(Newswire.net — January 6, 2021) Sacramento, CA — Although the pandemic is far from over, several promising vaccines have emerged to lend a newfound hope for COVID-19’s eventual resolution. With the end seemingly in sight, governments on a local, state and federal level will quickly begin seeking new and innovative ways to help their economies recover from the consequences of 2020’s downturn. And when it comes to creating jobs, replenishing tax budgets, and reviving local economies, no sector offers quite as much promise as the budding cannabis industry. Garib “Justin” Karapetyan, CEO for Sacramento-based business KOLAS, provides insight on how the legalization of cannabis is the answer to a post-pandemic economic recovery.
Comparing Cannabis as an Illicit Substance to Alcohol Prohibition
For economists and historians alike, the cannabis industry’s promising role in post-COVID economic recovery bears a meaningful resemblance to the way in which America’s 1933 end to alcohol prohibition helped the nation recover from the Great Depression. “Just as in 1933,” states Karapetyan, “the end of cannabis prohibition will stimulate our national economy.”
Like the historic alcohol prohibition, the cannabis plant’s national classification as an illicit substance has needlessly hindered the nation’s economy, forcing the emergence of underground markets that foster illegal trade. Outside of breeding organized crime and violence, these illegal trade networks rob local, state, and federal governments of potential tax revenue.
During the years of alcohol prohibition, for example, criminals seized control of the illegal liquor trade, capitalizing on their monetary gains to further leverage control. When prohibition ended, illegal profits dried up, dissolving the mob’s power and influence. In a similar sense, the past decades of cannabis prohibition have correlated to a rise in gang violence in the United States. For reference, an astounding 30% of Mexican drug cartel revenue comes directly from illegal cannabis sales.
Meanwhile, there remains an undeniable market for cannabis, regardless of its legal status. According to a recent poll, more than half of Americans have sought out the plant at some point in their lives. Since Canada legalized cannabis in 2018, many consumers have crossed the border to purchase goods, causing the mass reallocation of revenue that could otherwise stay within U.S. borders. This occurrence again mirrors the historic alcohol prohibition—during prohibition years, Canadian companies became the largest smugglers of alcohol. Looking to the post-COVID years, it is reasonable that states will begin to seek routes to keep those dollars within their own communities. The most effective way to achieve that is clear: it requires cannabis legalization. According to Karapetyan: “A state-by-state framework – or adoption – is needed to allow the private cannabis sector to flourish.”
More than half of a century has passed since the United States passed the 1970 Controlled Substances Act (CSA) officially classifying cannabis as illegal for any use. Its hard to say exactly how much revenue the country has lost on cannabis-related taxes since then. To estimate, we must look again to the prohibition years: during America’s alcohol prohibition era, the federal government lost out on an astounding $11 billion in related taxes. Alcohol prohibition, however, lasted only 13 years. Cannabis prohibition, on the other hand, has stretched more than 70, making tax revenue losses reasonably unfathomable.
According Karapetyan, “just as the Great Depression required the U.S. government to reassess its stance on alcohol prohibition, the economic downturns caused by the current pandemic have more states looking towards the cannabis industry. Over the last several years, many states have made movements to legalize the plant. In clearing away legal barriers that have previously kept the industry at bay, these states have welcomed the development of promising cannabis brands like KOLAS, which offer essential products and high-caliber expertise on the plant.” Currently industry-strong with multiple retail outlets and a significant intricate business presence in the capital of California, KOLAS has brought both jobs and tax revenue to the Sacramento area.
The Positive Impact of Cannabis Companies
Looking on a broad scale, the positive benefits that companies like KOLAS bring to local economies have successfully enticed more states to push for legalization. Many are increasingly looking to the cannabis industry to revitalize their economies in the post-COVID world. Nothing, perhaps, illustrates this fact quite as poignantly as the 2020 election results; while the presidential winners remained uncertain for many days following poll closures, states that voted on legalizing marijuana had overwhelmingly definitive outcomes.
As a result of propositions passed in the 2020 election, states like Montana, New Jersey, South Dakota, and Arizona approved legislation legalizing the plant, opening their doors to businesses like KOLAS with proven track records of contributing positively to local economies. A recent study by New Frontier Data suggests that national legalization could put more than $128.8 billion in tax revenue into the government’s pocket, creating millions of new jobs and bolstering the country’s economy. Karapetyan notes that “these states sought not only increased jobs and tax revenue, but also the adoption of regulation, as there is more room for corruption without that.”
The Bottom Line
Of course, the end of prohibition was not wholly responsible for the country’s climb out of the Great Depression era, and cannabis legalization may not single-handedly rebuild the American economy. That said, the new industry which emerged at the prohibition’s end did play an integral role in supporting key New Deal projects that pulled American families out of economic hardship during one of the country’s darkest downturns. In assessing our current economic situation, the cannabis industry offers a similar opportunity—one that state governments, with the help of brands like KOLAS, will surely capitalize on in coming years. Karapetyan sees a broader vision beyond just recovery: “As a new commodity enters the market, we will see innovation, tech, science and formulation take place. That’s where legacy and prosperity are bred.
About KOLAS
KOLAS is a vertically integrated-horizontally diversified cannabis and hemp company based out of Sacramento, California. Being part of one of the fastest-growing industries in the United States, KOLAS also provides services and real estate to the specialized cannabis and hemp industries including compliance, SOPs, and business “best practices”.