The Power of the Cannabis Industry in Catalyzing Economic Growth in Post-COVID America
As California enters its second month under shelter-in-place directives, the scope of COVID-19’s economic impact is coming into stark relief. The federal jobless numbers show an economy hurtling into a deep economic retrenchment at a rate unprecedented in our history. But through great change and crisis emerge the seeds of extraordinary new business opportunities — mirroring a shift currently happening in the cannabis industry. While cannabis remains illegal at the federal level, it could be a compelling new engine of economic relief for a crippled economy. In California and many other states, local governments have presciently begun the long and difficult process of decriminalizing and regulating cannabis.
California, in particular, has been at the forefront of the cannabis legalization movement since the 1970s, and was the first state in the U.S. to legalize medical cannabis back in 1996. This foresight has positioned the state to be the largest legal cannabis market in the world today, and while it still has a ways to go in its evolution towards optimal regulations, the state nonetheless generated an estimated $635 million in tax revenue in 2019 from legal cannabis sales.
The cultivation, manufacturing, distribution, and sales of cannabis provide a robust and growing base of careers that offers workers both a healthy paycheck and sense of purpose. These are jobs of varying types that require different skill and education levels, from production line employees to PhD-level scientists and everything in between. In cannabis manufacturing, for example, there’s a strong demand for skilled extraction technicians, procurement specialists, and quality assurance professionals, among other roles.
Cannabis businesses of all types need professionals experienced in sales, finance, marketing, and other core business areas. According to Leafly, a leading cannabis publication, legal cannabis supported nearly a quarter of a million full-time-equivalent jobs in the U.S. as of early 2020, and cannabis job growth from 2018 to 2028 is projected to be a staggering 250%. That’s the largest projected growth of any job sector in the U.S. by a factor of four.
In California alone, legal cannabis supported nearly 40,000 jobs in 2019, and that’s in a state where it’s estimated that over 70% of total cannabis transactions are made in the illegal market. These are not small numbers, and they also don’t factor in corollary industries, which also benefit from cannabis industry growth, such as real estate, technology, packaging, or professional services.
It’s significant to point out, during a global crisis that’s rapidly evolving into one of the greatest challenges of modern times, that many states in the U.S. have deemed cannabis an “essential” business. This means operations are allowed to continue despite stay-at-home orders, which have shut down many other manufacturing and retail sectors. This, combined with the fact that cannabis is widely considered to be a recession-proof industry (with initial indications during the current crisis supporting just that), indicates that cannabis is poised to play a pivotal role in a post-coronavirus-crisis world, and can help rebuild what potentially looks to be a devastated economy.
Coronavirus or not, it’s abundantly clear that cannabis will play a major economic role in California and beyond in the coming months and years. The only real question is how communities at the local, state, and national levels embrace this transformation and harness it to drive economic recovery and growth. Investors will also play a major role in this transformation, deploying capital into a burgeoning industry with significant potential to help reshape our economy. As the old adage goes, within crisis lies opportunity, and never has this been more true than in the cannabis industry today.
Alex Rowland is Chairman and CEO of NewTropic, a leading cannabis manufacturer that provides professional-grade supply chain solutions to California brands, cultivators, manufacturers, and distributors. Mr. Rowland is also a co-founder of Ensemble Brands, a cannabis brand accelerator.