Cannabis 2038

by Jayson Filingeri,

Let’s fast-forward to 2038 and imagine the future of legal cannabis. Perhaps we’ll see Walmart-branded pre-rolls, Super Bowl commercials for Sativa sodas, and well-funded, state-sponsored community programs…and much more!

We’ve come a long way, eh?

So much progress has been made in this industry that one can only wonder what it’ll look like in another 20 years. Cannabis looks to be on the path to full legalization within our lifetime, and, judging by the pace the industry is growing today, here’s what you can expect to see in the year 2038.

Expect a mammoth cannabis economy.

The biggest question with legalization is the true size of the cannabis market. There are actually two answers to this question. According to The Washington Post, legal marijuana sales in 2016 totaled $6.7 billion, and Arcview Market Research, a cannabis analytical group, estimates that the industry will grow to $20.2 billion by 2021. BDS Analytics predicts the legal U.S. cannabis market will hit $47.3 billion by 2027.

But legal marijuana sales only account for 13 percent of the total market. That means $46.4 billion in black market product was sold in 2016, which brought the total market to $53.3 billion. Alcohol sales reached $226 billion that same year, up from $176 billion in 2006.

The difference between alcohol and cannabis is the legality, and several studies have been performed to determine how legality affects pot usage. A study at the RAND Corporation found states that allow medical marijuana dispensaries to operate have an increased usage among their citizens.

To give you an idea of how much marijuana is consumed by legal users, the Marijuana Policy Project reports the total population in medical marijuana states is 201,345,903, of which 2,254,782 are medical marijuana cardholders. This means 1.12 percent of the population in these states are legal cardholders, and they’re accounting for 15 percent of total marijuana sales.

Meanwhile, a doctoral study at the Yale School of Public Health found approximately 74 percent of people would use cannabis if it were legal. When this 74 percent of the population is able to legally consume cannabis, we can safely assume sales will rise exponentially. This will also drive retail prices down.

By 2038, the U.S. cannabis market will easily be worth more than $400 billion. This doesn’t include hemp and CBD products, which we’ll discuss in more detail below. That’s a lowball number, because federal decriminalization is sure to spike sales across the country. We could see it reach over $700 billion based on current statistics.

State coffers will be rich in new tax revenue.

Now that we know those numbers, it’s important to understand how much would go to the government. Cannabis data analytics firm New Frontier Data estimates $131.8 billion in federal tax revenue would be collected in the first eight years of cannabis legalization. This includes $51.7 billion in sales tax (at a rate of 15 percent) and assumes a 35 percent corporate tax rate (which was recently lowered to 21 percent).

Colorado, Washington, and Oregon, the three states with the oldest recreational cannabis markets, collected a total of $1.3 billion in taxes for 2016. That means states could collect approximately $21.67 billion collectively each year with cannabis decriminalization. This includes state, county, and city taxes, and, as discussed above, another $16.48 billion in federal taxes would be generated annually.

Extend that for 20 years, and a collective total of $763 billion in taxes would be generated by the cannabis industry between now and 2038. That’s nearly $1 trillion in taxes our economy would receive from the federal down to the local level in that timeframe.

Imagine how many schools, roads, and libraries that would fund. The investment in infrastructure could be amazing. Of course, that would also come with a decline in revenue generated from incarcerating prisoners for non-violent marijuana-related crimes.

So, let’s explore how the legal system will be affected by the decriminalization of cannabis.

The laws will adapt for responsible cannabis. 

According to Newsweek, marijuana possession arrests account for over five percent of all arrests in the country. In 2017, 587,700 people were arrested for simple possession, and the annual costs average around $3 billion. This is despite widespread state legalization.

The ACLU estimates about 7 million people are arrested every decade in the U.S. for nonviolent marijuana possession, costing states $3,613,969,972 a year for enforcement (approximately 10 percent of which goes to prisons run by private corporations). This means 14 million people will be incarcerated between now and 2038 for possession. Cannabis use has not been linked to other crimes.

