One of the most powerful arguments in favor of marijuana legalization has to do with the amount of money that governments are losing out on year after year due to their fruitless prohibition of the substance.
The War on Drugs, both in the U.S. and abroad, has been a failure. People will continue to consume drugs, so the best that governments can do is try to make the process as safe and sensible as possible.
Marijuana especially, being one of the least harmful recreational drugs on the market, should long ago have been made legal.
While the tide of support has been building behind marijuana legalization in most major jurisdictions, we’re still stuck in a pitched battle of ideas between legal pot and failed drug prohibition policies.
One of the best ways to argue for legalization is to show just how much money can be made from legal marijuana.
In its first full year of marijuana legalization, Canada saw CA$640.0 million in provincial taxes collected on marijuana products. (Source: “Pot taxes add $640 million to provincial coffers in first year of legalization,” Toronto Sun, December 12, 2019.)
The first quarter of Canadian marijuana legalization saw CA$144.0 million of provincial taxes roll in, followed by CA$160.0 million, CA$144.0 million and CA$192.0 million over the subsequent three quarters.
And then there are the federal taxes, which have been capped at $100.0 million annually for the first two years of legalization.
Blacklock’s Reporter, using Statistics Canada figures, projects that cannabis tax revenue is set to increase in the country.
Across Canada, over 400 licensed pot stores are up and running, selling marijuana products and helping to generate tax revenue for their respective provincial governments—not to mention creating thousands of jobs and boosting the economy.
According to Statistics Canada, during the first year of pot legalization in Canada, marijuana users spent over CA$907.0 million on legal recreational cannabis. That included an impressive $120.6 million in online spending. (Source: Ibid.)
Ontario, the largest and richest province in Canada, saw about CA$217.0 million in sales at legal cannabis retail stores. Compare that to the far less populous Alberta, which had sales of about CA$196.0 million.
What that tells us is that provincial policies have had a big impact on marijuana sales figures.
Ontario had a bumpy road toward pot legalization, with a last-minute policy change from government monopoly to privatization, due to a newly elected provincial government.
That policy change led to a slower introduction of legal marijuana to the strongest Canadian provincial market.
“Differences between regions in total and per capita cannabis store sales may be explained in part by Canadian’s access to cannabis stores,” said a report by Statistics Canada.
“Most online sales are operated under the public retail model, the exception being Manitoba, Saskatchewan and Alberta.” (Source: Ibid.)
Statistics Canada said that, as of the summer of 2019, 45% of Canadians lived within 10 kilometers of a marijuana store.
In Ontario, that number is low, but it is getting larger as more and more stores are set to open as the legal weed market in Canada matures.
Therefore, we can expect to see more money flow into the Canadian market in 2020, increasing revenues and boosting marijuana stock prices.
What this shows us, then, is that legal marijuana sales are increasing (a great sign for pot stocks), and there’s a huge amount of tax revenue that governments around the world can tap into—if they’re willing to make moves to legalize pot.
Consider that weed legalization is enjoying the most support in modern history among the American populace, with a strong majority supporting some form of legalization.
Couple that with the fact that the majority of U.S. states—33, including D.C.—allow medical marijuana and 11 states permit recreational pot and you have exactly the type of groundswell needed to push for federal U.S. marijuana legalization.
Another important factor is that support for federal U.S. marijuana legalization has grown among politicians as well.
The Democratic Party has several presidential candidates, many of them front runners, who have been outspoken in their support for cannabis legalization.
It’s not always that politicians follow the direct will of the people, but with the vast majority of Americans supporting marijuana legalization in some manner, it’s only a matter of time before federal legalization is passed in the United States.
With such vast sums of money to be made by governments—money that can be used to fund popular items like education and infrastructure—it’s becoming easier every day to make the argument for the legalization of weed.
In the U.S., that day is fast approaching. And when we eventually see federal marijuana legalization in the U.S., we can anticipate a huge rise in the prices of marijuana stocks.
The fight for U.S. marijuana legalization—and global legalization—is the most important catalyst for pot stock growth in 2020, followed closely by the fight against the marijuana black market.
While we’re still likely a few years away from legalization in much of the world, the U.S. is making a lot of headway. And the U.S. is the richest and most important market in the world. Following the United States’ eventual legalization of marijuana, I anticipate that many other countries will follow suit.
How fast pot stocks can reach their potential is directly determined by how much support the drug can gain both politically and socially. The topic of marijuana tax revenue is a huge help in persuading both voters and politicians that marijuana is a drug that is better off being legal than fought by law enforcement.
To that end, we had some very impressive pot tax revenue numbers in 2019, and I anticipate that those numbers will get larger in 2020. The way I see it is that this is a huge win for marijuana stocks and another feather in their cap when it comes to arguing for legalization.
I expect that we’ll see federal U.S. legalization in the very near future and, along with it, massive gains for pot stocks.