Marijuana executives are feeling optimistic about the prospects of federal legalization after cannabis dispensaries were deemed essential during the coronavirus pandemic.
“When we all start to be able to lift our heads from this COVID experience, we are going to be faced with a scenario where a lot of jobs have gone away, a lot of economic development impact has disappeared,” Charlie Bachtell, CEO of Cresco Labs, told CNBC in a report on Sunday (April 19). “How are we going to bring that back? I think cannabis has to be part of that discussion.”
Marijuana dispensaries were designated as essential businesses in 8 of the 11 states where adult use is legal.
CNBC spoke about the future of the industry with top cannabis firms in the U.S. — Cresco Labs, Curaleaf and Green Thumb Industries — as well as marijuana investor Matt Hawkins.
According to research firm Cowen, the marijuana market is valued at about $56 billion in the U.S. but some 90 percent of sales escape taxation in the black market.
Curaleaf CEO Boris Johnson said that after the Great Depression, governments scrambled to find more ways to generate taxes, and cannabis “is a significant revenue generator.”
Following the depression, “They lifted prohibition on alcohol and therefore started to tax it — and it became a major revenue generator for both the federal and the local governments around the country.”
Sales have also surged since the coronavirus lockdown was initiated in March. Cowen research indicated that weekly sales last month were up 17 percent compared to March 2019, totaling $134 million in California, Washington, Nevada and Colorado. The average purchase also went up by 47 percent in the second half of March. Cannabis investor Matt Hawkins said that the data supports the argument in favor of legalization.
“You can just point to the fact that we have been deemed essential, why are we not legal?” said Hawkins, managing partner of Entourage Capital, a private equity firm with $200 million invested in Green Thumb Industries and other cannabis producers. “There is going to be a need for increased tax revenue and where else to look but at a legalized industry like cannabis, that is one of the few growth sectors in the world right now.”
At least three states — New Jersey, Arizona and South Dakota — are expected to have adult-use legalization on November ballots. New York, Connecticut and Rhode island already have legalization bills pending.
Members of Congress from both sides of the political fence are pushing for the marijuana industry to be included in the next round of government coronavirus relief funds and made a formal request in a letter addressed to House of Representative leaders Majority Speaker Nancy Pelosi and Minority Leader Kevin McCarthy.