Cannabis: Any easy path to job creation
(Originally published via the Huffington Post)
Dear President Trump:
Although my Facebook feed is a rather dramatic and unreliable source for information about your administration, in the past few weeks it has been clear about at least this much: you’ve had a very busy first month. So, I’ll cut to right to the chase: I think you should consider cannabis. More accurately, I think you should consider the legal cannabis industry as a potential catalyst for the “unbridled economic growth” you’re hoping to deliver to those working-class Americans who supported you, and even those who didn’t.
During your campaign, you spoke about your pro-growth approach to economic policy, promising to create 25 million jobs in the next decade. Since technically the government can’t “create” all those jobs, we both know that what you mean is that you plan to foster an economic environment in which the free market will generate 25 million new jobs by itself. The best way to do that is to remove government obstacles. “One of the keys to unlocking growth,” the Fact Sheet on your website argues, “is scaling-back years of disastrous regulations unilaterally imposed by our out-of-control bureaucracy.” I challenge you to find a better example of such disastrous regulations than the federal criminalization of marijuana.
Back in 1990, you publicly condemned the so-called “War on Drugs.” As I’m sure you know, the US spends more than $51B annually on this failed policy. What you may not know is that according to the FBI’s annual Uniform Crime Reports, about 84% of all arrests for drug law violations in 2015 were for mere possession—a non-violent offense. Further, a full 43% of those were for marijuana, and almost 90% of those were for possession alone. Conservatively assume mere 6-month sentences on average, and that’s potentially another $9B we’re spending annually on incarcerating people for marijuana possession, many of whom are disadvantaged minorities.
But that doesn’t begin to take into account the devastating scar that a felony drug charge leaves on someone’s record, permanently impacting his or her ability to successfully participate in the labor market and contribute to that 3.5% economic growth you’re targeting. As any (Austrian school) economist but can tell you, hidden costs can destroy even the most plausible-seeming policies—a fact that the budget-hungry DEA will happily sweep under your Oval Office rug.
On the other hand, the United States has a rapidly growing “legal” cannabis industry. Less than 3 years after legalization, Colorado’s dispensaries sold $1.3B worth of cannabis, representing over 30% year-over-year growth and generating $175M in tax revenue and 23,000 jobs (0.4% of Colorado’s population). As much larger states like California come online, analysts project a $100B industry by the end of the next decade. That’s a whole lot of economic activity to help revitalize a beleaguered economy.
So what can a President do to capitalize on this?
First and foremost, don’t kill it before it grows. Attorney General Sessions has been an ardent advocate for states’ rights, but demonstrably lacks even a basic understanding of marijuana or the history of its abolition in the United States. Go read about Charlotte Figi and Jayden David and try not to break down in tears. Go read about Harry Anslinger and his overtly racist crusade to demonize a legitimately useful plant, and try to keep your blood from boiling. Ask the DEA how many recorded deaths from cannabis overdoses there have ever been. Ever. And then, as a reminder, go take another look at their budget. Armed with this basic information, and the knowledge that 60 percent of Americans now support legalization, set aside some time to remind the Attorney General about his unwavering dedication to states’ rights.
Second, advocate the complete removal of cannabis from the Controlled Substances Act. Support bills like the Ending Federal Marijuana Prohibition Act of 2017, recently introduced by Representative Tom Garrett. Don’t accept a repositioning of cannabis from Schedule I to Schedule II as Senator Clinton suggested during her campaign; this will just transfer power to large pharmaceutical companies at the expense of the swelling entrepreneurial community responsible for creating all those anticipated jobs.
Finally, help with the banking problem. Federal law still prohibits banks from servicing legal cannabis companies. Most banks even refuse companies that don’t “touch the plant”—such as software, agricultural technology, and even investment firms—because they fear retribution from the federal government. Create a path for banks to service cannabis-related businesses and remain in compliance with AML and KYC regulations. Aside from the logistical nightmare that banking problems create for industry entrepreneurs, they also force companies to deal in cash—sometimes a tremendous amount of cash. “We’ve had folks come in with hundreds of thousands of dollars,” recalls George Runner of the California State Board of Equalization. Large amounts of cash attract actual criminals—violent criminals and gangs—and could create real impediments to the growth of an otherwise exploding industry.
The compelling thing about the cannabis industry is that you don’t even have to do much of anything to reap the benefits of its inevitable economic growth. Like so many other industries, to make cannabis great all the federal government really needs to do is to get out of the way.
Managing Director, Gateway