Ex-pat Brit cannabis entrepreneur Elle Rahman, CEO of Oregon-based OME Health, elaborates on what the recent Election means for the industry in the USA.
UNDER a Biden-Harris Administration, expect to experience a sustained ‘Green Rush’ delivering a multi-trillion dollar boost to the United Sates cannabis economy.
The duo support recreational-use decriminalisation of cannabis, removing cannabis as a Schedule I drug in the Controlled Substances Act, and Federal medical legalisation; deferring to each State to manage and set laws pertaining to the cannabis economy.
Under the new administration, we anticipate the passage of either or both of the STATES and MORE Acts – which will allow for access to capital markets and financial services without risk of Federal sanctions.
This should allow cannabis business start-ups and existing operators to trade, as in any other commercialised industry.
Cannabis: The US Economic Saviour?
Prior to the Covid-19 pandemic, the US was already witnessing voter majority support trending towards legalising recreational-use in the states where medicinal-use is permitted.
The resulting increase in recreational sales during the pandemic – determined an essential service during state-wide lockdowns – has boosted analysts growth trajectories to $16bn in sales this year, up by $4bn from last year.
With the severely depressed state of the US economy resulting from the Trump Administration’s failure to appropriately manage the Covid-19 crisis, the complete elimination of businesses across multiple traditional industry domains and soaring unemployment rates, cannabis looks to be set the US’ saviour.
It has the potential to create new jobs and significantly boost Federal and State tax revenues.
Support for cannabis to resurrect the country’s economy was evidenced through ballots which saw an additional five states legalise cannabis.
These included; New Jersey, Arizona, Montana, Mississippi and South Dakota, bringing Cannabis legalisation to 36 of the 50 US States for medical-use and 15 states for recreational-use.
Looking at the potential revenues generated through legal cannabis businesses demonstrate the overwhelming economic argument, for the remaining States to join the club.
The State of Colorado legalised cannabis in 2012 and, as of September 2020, reported over $1.2bn annual sales, delivering State tax revenues of approximately $225m.
Oregon legalised medical-use in 1998 and became one of the first States to legalise recreational-use in 2014. It now has monthly sales of around $100m.
In Q2, 2020, California reported $85m in sales tax revenue and $22m in cultivation taxes and Illinois, only recently minted as a legal cannabis state, is now witnessing record sales in the realm of $70m a month.
Legalisation in New Jersey is expected to generate approximately $1bn a year and other States will be enviously wanting join these ranks.
Investments Across Every Sub-Sector
Under this new Administration, US entrepreneurs and companies will be increasingly confident to start and operate cannabis businesses.
Therefore, expect to see an up-tick in start-ups in every sub-sector, with investments pouring in to an industry which has proven to be stable during an otherwise fiscally-fraught time.
As the cannabis economy matures and displays increasing sophistication, we expect to see acquisitions from the leading CPG companies who have not been unable to touch the space due to the lack of Federal regulations.
And, thereafter there will be moves towards a global expansion, through traditional avenues, making cannabis the hottest commodity since sliced bread!
Elle Rahman, CEO, OME Health