Prohibition Is Ending. What's Next?

Last week’s issue of The Economist focused on the rapid growth of the increasingly global legal cannabis industry. Governments around the world are choosing to legalize cannabis. Now they must determine how to do so and what will happen after those policies take effect. As the leading investment firm operating in the cannabis industry, Privateer Holdings has several predictions on what the future holds for legal cannabis around the world:  

1. The pace of regulatory change will continue to accelerate globally. 

Legalization is more widespread and happening faster than most people realize. A majority of Americans now live in a state where cannabis is legal. At least some of medical cannabis is legal in 31 states, and recreational cannabis is legal in four states and the District of Columbia. Full legalization measures are expected to be on the ballot in ten states this November, seven of which already allow medical use. 

In the United Kingdom, former Liberal Democrat Leader Nick Clegg made headlines earlier this month when he urged the government to legalize medical cannabis. Legalization in the UK would build on momentum for legalized medical cannabis elsewhere throughout Europe, including in Croatia, the Czech Republic, Finland, Germany, Italy, and the Netherlands.   

Across the pond in Canada, Prime Minister Justin Trudeau is poised to make Canada the first G-7 nation to legalize recreational cannabis. Trudeau made legalizing, regulating and controlling cannabis similar to alcohol a signature campaign promise and has now declared it to be a key policy priority for his newly formed government. Canada already has one of the largest and most advanced federally legal medical cannabis markets in the world.  

Latin America, Chile, Colombia, Brazil, and Mexico have all taken steps to reform their national cannabis policies after struggling with cartel violence for decades. Uruguay became the first country to legalize recreational cannabis at the federal level in 2014.  

 Across the Pacific, Australia is investing heavily in medical cannabis research with support from the government and recently introduced a bill to legalize medical cannabis at the national level. 

2. Brands will shape the future of the industry. 

The emergence of mainstream, trusted, responsible brands will further shift social attitudes and fuel change. As an illicit substance, cannabis is one of the few commodities to be sold unbranded. As legalization occurs, cannabis branding is prompting to the public to confront the outdated stereotypes and stigmas associated with cannabis use.  As branding improves and more responsible brands emerge around the world, companies will inspire confidence, build trust, and form consumer relationships in a way that an illicit, unregulated market cannot. 

3. As clinical research advances, cannabinoid-based medicines will help patients suffering from different diseases ranging from cancer to epilepsy. 

New studies that point to the safety and efficacy of cannabis in chronic pain management have made cannabinoid-based medicines an attractive alternative to dangerous and highly addictive opioid drugs. In fact, the scourge of opiate addiction in the United States has caused previously skeptical lawmakers to advocate for medical cannabis. In addition to people suffering from chronic pain, patients with HIV/AIDS, multiple sclerosis, cancer, epilepsy, post-traumatic stress disorder, and other conditions will also benefit from increased research and development focused on specialty medicines derived from cannabis. 

4. The size of the cannabis industry will continue to grow — and governments around the world will take notice

Cannabis is already a $150-$200 billion industry globally, with $60-80 billion in licit and illicit sales in Europe and $40-50 billion in total sales in the United States. The size of the industry only stands to grow. Meanwhile, taxes on cannabis products have the potential to generate enormous revenue for cash-strapped public coffers, as Colorado and Washington have already demonstrated

5. Governments around the world will embrace the social benefits of legalization. 

The end of the war on drugs will save the billions of taxpayer dollars currently used to enforce cannabis prohibition. These unjust laws create criminal records for non-violent offenders and are often applied in a racially discriminatory manner.  

By legalizing cannabis, governments will begin the first steps of reversing the social harms caused by prohibition. These pioneering countries will also realize the benefits of trading an unsafe and unregulated black market for legitimacy, transparency, and quality. Soon enough, these first-movers will be joined by nations around the world as global cannabis prohibition finally crumbles once and for all.