Article by Sean Williams, Madison.com
The marijuana industry is growing like a weed. Last year, legal weed sales grew by 34%, according to cannabis research firm ArcView, and by 2021, legal sales (which includes medical and recreational pot) are expected to exceed $22 billion. Investment firm Cowen & Co. has an even more bullish forecast on legal weed, calling for $50 billion in sales by 2026. These estimates are what have revenue-hungry state governments, as well as investors, drooling with excitement.
Take Colorado as a good example. Residents in Colorado legalized recreational cannabis in 2012 along with Washington, becoming the first two states to do so. Last year, Colorado generated more than $1.3 billion in legal weed sales, two-thirds of which came from the recreational side of the equation, leading to almost $200 million in tax and licensing-fee revenue.
Investors have relished in the growth as well. Most marijuana stocks have doubled or tripled in value over the past year, if not more. We’ve even seen a few Canadian medical marijuana producers and retailers turning a quarterly profit, which is a nice departure from the years of losses investors have been accustomed to with pot stocks.
The federal government constrains pot’s potential
But the major hurdle the marijuana industry has yet to overcome is escaping its restrictive Schedule 1 status from the U.S. federal government. As a Schedule 1 drug, marijuana is recognized as having no medically beneficial qualities, and is illegal. This leaves cannabis companies to face a number of disadvantages that include having little to no access to basic banking services, and having to pay tax on their gross profits instead of net profits since they can’t take normal business deductions.
Most lawmakers and investors look at the marijuana industry from a profit-loss standpoint, but there’s also a human factor involved. Medical marijuana is currently approved in 28 states and Washington, D.C., and it’s often prescribed to treat a host of ailments including glaucoma, epilepsy, and pain associated with cancer, to name a few. Because the U.S. doesn’t have a nationwide medical marijuana program (which is something 93% of survey takers in the latest Quinnipiac poll would like to see happen), tens of millions of Americans are denied access to medical cannabis.
A national medical marijuana program could save a lot of money
Yet, a recent study suggests that if a medical marijuana program existed, it would not only save lives but a sizable amount of money in the process.
As background, in July 2016, father-daughter duo David and Ashley Bradford of the University of Georgia published a study in the journal Health Affairs that examined the effect of medical cannabis on Medicare in states that had legalized medical pot. What they found was a $165.2 million reduction in prescription drug expenses for Medicare in states that had legal medical weed. Across the U.S., they estimated that nearly $500 million could be saved for Medicare if medical marijuana were legalized nationally.
In particular, the July 2016 study notes that there were 1,826 fewer doses of pain pills issued under Medicare in legal medical weed states, 562 fewer doses of anxiety meds, and 541 fewer doses of nausea pills, all based on 2013 data. The lower doses of pain pills is of particular interest because opioid overdose-related deaths totaled 20,101 in 2015, according to the American Society of Addiction Medicine. Though it’s possible to overdose on marijuana, too, no one has died from a pot overdose. Thus, some pundits have suggested that access to medical marijuana is a way to fight the opioid epidemic in order to save lives and reduce costs.