Federal Laws Stalling a Potential Global Marijuana Market
Marijuana has been legal in many states beginning with Colorado and Washington state in 2012. As of 2020 adults of the age of 21 can purchase marijuana recreationally in eleven states and Washington, DC with Illinois just joining the group as of January 1stof this year. An astounding 33 states in the U.S. have legalized the medical use of marijuana as well.
These shipping restrictions make it impossible for high quality marijuana farmers to ship their products internationally and even to other states where it is yet to become legal. These laws are keeping what would be a high demand product internationally from becoming a legal trade product and potentially bringing significant revenue to the U.S. and farmers.
Canada has taken notice of the absence of high quality and trusted marijuana on the national market and become the prevailing exporter of marijuana in the expanding global trade. In 2019 the international marijuana market reached $14.9 billion in sales, according to ArcView Market Research and BDS Analytics. The U.S. is set to continue missing out on this industry as long as federal laws on the product remain the same.
Unmatched Quality
Farmers and government, alike, being denied the opportunity for significant revenue is not the most upsetting thing about these federal laws. It is well known that U.S. marijuana farmers produce some of the most meticulously grown marijuana available in the world.
Most reputable marijuana farmers in the U.S. implement quality and safety practices including custom blend nutrients applied to their plants, additional carbon dioxide added to the room to promote growth, and intentional insect release to prevent pests without the use of pesticides to name a few. These practices, and more, make the marijuana legally grown in the U.S. safe and effective. Allowing these products to enter the international market would ensure greater safety for consumers.
Since 1996 California marijuana growers have been in practice, this is longer than any other location aside from Amsterdam. Seeds produced in this state are distributed worldwide for their quality and most other international producers have tried to replicate the quality found in marijuana grown in California.
Potency of marijuana flowers grown in the U.S. by reputable farmers is another aspect that is missing from the international market. The focus of industry in the U.S. is placed largely on a level of genetics and complexity that allows manufacturers to pioneer the way in products like edibles, tinctures, and oils. No other nation makes the variety and diversity of cannabis related products than the U.S.
Safety of U.S. grown marijuana is yet another aspect that would make it a highly demanded product internationally. International marijuana customers place an important focus on quality and safety practices, of which most U.S. are already meeting because they are regulated by a governing agency, unlike most other manufacturers in other areas of the world.
Growth Restrictions
Federal regulations have not just made it impossible for legal marijuana farmers to take advantage of international trade, but in some cases the restrictions have led to hindered growth for these family-owned businesses.
Certain restrictions handed down by federal law make it difficult for many farmers to gain easy access to banking. One Denver-based farm had to pay to install an HVAC system with cash because they could not get a loan to pay for the installation. While the company was able to do use cash for this large investment, because of their profits, many smaller companies just would not be able to do the same. This limited access to beneficial loans keeps many companies from thriving in the business.
Canada Gets a Head Start
Marijuana was nationally legalized in Canada in 2018. At that time, Canadian marijuana firms were able to be listed on NASDAQ and the New York Stock Exchange.
Because Canadian growers are able to sell internationally, they are wise in getting a head start in the industry by signing trade deals and obtaining licenses to sell internationally. By having these contracts and deals developed they are getting ahead of any U.S. growers that may one day be able to sell internationally. This would put U.S. companies behind and reduce the pool of quality clients available.
The market for international recreational marijuana is small, but medical marijuana is rapidly becoming legal and is legal in 30 countries, to date. Many leaders in the global marijuana industry believe there still remains enough for U.S. firms to still have a competitive edge if they are ever able to sell at this level.
Preparing for the Future
At this point in legal marijuana sells in the U.S. most businesses are preparing for the borders to open across all states. This would allow for substantial export of their products to new markets. With the potential opening of state lines companies are beginning to prepare for what they would have to do to meet legal requirements from growing to manufacturing.
Companies are also beginning to increase the space where they are able to grow cannabis in the event that production is ramped up and they are able to sell to more states, and hopefully countries. LivWell, a Colorado-based business, has learned that growing up, like what is done with microgreens, rather than growing out in square footage allows for greater capacity for growth.
Those on the inside of the cannabis industry believe the country is on a fast course to national legalization, which would expand the industry’s market. In a 2018 House Judiciary Committee passed a bill that would make marijuana legal nationally, it would still need to pass Congress, which is unlikely at this time, but industry leaders believe it isn’t too far off.
It is best for U.S. marijuana farmers and firms to continue producing high quality and safe crops. This will ensure they are ready to be a competitive force within the international market when it is legalized.
