Reaping the Benefits of a Regulated Cannabis Market

Developers in the US state of Colorado announced last month that if they receive the final approval from the city council, they’ll be opening the world’s first marijuana mall. Chris Elkins and Sean Sheridan said they’ve already obtained city permits and a building has been purchased.

The mall, which will contain five cannabis dispensaries, is set to open next April in the town of Trinidad. Recreational marijuana in Colorado is now a billion dollar a year industry that generated $198.5 million in tax revenue last year.

Colorado and Washington were the first two US states to legalise recreational cannabis on November 6 2012. And since that time, six more states have legalised recreational use, which means one in five Americans now live in a jurisdiction where they’re free to take pot for pleasure.

Get with the times

Many are heralding the economic benefits the burgeoning legalised weed markets are bringing to these states as a “green rush,” much like the mid-nineteenth century Californian gold rush. But unlike gold, cannabis isn’t a scarce resource, and the growth industry is unlikely to run dry.

And as Australian authorities continue their decades-long heavy-handed law enforcement approach to the recreational cannabis, the experience in the States is leading many local commentators to question the government’s continuing marijuana prohibition stance.

Reaping the benefits

The legal cannabis industry in the US was worth $6.6 billion last year, according to New Frontier Data. That included $1.9 billion for recreational sales, as well as $4.7 billion via the medicinal cannabis market. The use of marijuana for medicinal purposes is now legal in 29 US states.

The states of California, Massachusetts and Maine all voted to legalise recreational cannabis use last November. The sixth-largest economy in the world, California is set to commence retail sales on January 1 next year, while Massachusetts and Maine are following in mid-2018.

And with the addition of the Californian market, it’s estimated that the US cannabis industry will be worth $24.1 billion by 2025.

However, even before these additional markets begin, it’s been estimated that as of January this year, there were 122,814 full-time jobs being supported by the legal cannabis market. And 57,958 of them have been created by the retail sale of recreational marijuana in the five states where it’s available.

These figures include those that cultivate the plant, along with retail outlet owners and employees. But, they also take into consideration lawyers advising cannabis businesses, realtors specialising in commercial cannabis real estate, and electricians consulting grow operations.

Viva Las Vegas

Nevada was the last big player to set up a recreational marketplace. On July 1 this year, it began legal sales. However, it got off to a rocky start, as the first licence to transport the product from the farm directly to the store was issued two weeks later.

This left retail outlets concerned that they were going to run out of marijuana products as demand was better than expected during the first fortnight. Dispensaries in that state raked in more than $27 million in the first month of recreational sales, which generated $3.6 million dollars in taxes.

The largest cannabis store in the world opened its doors in downtown Las Vegas this month. NuWu Cannabis Market is an initiative run by the region’s Indigenous Paiute people. While taxes on their products are the same, the revenue is going towards funding health services for their community.

The Colorado experience

The first legal recreational cannabis purchase in the United States this century took place in Denver, Colorado on January 1 2014. And ever since, the Mountain State’s regulated market has been held up as the shining example of the benefits recreational marijuana can bring.

Victorian Reason MLC Fiona Patten advocates for legal recreational cannabis in Australia. She paid a visit to Colorado in July to get a firsthand experience of the state’s regulated market.

Ms Patten said she was “incredibly impressed” by what she witnessed. Whilst there, she met with a whole range of organisations, including the departments of health and finance, along with the police, to find out how the industry is fairing.

“Everyone’s fear is that the legal industry seeps into the illegal industry. And there are protections on that,” Ms Patten told Sydney Criminal Lawyers. “They believe that 85 percent of all cannabis that is sold in Colorado is sold through the legal system. We can’t say that for tobacco in Australia.”

For the wider community

The tax revenue generated by recreational cannabis sales in Colorado has been funnelled back into community healthcare services, including drug rehabilitation, as well as providing the funding to build new schools and for the allocation of grants to educational facilities.

As Ms Patten pointed out, Pueblo County in Colorado is going to begin providing grants to all high school graduates beginning their university education as of next year. And on top of all this, the Reason Party leader noted “there’s lots of consumer education.”

State officials in Colorado have reported the availability of the drug has had no overall adverse effects since it began being sold in retail stores. Cannabis products are heavily regulated, and they’re sold in childproof containers.

“They’ve got this amazing seed to sale tracking system,” Ms Patten continued. It’s required that each plant for sale is tagged with a radio frequency identification chip. “So, every seed that a licenced cultivator grows is tracked right to when the person buys the product that it created.”

The Australian scene

A 2013 National Drug and Alcohol Research Centre report found that Australian law enforcement activities cost over a billion dollars a year. The 2015-16 Illicit Drug Data report found that cannabis continues to be the most dominant illicit drug in Australia in terms of arrests, seizures and use.

The Australian Bureau of Statistics estimated that Australians spent in excess of $3.6 billion on cannabis in 2010. This is more than the $2.97 billion they spent on wine over the year 2015-16.

And an Essential Media poll taken late last year found that 55 percent of those surveyed supported cannabis being taxed and regulated like alcohol and tobacco.

For Ms Patten, it’s a no-brainer. “We are spending billions of dollars on prohibiting cannabis, when we could be earning billions of dollars on cultivating and regulating it,” she concluded. “We give this money to organised crime. Why wouldn’t we be giving it to our schools and hospitals?”

Paul Gregoire About Paul Gregoire
Paul Gregoire is a Sydney-based journalist and writer. He has a focus on civil rights, drug law reform, gender and Indigenous issues. Along with Sydney Drug Lawyers, he writes for VICE and is the former news editor at Sydney’s City Hub.

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