The USA has spent more than $5 billion in the past 10 years to fight the cannabis industry, and with state legalization now a reality in two thirds of the country, the cannabis industry in the USA is starting to show the same problems that have plagued Canada’s legal market.
Canada has long been the cannabis capital of the world. The country has been permitting medical patients to use cannabis for various ailments since the early 1970s, and medical cannabis has been legal for recreational use since 2001. In contrast, the US hasn’t enjoyed the same success with cannabis legalisation.
Canada’s legal marijuana market is the envy of the world. The country has been at the forefront of the global movement to legalize cannabis, with full-scale legalization taking place in 2018. This has been a boon for the country’s tourism industry, with Canada welcoming more visitors than ever before. In the year ending March 31, 2018, Canadians spent over $5.7 billion on marijuana, almost double what they made in 2014.. Read more about top cbd stocks 2021 and let us know what you think.
According to a recent study by Flowhub, the cannabis business in the United States is worth $61 billion. However, if Uncle Sam gets involved, much of the business will be compelled to adapt.
Ask any longstanding advocate of cannabis legalization, and they’ll tell you that a taxed and controlled marijuana market is all the nation needs to turn things around, ready or not. Consider how much money the federal government can earn just through tax collections, they frequently argue.
The only issue is that such individuals are the ones that refuse to pay their taxes. Because many consumers have continued to buy from the illegal market, the cannabis sector in Canada now has a 1.1-billion-gram excess of marijuana that they can’t sell. Some even believe that illegal cannabis sales have doomed the Canadian marijuana industry. Of course, this raises the issue of whether the cannabis industry in the United States is destined to follow suit.
Stockpiles of Canadian marijuana are spoiling before they can be marketed. Over the last several years, about 500 tons of high-quality retail cannabis has been destroyed. According to sources, the catastrophe is due to the fact that 50% of marijuana bought in the northern country still comes from the illicit market. That’s correct, despite having a legal supply for marijuana, many choose to purchase it from a local street dealer. Why? Because it is less expensive and allows individuals to remain anonymous. Some people do not want their marijuana usage to be made public, whether it is legal or not. Unfortunately, Canadian cannabis businesses’ revenues are being sabotaged by their devotion to the illicit market.
In other places that have legalized marijuana for recreational use, we’ve observed a similar loyalty to the illicit market. Illicit marijuana sales are still a problem in California, Illinois, and Massachusetts. Some argue that the issue stems from high starting costs and license fees. Of course, there are all those marijuana users — the same ones who said during prohibition that taxing cannabis would save the economy — who have flatly rejected the notion of paying taxes on something they can still buy cheaply from a guy down the street.
However, tango requires the participation of two people.
Meanwhile, the federal government is studying the Great Cannabis Experiment and pondering how to scale it up and make it lucrative throughout the country. They claim that removing prohibition is in the interests of social justice and mending the harm caused by the drug war. Still, they want to find the “magic formula” that will make legal marijuana as beneficial to the United States as alcohol and cigarettes. So far, it seems that everyone engaged is failing.
If you recall, industrial hemp was expected to give a huge financial boost to the nation when it was legalized again in 2018. It would be used to store food, paper, tires, and other items. However, it has failed to gain traction. There are problems with overstock, high processing costs, and a lack of new markets. It seems that the country is not yet ready to accept it.
Despite this, financial analysts believe the US cannabis industry will not face the same economic difficulties as Canada.
According to Korey Bauer, chief investment officer and portfolio manager of Foothill Capital Management’s Cannabis Growth Fund, “there has to be a sense of caution when looking at Canadian cannabis businesses compared to their U.S. counterparts who are extremely successful and continue to expand.” “At these present levels, valuations in the United States seem to be considerably better.”
A recent report from Flowhub finds the U.S. cannabis industry is worth $61 billion. However, much of the industry will be forced to change once Uncle Sam gets in on the mix. States do not have any federal controls and are mostly left to legalize how they see fit — for now. Senate Majority Leader Chuck Schumer is pushing a bill this year that, if passed, would create national controls. Pot prices will conceivably get more expensive once marijuana goes legal nationwide.
It’s possible that this may result in a surplus scenario similar to what’s occurring in Canada to the north. Let’s just say that your local marijuana dealer isn’t going anywhere anytime soon.
Canada has realized that the demand for marijuana and cannabis products is so high that supply can’t keep up with demand, and has been willing to put its freedom and security on the line to get it. Canada’s Prime Minister Justin Trudeau could have made the same argument about the US when discussing cannabis legalization.. Read more about trulieve vs green thumb and let us know what you think.
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