Opening the Borders on the Green Coast
Author – Jon Russell
Edited by Noah Persin
Cannabis is legal along the entire western seaboard of the United States of America, from Mexico to Canada. While it’s safe to light up in all three Coastal states now (and Alaska), you still can’t bring your herb from Oregon to visit your buddy in California. In 2012, the Cole Memo spelled out guidelines for how the feds were going to handle medical and recreational marijuana voted in by individual states. This memo (while not a law preventing the federal government from attacking cannabis businesses) spelled out some hard and fast rules states need to follow. One of these rules is to “Prevent the diversion of marijuana from states where it is legal under state law in some form to other states.”
Allow me to explain; even if two states with legal cannabis regulations share a border taking marijuana from one into the other is still illegal under federal law. It’s considered smuggling a Schedule I substance, which carries a minimum of 5 years in prison under Federal Trafficking Penalties for Marijuana, Hashish and Hashish Oil, Schedule I Substances. However, the landscape of cannabis has changed and over half the U.S. has access of legal cannabis of some sort. This includes the entire West Coast; California, Oregon & Washington all share borders and have recreational cannabis laws. Shouldn’t we change some things?
Opening the Borders for Business
The United States has financial issues and would benefit from a boost to its economies. Here are some of the largest budget shortfalls over the next couple of years:
- Illinois – $8 billion shortfall
- New York – $5 billion shortfall
- Alaska – $4 billion shortfall
- California $1.9 billion shortfall
- Texas – $1.6 billion shortfall
- Louisiana – $1.5 billion shortfall
- Virginia – $1.5 billion shortfall
- Oregon $1.4 billion shortfall
- Washington $1 billion shortfall (compared to $1.67 billion in 2014)
- Arizona – $1 billion shortfall
- Maryland – $783 million shortfall
- Michigan $460 million shortfall
- New Mexico – $458 million shortfall
- Colorado – $330 million shortfall (compared to $1.1 billion in 2014)
We have seen many budget cuts over the last couple years and you can be assured we are due to see many more in the not too distant future . What can be done to change that? Let’s take a look at the financial state of the legal cannabis industry?
Oregon has already collected $40 million in taxes this year, which far surpassed initial estimates. That may seem like a drop in the bucket compared to the numbers above, but when we look at projections for the next few years we can see even more money coming in. USA Today estimates that legal cannabis sales will break $22 billion by 2020 (with others predicting almost $40 billion). At a 17% tax, that is $3.45 billion in taxes industry wide. Not enough to wipe out the shortfalls above completely, no, but it goes very far in filling those budget gaps and this isn’t even taking into account the job creation potential! Much of that will come from California, where estimates show $6.46 billion in cannabis sales by 2020. That’s almost 30% of the entire cannabis industry! Where is all that cannabis going to go though?
What would happen if we could transport cannabis grown in Oregon into California? Or Californian edibles delivered to Washington dispensaries? Let’s compare cannabis to another agricultural crop: hay & forage.
Oregon is one of the top producers of hay & forage crops in the country. However, most is exported to other states. Most of the hay & forage grown in the Oregon is sold to California and Washington farmers. California regularly imports 600,000 to one million tons of hay annually from neighboring states. If Oregon couldn’t sell it’s hay to California there would be over a 50% reduction in hay sales!
Cannabis would most likely see similar results (but in reverse). Opening the borders across the West Coast would allow the entire industry in those states to increase by a significant amount. While those figures are unknown, one study shows that full legalization (across all 50 states) would bring a potential $76 billion in cannabis sales. The Northwest Coast would be the “breadbasket” of cannabis and would see huge spikes in domestic exports. Oregon would be legally filling in the supply gaps in California, and vice versa.*
As more and more states legalize cannabis it only becomes more clear that we need to open the borders for distribution. Some states that are legalizing cannabis for adult use don’t have the same ability to grow mass quantities to fulfill market demands. That means states who have the ability to grow an abundance need to be clear to supply the growing demand.
Cannabis is showing to be this generation’s “cash cow” but the borders being closed stifles the growth of the economy. It’s time to open them up and create the “Green Highway” along the Gold Coast and beyond.
*It should be noted that this would also take a huge bite out of the black market. Currently states like California that cannot meet their domestic demand are supplementing it via the black market from neighboring states and/ or states with surplus cannabis