly, this means that it is illegal, subject to abuse and that it has no recognized medical benefits. As long as this federal classification exists, the potential of marijuana in the United States remains fairly firm.

Why is the legalization of cannabis in the United States so difficult?

You may be wondering why, with the support and impulse as strong as it is, legalizing the pot in the United States is so difficult. The answer to this question is actually a combination of factors.

First, we can state the obvious: support for legalization really depends on party preference. In Gallup's October 2018 poll, 75 percent of Democrats and 71 percent of independents were in favor of legalization, compared with only 53 percent of Republicans. While this is an all-time record for GOP support in the Gallup polls, there is a fairly definite line in the sand for reform. Since Republicans control the Senate and the Oval Office, it is not absolutely urgent to seek legalization, even with the American public firmly in favor of cannabis reform.

This raises another important point: the political importance of marijuana. While several Democratic presidential candidates argue in favor of legalization, a survey conducted in April 2018 by Quinnipiac University, an independent university, showed that weeds were not a sufficiently polarizing subject to influence voters. Respondents were asked if they could vote for a candidate who shares most of their points of view but who has a different point of view on cannabis. Only 13% said they would not vote for the candidate in question, while 82% could still vote for a like-minded candidate. This implies that politicians are unlikely to lose their elected seat in Washington, even if they have an unpopular view of marijuana.

Third, legalization creates a money problem for the federal government. As a Schedule I drug, companies that trade cannabis are not allowed to take normal deductions from corporate income tax, in accordance with Section 280E of the Income Tax Act. Tax Code. Since only product costs can be deducted from revenues, the most profitable weed treatment companies pay a very high effective tax rate. If marijuana was suddenly legalized, it would no longer be subject to section 280E of the corporation, which would cost the federal government about $ 5 billion in total tax revenue over the next decade.

To add to this point, instituting a federal excise tax on legal cannabis is not necessarily a quick fix, either. Each federal, state and local cannabis tax increases its cost relative to the black market. Some places in California are already paying nearly 45% of the global tax, which will only bring consumers back to the black market.

In order for cannabis to actually be legalized, we would probably need to see Democrats hold a majority of congressional seats, and the economic benefits of legalization should really impress legislators.

Signifying signs of legalization

Although the US federal government is currently suppressing the marijuana sector, hemp is a recent example.

In December, President Trump enacted the Agriculture Act, legalizing hemp and derived products (mainly cannabidiol, or CBD) for commercial production and sale. CBD is the non-psychoactive cannabinoid best known for its perceived medical benefits. As a result, companies producing hemp oil and CBD products flourished, such as Charlotte Web Holdings (NASDAQOTH: CWBHF) and CV Sciences (NASDAQOTH: CVSI).

But what is particularly interesting about the legalization of hemp in the United States is the eagerness with which some of the largest marijuana growers in Canada have turned to the US hemp industry. Mid-January Cover growth (NYSE: CGC) announced the granting of a hemp production and processing license in the state of New York. Canopy will now spend between $ 100 million and $ 150 million to develop a hemp processing facility in New York.

Also in mid-January, the biggest pot producer in Canada, Aurora Cannabis (NYSE: ACB), detailed his imminent entry into the US hemp industry. Cam Battley, CEO of Aurora, in an interview to Internal business"We will unveil our hemp-derived CBD strategy to enter the US market in the coming months."

While Canopy Growth and Aurora Cannabis both made it very clear that they did not intend to enter the US cannabis market as long as it would remain illegal at the US level. Federal, their penetration into the hemp market provides some of the infrastructure needed to succeed if the federal government ever legalized marijuana. In addition, their willingness to spend on infrastructure in the United States appears to be a telling sign of their belief that the legalization of cannabis will soon happen.

Let's just say that a battle is brewing on Capitol Hill about marijuana, so grab your popcorn.