As multiple sectors of the U.S. economy struggle in the midst of the coronavirus-induced downturn, one industry has seen both skyrocketing demand and newfound government approval: cannabis.
Several CEOs of cannabis companies spoke with CNBC about the future of the industry. With eight states total having deemed both recreational and medicinal marijuana stores essential during the coronavirus pandemic, industry leaders see an emerging path toward legalization.
“You can just point to the fact that we have been deemed essential, why are we not legal?” Matt Hawkins, a managing partner of Entourage Capital, a private equity firm with a reported $200 million invested in several cannabis producers, told CNBC.
CNBC notes that weekly marijuana sales in March topped $134 million in four of the eight states that declared it an essential business, specifically California, Washington, Nevada and Colorado.
This is reportedly a 17 percent increase from the weekly average in 2019.
Using the booming cannabis sales as a form of tax revenue is also a popular idea to generate money for the government.
“There is going to be a need for increased tax revenue and where else to look but at a legalized industry like cannabis, that is one of the few growth sectors in the world right now,” Hawkins explains.
Job creation is also a potential benefit of legalizing marijuana. With unemployment numbers jumping as nonessential businesses are forced to shutter, the cannabis industry could create new roles for job seekers.
“When we all start to be able to lift our heads from this Covid experience, we are going to be faced with a scenario where a lot of jobs have gone away, a lot of economic development impact has disappeared,” Charlie Bachtell, CEO of Cresco Labs, told CNBC. “How are we going to bring that back? I think cannabis has to be part of that discussion.”
According to Statista, the cannabis industry was valued at $4.7 billion in 2016 for medical usage alone. Citing data from Cowen, a research firm, CNBC estimates that the cannabis industry — including both medical and recreational usage — will be worth $56 billion in 2020.
This fall, at least three states, including New Jersey, Arizona and South Dakota, are expected to have adult-use legalization on November ballots, per CNBC.
On the federal level, there is a pending bill in the U.S. House of Representatives that proposes the legalization of cannabis for adult use.
For cannabis company executives, initiatives to legalize marijuana alone are extremely encouraging.
“Every state that has progress on the issue of cannabis, increases the likelihood and the momentum of a broader success down in Washington D.C.,” Bachtell said.