Bernie Sanders and Marijuana

Have you heard about the plan with Bernie Sanders and marijuana? Love him or hate him, you can’t ignore him. Senator Bernie Sanders of Vermont is having his moment as the insurgent populist of the 2020 Presidential election cycle, after President Donald Trump dominated the 2016 Republican primaries with his own brand of grievance politics and big promises. One particular issue that Bernie is distinguishing himself from his rivals on is his reasoned approach to cannabis and its legal status in the United States. We are paying close attention to the current Presidential campaigns and what they might mean for the cannabis industry going forward. We’re starting our scrutiny with Senator Sanders.

Where Presidential Candidate Bernie Sanders Stands on Marijuana

Should he become President of the United States of America, Bernie Sanders has pledged to legalize marijuana. He would issue an executive order directing his new Attorney General to declassify marijuana as a controlled substance, allowing growers and dispensaries to interact with the banking system in the same way as any other business. For anyone who has been paying attention to Senator Sanders’ politics over the past five years, this should be unsurprising. He endorsed marijuana legalization during his 2016 Democratic primary challenge, running against Hillary Clinton who was cautiously supportive of states seeking to legalize recreational and medical marijuana. Even before that, in 2015, he sponsored the Ending Federal Marijuana Prohibition Act. This piece of legislation was intended to remove marijuana from the list of Schedule I controlled substances named in the Controlled Substances Act. He has also supported Sen. Cory Booker’s Marijuana Justice Act and Senate Minority Leader Chuck Schumer’s Marijuana Freedom and Opportunity Act.

How Bernie Sanders Would Legalize Marijuana

The Bernie Sanders plan to legalize marijuana in every state relies on his ability to change the playing field through executive action. The power of the Presidency to put Congress on the back foot has certainly been exhibited by both President Obama and President Trump over the past decade, though this may be one of the boldest executive orders yet conceived. Bernie Sanders initially opposed the 1991 Violent Crime Control and Law Enforcement Act, and spoke out against (but eventually voted for) the 1994 Crime Bill that fed the mass incarceration of nonviolent drug offenders, many of whom were arrested for crimes relating to marijuana. He was of the opinion that it was cruel to concentrate on penalizing poor communities for turning to crime in the absence of other opportunities, instead of passing legislation to ease their burdens and lift them out of poverty.

It follows from this, then, that his legalization plans also include the intention of reviewing both federal and state convictions for marijuana-related crime. With the tax yield from marijuana and associated products, the Sanders administration would reinvest in communities hit hardest by the War on Drugs, supporting entrepreneurs of color, offering apprenticeship programs related to marijuana businesses, and providing business grants for companies majority owned or controlled by those in disproportionately-impacted areas, or individuals arrested for or convicted of marijuana offenses.

What Would This Mean for the Marijuana Industry?

Firstly, it would make for a far more diverse marijuana industry. In 2017, 81% of marijuana business owners and founders were white and only 4% were Black/African-American, despite Black/African-American people representing 13% of the US population. Secondly, Sanders’ plans for legalizing marijuana would potentially create 654,000 new jobs nationwide, according to New Frontier Data’s study Cannabis in the US. This would increase to 1 million jobs over an eight-year timeline. This massive increase would also herald a natural increase in payroll taxes and, as businesses turned over product, sales taxes. Assuming a federal rate of 15%, comparable to California’s rate, sales tax revenues could reach $46 billion dollars over that same eight-year timeline. However, Bernie Sanders’ marijuana moment would come with caveats. The market would be undoubtedly affected by federal incentives to structure marijuana businesses as collective nonprofits and cooperatives, so as to improve economic growth in local communities. Sanders’ intent to lock Big Tobacco out of participation in the marijuana industry would doubtless also inhibit growth, at least initially. Another element that may disrupt the potential for legal marijuana growth is the black market. California is struggling to clamp down on unlicensed cannabis sellers seeking to circumvent the sales tax and other regulations. Any attempt to legalize marijuana and reap substantial tax benefits would necessitate efforts by law enforcement to monitor for black market sales.

Public Support for Lifting Marijuana Prohibition

Bernie Sanders is known for running a campaign that polarizes people. However, his policy of marijuana legalization is almost as popular as his ‘Medicare-for-all’ policy. In total, 70% of Americans support Medicare-for-all, while over two-thirds of Americans support marijuana legalization. In this sense, Sanders’ policy position is the most inline with the American public, compared to his rivals for the Presidency. With courts, police time, penitentiary services and all other costs included, the price of convicting someone of a marijuana-related crime is around $73,000. In 2018, there were approximately 50,000 such convictions. Once convicted, studies indicate that a period of incarceration reduces the wage growth of an individual by 30%. Expunging these convictions would improve the ability of Americans to provide for their families and generate additional wealth for their communities and the wider country. It is possible that these former convicts would seek employment in the legitimized cannabis industry. Their expertise and experience could support the industry, propelling it to greater profitability.

OF SPECIAL NOTE

Statements, estimates and forecasts are subject to significant legal, business, economic, and competitive uncertainties, including competition, limited access to bank services, litigation, enforcement actions, and the receipt of government authorizations. This includes differences in, among other things, laws, regulations and guidelines relating to the manufacture, transportation, and storage of cannabis, and the conduct of operations, which vary among the U.S. federal government, various states, and foreign jurisdictions. There can no assurance that such estimates and/or forecasts will be realized, and these are not indicative of future investment performance. Historical data is not indicative of future performance.