Here’s what the history of prohibition in the U.S. can tell us about the future of cannabis legalization…
Nearly a century ago, in 1929, the Great Depression hit the United States – shuttering businesses, devastating families, and changing the U.S. economy forever.
Meanwhile, alcohol prohibition in the U.S. – which began in 1920 – was in full swing.
And so was the black market it created.
But public opinion about prohibition began to change dramatically during this time.
Folks started to realize that all those tax dollars legal alcohol sales had been bringing in before prohibition were now being lost – an estimated $11 billion that could have flowed into the U.S. economy when it needed it most.
And they also realized that the hundreds of thousands of jobs the legal alcohol industry had previously created could get people back to work.
Fortunately, the federal government came to its senses, and repealing alcohol prohibition in 1933 ended up being a major catalyst for bringing this country out of the Great Depression.
Fast forward just a bit, and the U.S. beer industry was responsible for creating 2.19 million jobs that paid more than $101 billion in wages and benefits in 2018.
As we speak, the U.S. is grappling with an eerily similar scenario.
It’s a scenario that, as we’ve seen with the beer industry, could generate billions and put people back to work.
The COVID-19 Catalyst
Similar to what was seen during the Great Depression, the U.S. is experiencing record unemployment numbers in the midst of the COVID-19 crisis.
Many businesses are struggling to survive, with industries like commercial real estate and travel having to make difficult but necessary adjustments.
And states across the country are losing millions and even billions of dollars in revenue.
New York, for example, anticipates a revenue drop of up to $7 billion compared to what it was previously expecting.
But despite the economic slowdown, the cannabis sector is performing remarkably well.
Revenues are surging, with legal cannabis sales up 30% to 40% across the country. In some cases, sales have even climbed 100% since January.
Hundreds of Billions of Dollars in Federal Tax Revenue
Fact is, the tax revenue that legalization could generate in states like New York would have a massive impact on repairing the economic damage of COVID-19.
In Colorado alone, adult-use legalization brought in $1.2 billion in tax revenue for the state from 2014 to 2019, according to New Frontier Data – and it’s estimated that some 39,000 jobs were created just in 2019 by the state’s legal cannabis industry.
And that’s just one state.
Once full legalization inevitably happens, it could bring in an additional $128.8 billion in federal tax revenue by 2025, along with 1.6 million jobs.
Fortunately, federal legalization is now a question of when – not if.
Much like public opinion for repealing alcoholic prohibition nearly a century ago, the vast majority of Americans – on both sides of the aisle – support cannabis legalization.
Record-setting cannabis sales in the last couple of months have proven people are willing to pay for a safe, regulated cannabis product.
When those sales from the illicit market start filtering into legal markets, that will be reflected in incredibly higher stock prices for the companies that you have already built a ground-floor position.
For those of you who may just be getting started, you can find out which companies will secure you the highest potential gains with our list of top pot stock recommendations right here.
3 responses to “Ending Cannabis Prohibition: $130 Billion in Revenue, 1.6 Million Jobs, and Unprecedented Wealth”
June 02 2020