The COVID-19 pandemic has plunged the US economy into a crisis unseen since the Great Depression of the 1930s.
As of mid-May, 36.5 million Americans had filed for unemployment benefits in the preceding two months. The federal government has so far passed a $2 trillion stimulus package, the largest in US history, to support laid-off workers and struggling businesses. A second, even larger, stimulus package is in the works.
While there is no silver bullet to the economic harms precipitated by the coronavirus outbreak, there is one course of action available to the federal government that would, according to New Frontier Data, create an estimated 1.6 million jobs and bring in nearly $130 billion in tax revenue by 2025: the end of marijuana prohibition.
To ignore the potential of federal cannabis legalization to help counter the intensified economic hardship experienced by millions of Americans, especially when the measure enjoys consistent majority support, would be nothing less than an act of national self-harm.
In many ways, the US is at a similar juncture as it found itself in 1930, not only due to the huge economic downturn, but also because the federal prohibition of alcohol was then in full swing. The Great Depression helped create a stronger impetus among the public and lawmakers to end the prohibition experiment. Its repeal in 1933 helped pave the way for Franklin Delano Roosevelt’s New Deal projects, which provided jobs to millions of Americans and greatly expanded the nation’s social security programs. For illustration, the federal government collected $420 million in income tax in 1934, but $1.35 billion in alcohol and other excise taxes that year.
The eleven states that have legalized adult-use cannabis have largely recognized the importance of the marijuana industry during the COVID-19 pandemic. Only Massachusetts initially refused to deem marijuana dispensaries as an essential service that should remain open during its statewide lockdown, but Gov. Charlie Baker reversed this decision late last month. States and jurisdictions such as Washington, D.C. went further and enacted legislation to facilitate home deliveries and curbside pickups of marijuana to ensure continued access while minimizing the risk of spreading the virus.
While legal cannabis states deemed the industry essential, momentum behind marijuana legalization efforts faltered elsewhere as lawmakers and state officials grappled to contain the virus and cushion the economic impact. The governor of New Mexico lamented the fact that her administration had been unable to pass legislation to legalize adult-use cannabis before the coronavirus outbreak, as the extra tax income would have helped with the state’s economic relief efforts. Illinois, where marijuana legalization came into effect at the beginning of this year, is proof of this potential tax windfall. The state reported more than $3 million in sales on day one of legal cannabis sales, while $37 million of marijuana was sold in April during lockdown measures.
But by and large, for an industry with impressive sales figures and nearly 250,000 full-time workers – more than four times that employed in coal – federal support during the coronavirus outbreak has been sorely lacking. Marijuana businesses are not eligible for federal assistance owing to the plant’s status as a Schedule I controlled substance, but another of the significant obstacles the industry faces is its exclusion from sourcing basic financial services. Banks and other financial institutions are fearful of working with cannabis businesses in case the federal government decides to intervene. This means that already-struggling marijuana businesses without federal support also have to operate in cash, thus increasing their costs and the risk of theft.
The Democrat-led House of Representative recognized this problem by including provisions of the SAFE Banking Act in the second coronavirus stimulus package it recently passed, to the dismay of many Republican lawmakers. The SAFE Banking Act was first passed by the House last year, but is now languishing in the Republican-controlled Senate.
The potential for marijuana legalization to aid the nation’s recovery after the pandemic extends beyond cold economic calculations. Fundamentally, the argument for ending cannabis prohibition is one for racial justice. The 70 year War on Drugs was from the beginning rooted in racism, and these foundations inform how prohibition is enforced today. While cannabis consumption rates between racial groups are near identical, people of color are still four times more likely to be arrested for marijuana possession in the US than white people. As protests over the death of George Floyd rage on across the US, it is important to remember that a post-pandemic economic recovery must be rooted in racial justice or it will be no recovery at all.