Why did they Legalize cannabis for recreational use in California in 2018?

Why did they Legalize cannabis for recreational use in California in 2018?

There are several reasons why the state of California legalized recreational cannabis, but probably the most important is the prospect of the economic improvement associated with the decriminalization of the product. California is the 6th biggest economy in the world, home to nearly 40 million people and has a turnover of more than $2.5 trillion annually.

The legalization of Cannabis provides a significant revenue opportunity for the state. Additionally, California has some of the USA’s most open-minded and forward-thinking residents. As a result, it wasn’t a great surprise that they have been a trailblazer in creating a new market for the sale and distribution of recreational Cannabis.

 

ECONOMICS

California is the 6th biggest economy in the world, home to nearly 40 million people and has a turnover of more than $2.5 trillion annually.

  

So, what is cannabis worth to the Californian economy?

Financial analysts Green-wave were one company who advocated the financial benefits for California and projected the ways in which a legalized Cannabis industry could contribute to the state’s funding through tax. They valued the likely impact at as much as $5.1 billion in 2018, from which, the State was expected to receive a whopping $1 billion in taxes.

Investment bank, Cowen also suggested that legalizing cannabis for recreational use in California would treble the legal cannabis economy, with its associated tax revenues. Cowen also predicted that the US legal cannabis industry will be worth in excess of $50 billion to CA by 2026.

In 2016 the Californian people went to the ballot box, to vote on whether Cannabis should be legalized and 57% voted Yes. The following year in 2017, a Gallup survey showed that 64% of American adults supported the legalization of Cannabis.

With the American people behind the initiative, and taxes revenues looking positive, it was only a matter of time. In January 2018 Retail Cannabis shops opened their doors for the first time in California to brisk trading.

  

The major factor : Public Opinion Backs Legalizing Recreational Marijuana

  • Best Public Policy:
    Because of concerns for people’s civil rights and civil liberties, many people now consider that restricting a relatively harmless substance like Cannabis, is not in the general public’s interest.
  • Majority support:
    The stereotype is that liberal, hippy types have always demanded legal marijuana. More recently (and more scientifically) The Pew Research Center has found that there is growing support to legalize marijuana from all generations and in all areas of society. Interestingly, they analysis suggested that potential buyers included both conservatives and religious sectors, something which might not otherwise have appeared likely.

With Californial’s legislation changes, 20% of Americans now have legal marijuana,  even though cannabis remains classified as an illegal narcotic under U.S. law. There are still, however, some problems that California (and other states which have done or will soon do the same thing) need to face.

 

MONEY

The likely impact at as much as $5.1 billion in 2018, from which, the State was expected to receive a whopping $1 billion in taxes.

  

Problems with the new California Legal Recreational Use Marijuana Law

  • Cannabis is still illegal at the Federal Level:
    Although the state of California has legalized recreational use of cannabis, it is still illegal under Federal law. For political reasons, the Federal Government has ignored the new laws introduced in many states.
  • Financing problems:
    Because of the contradiction between the federal and state laws, many lending institutions (banks) will not lend money to anyone involved in the marijuana industry. This is because of concerns that they may be considered as being party to an illegal activity at a federal level when they have to enter proceeds from sales in to, for example, federal bank accounts.
  • Taxation Problems:
    There are also tax rules such as 280E which does not allow businesses involved with marijuana to file for the normal business tax deductions.
  • Federal laws contribute to the possibility of crime:
    Many legal retail businesses for recreational use cannabis have been set up and are doing well, but they are not able to use any banking services or obtain credit. This has forced them to become cash only businesses with the problems of securing their cash and becoming targets for robberies and crime
  • International Drug Treaties:
    The US (along with most other countries) is a signatory to three international drug treaties: These are the 1961 Single Convention on Narcotic Drugs, the 1971 Convention on Psychotropic Drugs and the 1988 Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of The United Nations. These treaties require the participants to prohibit and limit the use, possession, trade and distribution of drugs except for scientific or medical purposes as well as to stop international drug trafficking.

The problem is that these treaties could potentially prevent any country from decriminalizing marijuana except for medical use. These treaties spell out very clearly that illicit drugs aren’t to be allowed for recreational use. In some ways, California is breaking an agreement the country has made.

 

Summing up what Australia can learn from the Californian experience

Although many people suggest that the laws they passed were just a formality (because the law has been liberal on Cannabis possession for recreational use since the mid 1990’s when medical marijuana became legal), it has far reaching effects. California has enacted the wishes of the majority of its citizens and seems set to benefit economically and will provide many work opportunities.

What’s clear from their experience, and the problems they have to work through, it a series of lessons which Australia would need to consider before it embarked on a similar path. The USA’s Federal Government must align their recreational marijuana laws with the wishes of the states – a potential stumbling block that Australia also has. Failure to do so exposes Californian business which act legally under stake laws to the potential of robbery.

Finally, at a national level, Australia must consider the treaties to which the Commonwealth is signed up. It may be more appropriate to withdraw from those agreements before legalizing marijuana in Australia, than to ignore one for the expedient delivery of the other, as they have in the US.