Marijuana Exports: The United States Missed the Boat

Last Updated on Apr 17, 2018

The world market for marijuana is growing at a record pace. Marijuana exports have become more and more common as more countries choose to legalize marijuana for medicinal and recreational use. When a country legalizes medical marijuana, they may not have any local supply for patients who need it. Some of those countries are looking to foreign suppliers for their marijuana. Countries currently importing marijuana in clude Germany, New Zealand, Australia, Chile, Brazil, South Africa and Croatia. The market for marijuana exports is quite lucrative. By 2021 the international cannabis market is estimated to be at least $31 Billion and by 2026 cannabis sales worldwide are projected to reach $50 Billion. There are and will continue to be many opportunities for cannabis businesses to expand internationally.

Canadian companies are currently the first movers in the export market and clearly they have the advantage. Since medical marijuana is regulated across the country in Canada, cannabis producers are able to export their product to foreign legal medical marijuana markets.

In addition to legally being able to export medical marijuana Canadian suppliers stand out in the world market due to consistency of quality product and access to capital . Licensed cannabis producers in Canada have established industry associations that oversee the big picture of cannabis manufacturing, producing and marketing. These industry associations pride themselves in the expertise and the credibility they have gained operating under what most would consider a rigorous regulatory environment in Canada. Canadian producers currently face no competition from U.S. producers as their hands are tied by the government.

While Canada is the world leader in marijuana exports, Uruguay and the Netherlands are also exporting cannabis to other countries. Israel was planning to export cannabis in 2018, however there have been many hurdles which have prevented marijuana exports, including the Israeli police. Cultivators have produced tons of cannabis to be exported but have been thwarted and are now sitting on about $300 Million worth of cannabis, according to the Jerusalem Post.

In contrast U.S. producers are tethered by the red tape of federal law which still classifies marijuana as a Schedule I controlled substance making it illegal. Current U.S. laws keep production and distribution limited to the boundaries of each legal state. This is literally costing the U.S. government millions in lost tax revenue. In addition, it hampers the growth of U.S. cannabis companies which impacts local economies and jobs.

Along with marijuana production and distribution, of course, comes jobs. In this Forbes article author Debra Borchardt reports that, in states that have already legalized marijuana in one form or another, 300,000 jobs will be created by 2020 in the legal cannabis market. The Bureau of Labor Statistics reports that by 2024 “manufacturing jobs are expected to decline by 814,000, utilities will lose 47,000 jobs and government jobs will decline by 383,000” . Legalizing marijuana production in the U.S. could benefit the job market greatly over the coming decade. But if U.S. businesses were able to utilize the favorable cannabis growing climates in California and other states to produce for the U.S. and foreign markets the potential for job creation would be even larger.

Canadian producers are still not legally permitted to export recreational marijuana. As states like California enter the legal market supplies of marijuana will outpace in-state consumer demand. This will likely present increased law enforcement spending to limit the black market. While a federal law allowing the interstate and international export of marijuana would increase employment, greatly reduce black market activity and law enforcement spending all while increasing U.S. tax revenue. It’s time for the U.S. to legalize marijuana and start producing for broader markets.