Joshua Schmidt writes…. In late April, Governor Albert Bryan Jr. of the U.S. Virgin Islands pushed for cannabis legalization for one simple purpose, to generate much needed tax revenue as a result of the COVID-19 pandemic.
With tremendous stress on social security systems the world over, Gov. Bryan argued that cannabis represents an economic opportunity, plain and simple. Now while there have always been nay-sayers for cannabis being made available for retail sale and legalisation in general, using cannabis as a mechanism of generating tax revenues means that economies won’t have to cut retirement pensions or payments.
Talking to a Republican Congressional staffer on Capitol Hill, he said that getting the economy open was priority #1, but said his main concern was how the lack of tax revenue in March and April would show its head in the coming months, “it’ll come like a big whack for local jurisdictions who budget for a consistent inflow of tax revenue.”
For cities that rely on taxes to fund public works, this has been a good six weeks or more of next to no incoming revenues. So what does this do to our basic services and is it a good idea to lower our expectations of what is to come? Time will tell but as Shelter in Place orders are lifting and states are opening up again, the sense of ‘business as usual’ isn’t quite there yet so perhaps we should temper our expectations.
This brings me to cannabis and the fine Governor’s motion last week.
Is now the time to legalise cannabis? And is tax the issue that helps to carry it across the line?
Having taken something of a backseat to daily briefings and updates around COVID-19, we are sure to see the issue feature heavily as the Presidential election ramps up and gains momentum before November.
With two thirds of Americans reportedly backing recreational use, it is easy to understand why the issue will cause some hotly contested debate over the coming months. Afterall, what members across both sides of the House would agree on, is that more tax revenues, which can be spent however their party chooses, is better than less.
In Australia, alcohol has been considered an essential service throughout the entirety of the coronavirus lockdown.
I hail from a wine region and this designation has helped to ensure many people I know to keep their jobs. This declaration of alcohol being an essential service led to panic purchasing, quotas in stores and according to one article, spending was up more than 20%.
Once heavily stigmatised, the alcohol industry is now regarded as an essential service, an employer, a tourist drawcard and brings with it a sense of pride for those that inhabit those regions.
In 2015, Bill Gross gave a TED talk about Ideo. In attempting to measure the success factors for more than 200 companies, he found that in 42% of cases, the main factor in the company’s success was timing—not funding, the executive team, or a fancy new product.
For example, AirBnB came about in 2008, and allowed people to generate revenue from their home and apartments, amidst the biggest economic downturn in decades, and Uber in 2009, which allowed people to make extra income using their cars, during the Global Financial Crisis.
Now, it might have taken a pandemic to do it, but if timing is everything, maybe we have hit the right time to legalise cannabis and generate that tax revenues that some cities and states might find to be sorely lacking.
Can we hope for everybody’s favorite green plant to one day be as commonly accepted as everybody’s favorite use for grapes?
Joshua Schmidt is a New York-based MBA and cannabis entrepreneur who has gained considerable experience working in the Canadian and Australian Cannabis industries, achieving company exit by acquisition in 2018 in Canada, before establishing and managing the intelligence framework for an Australian cannabis company.