The Cannabis Prohibition Effect

By Alex Todd's

In California, Michigan, Arizona, and many other states cannabis cultivation, use, and distribution may be legal but there is still a major roadblock – federal prohibition. According to reports from the end of last year, 68% of Americans support cannabis legalization, but I still see us fighting the challenges of prohibition for at least a few more years due to all the politics behind it. 

In the news, we see a lot about the back-and-forth about what’s going on in the legislative side but there are small businesses, like mine, affected by these restrictions on a day-to-day basis. Small businesses are relying on cash and can’t use trusted financial institutions to safely conduct business. Not every legalized state allows entrepreneurs with cannabis-related convictions to start a cannabis business or work in one. All these factors amount to major halts in this country’s economic growth.

Relying on Cash

Small business owners face major dangers when relying on cash. Cannabis businesses that aren’t backed by millions of dollars from investors, have a higher risk of being robbed and losing everything by relying on a cash-only business model. Not only are businesses like ours more prone to robberies, but the federal authorities have seized money  in legal states and in some cases, with no evidence.  In congress, the SAFE Banking Act has been met with repeated roadblocks and these delays have prevented us from accessing major financial institutions to hold our money. Relying on cash leads to payroll issues, vendor tensions, cash divergence, complicated IRS requirements for large cash deposits, high taxes and more. The increased risk of robberies for cultivators and cannabis businesses is exponentially higher than it should be. 

There is a lot of back and forth on the legislative side but businesses across the country are putting their blood, sweat, and tears at risk. We need access to financial institutions, or the illicit market will continue to thrive. We need somewhere to safely hold our money without the fear of violent robberies or federal seizures for running a legal business. 

Economic Benefits

The legal cannabis industry has rapidly obtained a multi-billion-dollar price tag. Time and time again small businesses prove themselves to be the backbone of thriving local communities because the money doesn’t go directly to a corporation’s headquarters – it goes right back into the community. We all grew up with our local mom and pop stores, saw them slowly disappear over time due to large corporations moving in, and the negative impact. Local cannabis entrepreneurs, like myself, are changing that and bringing the money back to town. 

The U.S. tax revenue from recreational cannabis in 2021 alone was $3.7 billion, and the projections for the coming years are even higher. The cannabis industry isn’t slowing down anytime soon. How the economy performs is typically the most important issue for Americans, so lifting the federal prohibition on a highly profitable business should be a no brainer. 

Cannabis Convictions 

Federal legalization not only offers us the opportunity for deep economic growth but the ability to rebuild and reinvest into affected communities on a large scale. It allows us to reverse the damage the war on drugs has had on communities of color. It is critical that we do not leave these folks behind as the industry grows.

I support the decision of states prioritizing business owners with prior convictions in the licensing process, and I commend Governor Hochul’s debut of a $200M New York Social Equity Cannabis Investment Fund. Creating equitable opportunity, providing resources, and breaking down barriers to entry is key in assuring the true pioneers of the industry are making the big decisions that benefit the community from the top – and that their voices aren’t taken away by big corporations that value the bottom line over the plant. Prioritizing social equity and allowing the previously incarcerated to build generational wealth for their own families as a new business owner is a massive step towards effectively lifting this nation out of poverty.

Without reinvesting in the folks negatively affected by the war on drugs, a federally legalized cannabis industry will fail.

Removing the prohibition on cannabis may seem like a radical change, but the blueprint in what it could look like is already in place. Just look at New York, California, Colorado, Arizona, Michigan, and all the other states in the U.S. alone.