By contrast, the Alcohol Rehab Guide estimates 40 percent of inmates incarcerated for violent crimes were under the influence of alcohol. Drunk driving is the most common alcohol-related crime, while 15 percent of robberies, 37 percent of sexual assaults, 27 percent of aggravated assaults, 67 percent of domestic assaults, 40 percent of child abuse charges, and 40 percent of homicides are attributed to alcohol.

A recent study published by the Guardian found violent crime fell by an average of 13 percent in states where medical marijuana was legalized. In addition, the Drug Policy Alliance found traffic fatality rates remained stable in recreationally legal states, as did teen pot usage, while enforcement of drug-related crimes continued to disproportionately affect minorities, especially African Americans.

Even with full federal legalization, consuming cannabis in public will always be either illegal or at least frowned upon. Many states and cities have laws regarding public intoxication, and even those that don’t have such laws do have stiffer penalties for crimes committed while under the influence, i.e. drunken disorderly conduct.

In addition, most states (and especially major cities) forbid smoking of any kind (and often vaping) in public.

Still, arrests and incarcerations due to cannabis-related offenses will decline dramatically by 2038. And that’s not the only way life will change with decriminalization.

New events and products will emerge.

One of the biggest changes we’ll see over 20 years with decriminalization is that cannabis will no longer have the stigma it used to. Currently, it’s considered a Schedule I drug, meaning it’s grouped with heroin, LSD, and ecstasy by the federal government. This leads many people to avoid the drug and consider it to be more dangerous than it actually is.

Cannabis gatherings are already becoming a regular thing. 4/20 will be like Oktoberfest. Don’t be surprised to see festivals held in parks all around America.

And Amsterdam provides a peek at how cannabis businesses would evolve. Coffee shops and other cannabis clubs would pop up everywhere just like bars that currently serve alcohol. Many of these bars could convert to cannabis clubs (as serving both cannabis and alcohol is likely to remain banned). In fact, these clubs would likely replace many of the existing dispensaries.

Of all the existing cannabis businesses, dispensaries have the longest shot of survival.

State laws typically require cannabis products to be carried only by dispensaries, so full decriminalization would open the door to cannabis products for major retailers like Walmart, and convenience stores like 7-Eleven. Dispensaries would be competing with them, along with smoke and vape shops, and more. And dispensaries have specific zoning laws related to their distance to schools, which convenience stores and retailers don’t.

Dispensaries will still exist, but there won’t be as many, and they’ll need to try much harder to compete in the retail space. Many will be replaced by a kiosk on the counter, and hemp and CBD will also be more commonplace. With cannabis legalized, these non-psychoactive ingredients will be found in more products. This is already happening today: you can find hemp shoes at major clothing retailers and even hemp-based cosmetic products.

Many of the cannabis-related publications we see today will likely close up in 20 years, as even major publishers like the New York Times and News Corp are struggling to sustain themselves. These publishers use highly unpopular paywalls to supplement ad revenue deficiencies. Cannabis publications have an even harder time generating revenue.

Speaking of advertising, it’s very hard for legitimate cannabis businesses to advertise today. Tech giants like Facebook and Google ban cannabis ads, as do TV and radio. Businesses currently rely on cannabis publications and podcasts, along with guerilla marketing tactics like Sarah Silverman’s vape pen on the Emmys red carpet in 2014.

As marijuana is legalized, marketing will become more mainstream, and you’ll start seeing it advertised in all the same places as alcohol. That means expensive Super Bowl commercials, sponsored sporting events and concerts, magazine and newspaper ads, and more.

The future looks bright…and green.

In 2038, a new generation of adults will have grown up with legal cannabis—responsibly cultivated, sold, and consumed. The moral stigma will be history, and, perhaps, the black market will disappear.

We’ve still a long road ahead, but at least it’ll be properly paved with ample tax revenue.