THE WORLD IS GOING TO POT

It’s true, literally and figuratively.  The world is a mess and at the same time pot is becoming a major drug for recreational and medical use.  Will wonders never cease!

An estimated 23 million Americans report suffering today with continued pain for more than three months, and more than 50 million report suffering intense pain.  As the Boomers age, those numbers will only go higher.

For years, doctors have treated those conditions with a mix of painkillers and numbing agents that, while effective, come with side effects and can be expensive.

But, as a society, we’re slowly embracing another remedy.  Welcome to the next big thing…pot!

A GREEN OPPORTUNITY

In 2014, Colorado dramatically underestimated how much people would buy and what it would mean to the state coffers.

There are so many game-changers on the horizon that sometimes it’s difficult to keep up.  Artificial intelligence.  Self-driving cars.  Breakthroughs in energy storage.  All of these can upend the status quo and change our daily lives for the better.  But cannabis, the plant from which marijuana is derived, is in a class by itself.  It already exists.

We have the compound in a useful form.  It doesn’t need enhancements, tweaks, or new formulations.  Its potential simply needs to be unleashed.

The problem today is that if you don’t live in a state where such a product is available over the counter, you can’t legally transport it from Colorado across state lines.  Over time, that will change.

As more states allow medical and recreational use of marijuana, we’ll analyze more data on how consumers can use the substance to improve their health.  But, as usual, there are roadblocks.

THE LOG JAM

In 1970, the U.S. government classified marijuana as a Schedule 1 drug, meaning that Uncle Sam arrived at the conclusion that it has no medical purpose, carries the potential for high levels of abuse, and it can’t be safely administered even with medical supervision.  On each criterion, the government’s conclusion is demonstrably false.

There are no known cases of marijuana overdose.  It can make you lazy and fat, but it can’t technically kill you.  The same can’t be said of other Schedule 1 substances like heroin and cocaine, or even legal drugs like alcohol.

Not all plants are the same.  In fact, they come in a wide variety of strains, with different compound levels that achieve different results, which is where the incredible opportunities lie for medicinal purposes.

DIFFERENT MIXES FOR DIFFERENT USE

Plants with very little THC produce none of the “high” associated with marijuana.  As the ratio of THC increases, so do the effects on the mind.  The result is that many ailments and illnesses are treatable with marijuana that has no psychoactive effect.

It’s all about what patients need.

Those suffering epileptic seizures, or joint and muscle pain, would use a strain with minimal THC content.  Those with more general ailments, like spinal cord injuries, use marijuana with an equal weight THC and CBD.  Those suffering with cancer or migraines take a very high percentage of THC.

The following lists different classes of ailments and injuries, along with the ratio of THC and CBD that’s considered effective while limiting the psychological effects.

  • High THC/Low CBD – Cancer, migraines, diseases that suppress appetite
  • Equal THC/CBD – Multiple Sclerosis, neuropathy, spinal injuries
  • Overweight CBD – Rheumatoid arthritis, inflammatory bowel disease, general inflammation
  • High CBD – Schizophrenia, epilepsy, stroke, inflammation, head injury

Given marijuana’s long history of providing symptom relief for some patients, 28 states and the District of Columbia have approved the substance for medicinal purposes.

As pot becomes legal—for recreational and medial use—across the nation, it’s only a matter of time before the federal government relents and reclassifies cannabis.

THE WINNERS

Clearly those who might experience relief from chronic pain or seizures are the biggest foremost winners from medical marijuana use.  But it turns out pot can take us all higher.

In 2013, Medicare spent about $165 million less overall in states that allowed for medical marijuana, because of changes in prescriptions.  Doctors essentially moved their patients from expensive pharmaceuticals to cannabis.

If medical marijuana were legal across the country, it could cut Medicare Part D spending by an estimated $470 million per year, a University of Georgia study found.  A half a billion dollars is a drop in the healthcare bucket, but this is only the beginning.

As the Boomers march toward retirement, they are spending a lot more on healthcare.  It doesn’t take much analysis to figure out that older people spend more on medicine and are more likely to have chronic pain and other health issues.

Medical marijuana is bursting onto the scene just as our nation is about to feel the crush of caring for a rapidly aging population.

