Germany recently legalised the possession (limited to 50g) and cultivation of Cannabis (up to 3 plants), even though this isn’t the first-time cannabis has been legalised (certainly won’t be the last), this might be a catalyst for wider legalisation in Europe particularly the UK. In the US 40/50 states permit medicinal use of Marijuana and 24/50 permit recreational use.
Effects of Cannabis consumption on physical and mental health is unclear with research highlighting a great deal of correlation with mental health problems. But specific medicinal cannabis such as THC and CBD oils are already legalised in many parts of the world and are necessary in the treatment of specific conditions.
Economic benefits
The effects of Cannabinoids so far are believed not to be as damaging or addicting as opioids but at the same time once legalised cannabis related products could simply behave as a gateway to harder drugs.
Note: Recreational drugs tend to cause more absenteeism (= loss of productivity), medical problems (= more healthcare costs), and more social unrest.
The reason for legalisation is mainly to bolster tax revenues for governments whilst attempting to offset spiralling black markets, in the UK taxing Cannabis at the same rate as alcohol is expected to bring in tax revenues of £1BN-3.5BN annually but legalisation would only encourage illegal growers and consumption even more due to the inability to differentiate between strains/products during a simple stop and search, simply put the UK may face a “Cannabinoid crisis” like the opioid crisis in the US and become more overrun with Hippies and drug dealers than it already is.
Implications for businesses and regulators
In the UK, the Home Office already offers licences for growers, but the government may have to find a solution to preventing unlicensed “merchandise” finding its way more easily onto the streets by blending in with the licensed cannabis-related products. Similarly legalised products will likely be safer strains pushing illegal producers to start focusing on stronger unregulated strains as they will most likely be unable to compete on price with licensed producers due to productive capacity and economies of scales these producers possess.
A major problem for law enforcement would be the identification of different strains, this would require more investment into training for community officers regarding specific strains and even detection dogs may require further training to identify them correctly.
Firms to look out for
- Associated British Foods (+1.81% YTD)
- Aurora Cannabis (+43.17% YTD)
- CuraLeaf (+42%)
- Tilray (+17% YTD)
- Trulieve (+142%)
- Canopy Growth (+117.24%)