From airlines and hotels to restaurants and bars, nearly every major industry has been severely hit by the COVID-19 pandemic. Yet, one industry is not only navigating the pandemic-related challenges relatively well, but also is positioning itself for a monumental change that will unleash its tremendous growth potential. I’m talking about the U.S. cannabis industry and how the COVID-19 pandemic is accelerating the industry’s march toward national legalization.
As it stands today, cannabis is federally illegal in the U.S., defined by the federal government as a Schedule 1 drug, along with heroin and LSD. Yet, 34 of the 50 states, including Washington D.C., have legalized some form of medical and/or recreational cannabis use, with many others making significant progress in decriminalizing cannabis and expanding its legal access to consumers. And for the states that have already legalized cannabis, especially for adult recreational use, billions of tax dollars have been generated, with much more to come. Take California, for example, which has generated more than $1 billion of total tax revenue since adult recreational use was made legal in January 2018. Or Colorado, which also exceeded that milestone in 2019, five years after the state had become the first to legalize cannabis.
This all points to the economic power of this industry to create tax revenue and, just as importantly, jobs—something that many governments, including the federal government, are now beginning to appreciate more fully, as it struggles to cope with a ballooning budget deficit and a staggering 30+ million people applying for unemployment as a result of the pandemic.
We are seeing this increasingly broad support of cannabis’ economic and social potential on many fronts, from a vast majority of states deeming it to be an essential business that’s allowed to remain open despite wide-sweeping stay-at-home orders, all the way to bipartisan legislative efforts to ensure the industry has access to federal economic relief packages. When the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27, it specifically prohibited businesses that are illegal at the federal level—including cannabis—from accessing the $350 million loan program.
Yet, just two weeks after that historic bill was signed into law, nearly three dozen members of the U.S. House of Representatives signed a letter addressed to congressional leaders urging that cannabis companies should be included in the next round of federal relief packages aimed at boosting the economy. This bipartisan letter emphasized the cannabis industry’s critical role in the U.S. economy, employing nearly 240,000 Americans and creating nearly $2 billion in tax revenue in 2019 alone.
As many participants in the industry would say, “cannabis is no longer emerging, it’s essential.” And the overwhelming majority of U.S. adults agree, according to a survey from the Pew Research Center, with 91% of those surveyed believing that cannabis should be legal either for medical or recreational use—a number that has significantly increased in recent years as the health and recreational benefits of cannabis have become better understood, accepted, and adopted.
So, it’s fair to assume that, at least in the near-term, the federal government will be laser-focused on containing this pandemic, supporting those who have been deeply affected, and keeping the economy afloat. However, once we start to move past these near-term issues, the U.S. government will look more deeply at the bigger issue of how we can reenergize our once booming economy and labor force—and legalizing cannabis at the national level will undeniably be an indispensable tool to solve that problem.
Nick Kovacevich is the CEO of KushCo Holdings, a publicly traded company that has sold over a billion vape devices. This The Fresh Toast article originally appeared on Benzinga.