Suppliers

Taken as a whole, the legal marijuana industry employs about 150,000 people today, which is the same number of people that work at all car dealerships across the nation.

As use grows for both recreational and medical purposes, that number could increase to 300,000 or even 400,000, while it’s still restricted at the federal level

Large, multi-state agricultural companies are waiting to see what happens on the legal side, giving small businesses a chance to thrive.  Small operations are cropping up (no pun intended) as states open for business, providing employment opportunities in many areas, including crop cultivation, quality control, security, and retail sales.

Our Prison System

As state marijuana laws change, state law enforcement will arrest fewer people for marijuana-related crimes.  This leads to lower rates of incarceration.  If the federal government legalized marijuana, researchers have estimated it could save more than $7 billion in prison-related costs.

And, of course, there are taxes.  Governments at all levels will take a slice of the pot pie (pun intended) as the drug is legalized.  Colorado is at the forefront of this movement and generates significant tax revenue from marijuana today.

THE LOSERS

Just as patients are the clear winners, traditional drug companies are the obvious losers.  As more patients and doctors turn to cannabis, they also turn away from modern symptom-relief regimens.

The potential $470 million per year savings is just the beginning.  As we find more medical uses for cannabis, we’ll reduce out use of pharmaceuticals even further.

I don’t expect cannabis to put drug companies out of business anytime soon.  Marijuana doesn’t cure anything, it simply relieves symptoms of many different conditions.  The plant gives consumers another choice, which means greater competition, and, hopefully, a lower-cost option.

Abusers

Using marijuana is not without consequences.  The short-term effects of the strain that contains high levels of THC can include memory loss, impaired body movement, and difficulty thinking and solving problems.

There are also indications that using marijuana can weaken the immune system.  For those suffering from diseases like cancer, these side effects are trivial, but for recreational uses, they must be considered.

Other Businesses—Like Alcohol?

Like medical marijuana, recreational pot typically displaces another substance, and alcohol is the most likely candidate.

Unless consumers are taking money from other areas of their budget or out of savings, it makes sense that spending on one category would cut into spending on the other.

ALREADY BEATING EXPECTATIONS

Since Colorado legalized recreational pot several years ago, six more states and the District of Columbia have followed suit.  Most are in the early stages of establishing guidelines for producing and selling the drug, so there’s not much data on sales, use, taxes, etc.

Colorado decided to send the bulk of this new revenue to a public school fund and then divide the rest between cities and the state.

But no one knew how much money would be available.

Opponents expected very little new revenue, between $4 million and $20 million per year.  Supporters expected much higher numbers, maybe $60 million per year.

Both were wrong!  Annual receipts breached the $100 million mark in 2015, and $200 million in 2016, well beyond anyone’s rosiest expectation.  This still represents just a small fraction of the state’s annual budget, but the known-on effects are also very positive.

The industry created 18,000 new jobs in 2015, and $2.4 billion in revenue.  Legalization also reduced the need for law enforcement, alleviating some pressure in the courts and prison system.

One study estimates that if the federal government legalized marijuana, it would reduce law enforcement costs by $7.7 billion nationally and increase tax revenue by $6.2 billion.  And there’s no doubt that legal pot increases tourisms, although that should subside as other states follow suit.

THE ROAD AHEAD

State populations are deciding for themselves.  Medical marijuana, however, will be driven by outcomes.  As more people have access to cannabis-based pain relief, they become part of a growing voice calling for more choices to address their symptoms.

It will be impossible, and would be politically stupid, for legislators and regulators to ignore their voices.  Change is happening.

All of this is driving marijuana sales higher.  Legal pot sales are about $7.4 billion today and are expected to climb to more than $20 billion by 2020, just three short years from now.  That’s an annual growth rate of 29%!

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3 Comments

Filed under Blog

3 responses to “THE WORLD IS GOING TO POT

  1. Judy

    Wow, very interesting!

  2. Art Schwartz

    That’s what I said when I wrote it

  3. egads – who would have thought my business guru would become the authoritative resource on pot? Know where I can get any seeds? I’m getting ready to plant my fall garden next month. We’ve been getting too much kale and can make some room for that stuff with the THC/CBD balance – sounds like a nice Pinot Noir.

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