The world has been dealing with the pandemic for over a year now, causing serious health, social, and economic impacts. Even the United States experienced such negative effects. The good news is that we are now moving toward a more normal state.
Regardless, it is important to note that the “normal” that we are entering is not the normal that we used to know but a so-called new normal, referring to a post-pandemic world. In the new normal, everyone would need to observe the things that we have adapted to during the pandemic including following public health protocols.
For the cannabis community, one positive thing that can be observed during the pandemic is the series of legalizations across the US. A few states recently instated the full legalization of marijuana, while some legalized medical marijuana. Many states also listed cannabis as an essential service, leading to some adjusting their laws in light of the pandemic.
As the future of the cannabis industry is looking bright, it is important to note that lawmakers are looking at the marijuana market as a way to address some issues that we encountered during the pandemic.
Cannabis Industry Landscape
Before we talk about the potential of the cannabis industry in the new normal, let us first take a look at the current landscape. Currently, 38 out of 50 states have medical marijuana programs, 17 of which allow its recreational use. Many of the rest allow the use of CBD products within the legal threshold. Given this, there is no doubt that the industry will continue to expand. If in the year 2017, there were around 20,000 to 28,000 cannabis businesses in the US, it is reasonable to expect that this number has increased.
It is also important to note recent numbers, which show that the industry has a market value of $20.5 billion in 2020. Numbers have improved during the pandemic. According to studies, Americans spent a whopping $18.3 billion on legal marijuana when comparing April 2020 and April 2021 figures. This is a great improvement compared to past year-on-year figures at $10.7 billion, showing a $7.6 billion increase.
This can be an indication of consumers’ increased need to get the benefits that marijuana can offer including stress relief and relaxation, especially as stay-at-home orders have largely impacted the mental health of many individuals.
With such information, it is reasonable to expect that the cannabis industry will continue to go strong over the next years. In fact, projections values expect the sector to Studies expect this number to go up to $90.4 billion by 2026, showing a compound annual growth rate (CAGR) of 28%.
More states are also expected to legalize cannabis, what with the bills currently being reviewed in some. Connecticut, Delaware, and Rhode Island are looking over some House Bills that would legalize adult-use marijuana, while Alabama and North Carolina have respective Senate Bills aiming for medical marijuana legalization.
New Normal and the Cannabis Industry
The changes in the marijuana market during the public health crisis can have effects on the new normal. So, how can the cannabis industry contribute to the public and states during the new normal? Here are some of the most likely impacts:
· State Income Generation
The pandemic has ground the economies of many states to a halt. Many non-essential establishments closed, resulting in the temporary unemployment of some but the more long-term lack of work for many.
While personal finances of individuals and the cash flow of businesses are affected, states also saw a decrease in revenues due to reduced and limited economic activity. In addition, state funds are also bleeding as their governments work to address the physical, economic, and mental effects of the pandemic.
The opening of various marijuana companies in states where it is legal is expected to generate income. The most important economic aspect of legalization is that it regulates the production, retail, and consumption of marijuana products. Taxation is a huge part of these reforms.
Lawmakers across the United States see the industry as a great way to generate revenues. Bills proposing the legalization of marijuana highlight the industry’s potential to raise millions of dollars in tax revenues. This is supported by projections.
In the District of Columbia, the potential recreational marijuana excise tax revenue for a minimum of three years is $26,605,996, $135,837,117 in Maryland, and $139,977,848 in Virginia. Outside of the DMV, some states have earned much more than the projected amount. Some states even surpassed the projections. For example, Colorado was projected to earn $230,239,177 but it earned $307,278,327 in the fiscal year of 2020.
Some states also have projected earnings of billions. It is notable that many of the states are yet to reach the potential amount within.
· Repayment of State Debt
Aside from state funds bleeding dry because of the pandemic and its effects, the crisis also prompted many states to accumulate debt. In fact, one of the reasons that Illinois legalized the plant is to help pay off some of its debt. Given the tax revenues that can be generated by states with marijuana law reforms in place, legalization is a great move.
Colorado is one of the states that conducted a long-term study of the impact of legalization on the economy and tax revenues. The state began selling cannabis in 2014 and by 2021, the cumulative tax revenues it earned is a whopping $1.7 billion. Particularly, the state earned 4388 million in direct taxes which shows a 28% increase compared to last year.
The tremendous earnings states could potentially earn means that states can get additional money to pay for state debt they accumulated from different sources, particularly the pandemic.
· Job Creation in Legal States
Aside from the income, the industry can generate, a more impactful contribution it can offer is job creation. It is important to note that people lost jobs during the pandemic, which led to the decrease in people’s weaker purchasing power. This can affect states that rely on taxes generated by purchases.
While stimulus funds can help invigorate the economy, a more sustainable solution is to open up employment opportunities. The marijuana sector is one of the best job generators. In Colorado, the industry has created 18,000 direct jobs. These are openings in cannabis facilities such as cultivation sites, factories, dispensaries, and other similar establishments.
Aside from direct jobs, the state also saw a 23% increase in indirect employment. These are jobs that will enable the operation of cannabis businesses such as construction, legal services, and security.
Cannabis Activities That Could Continue in the New Normal
In light of the changes in the industry during the pandemic, some of them are bound to stick. The following are activities and policies that might continue after the pandemic.
· Weed Delivery
Before the pandemic, many states have restricted laws on cannabis product deliveries, while others prohibit it entirely. The stay-at-home orders and other public health protocols have prompted some states to relax their policies.
An example of this is the District of Columbia, which expanded its delivery rules in light of the pandemic. Before, dispensaries were only allowed to deliver within the window of 11AM to 7PM. New rules were released to widen the window to 9AM to 9PM, giving consumers and patients more time to get their products. Dispensaries were also allowed to deploy three delivery vehicles instead of only one.
Hopefully, the more relaxed rules imposed by the district will remain even in the new normal.
· Virtual Weed Events
Another important development during the crisis is the use of virtual platforms to hold cannabis events. In the past, on-site conferences and exhibitions were the most popular forms of holding events, especially as these are the most interactive mode. The pandemic has prompted organizers to go virtual to minimize the risks of exposure.
In the new normal, states will still need to imposed health and safety protocols, virtual events are here to stay. Even without protocols, organizers can still use such platforms to enable community members, industry leaders, and other participants all over the US and the globe to join these events even at the comfort of their own homes.
· Recreational Use of Cannabis
One of the most interesting impacts of the pandemic is that more people found cannabis more appealing. It is known to dispel stress and anxiety, which prompted many to try infused products, contributing to the increase in sales that the market saw over the past months.
People who picked up the consumption of cannabis products could continue to use them for recreational purposes, joining the millions of Americans who are regular consumers of these products. This is most likely to happen to individuals living in states where weed is legal.
Conclusion
The cannabis industry has to offer the economy, health, and society as we enter the new normal. Currently, we can observe its effects in its contributions as early as now. The potential contributions of the sector can greatly increase tax revenues, job creation, and even spur a few positive changes in the cannabis community.