The Economic Pros and Cons of Marijuana Legalization – Would Marijuana Growers See More Green?


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The Economics of Marijuana Legalization

Would Legalization Mean More Dough For Growers?
(Click to enlarge)

" For growers, legalization would bring both positive and negative monetary repercussions. "

With the continued spread of states legalizing medical marijuana, one of the most prevalent topics within the community and even among some major politicians and businesspeople is whether it is time to legalize marijuana for both medicinal and recreational use.

The growing community seems to be somewhat split over whether wide-scale legalization of marijuana would be good or bad for our financial bottom-line. Certainly it would bring more legitimacy and safety to the industry, and therefore to us as participants. But for growers, legalization would bring both positive and negative monetary repercussions, which is why the community is so divided on an issue which, on the surface, would seem to be something that everyone would support.

 

On The Plus Side:

 

- Full federal legalization of marijuana, without restrictions on quantity, would allow growers to cultivate many more plants than current state laws allow. More plants = more profit.

- Countless dollars would be saved in potential legal fees for growers or others in the industry who might find ourselves on the wrong side of the law.

- Finding recreational customers and medical patients alike would be easier and safer, so growers and vendors would be able to create a much larger customer base.

- If marijuana becomes available in stores, like medical marijuana in dispensaries but on a larger scale, salespeople and the growers who supply them will have more entrepreneurial opportunities.

- Federally-legalized marijuana would allow the industry to operate in states which have not passed legislation allowing either medicinal or recreational marijuana use. 

- When legal, growing and selling marijuana would be easier and safer, without the need to worry as much about security measures to protect our crops against robbery or raids. It will still be a profitable crop and certainly indoor hydroponics equipment can be a draw of their own for thieves, but the costs associated with security will drop.

- More companies will create products geared towards the marijuana grower, which will increase competition and end up lowering prices. The products, like hydroponics gear, nutrients, and even MMJ seeds themselves will likely increase in quality as more people join the newly legitimized marijuana industry.and bring their knowledge to the table.

- Marijuana legalization would also bring hemp legalization, reopening an industry that had once been at the core of our country but not allowed for many years. 

 

But, There’s Always A Down Side:

- The main argument against legalization is that it will inevitably cause wholesale marijuana prices to drop, simply because there will likely be more product on the market. At this point, we don’t know how low marijuana prices will go, because we don’t know how many people will enter the industry as growers, or how much more marijuana current growers will cultivate. However, it is likely to be a pretty big drop.

- If marijuana becomes a mainstream industry that is dominated by corporations the way that much of the current commercial marketplace is, from fast food to pharmaceuticals, the industry may lose some of its luster and financial benefit to smaller grow operations. It can be hard to compete with major corporations and their seemingly endless resources.

- Corporations may also try to patent aspects of the industry, anything from marijuana strains to cultivation practices which, if successful, could make things more difficult for the little guy. They are often successful at securing patents because they can hire the best lawyers.

- Growers and sellers who currently operate within a gray (or even black, though we do not advocate it) market will have to operate within legal parameters. This will likely mean paying substantial amounts in taxes and licensing fees. Operating a business on the up-and-up usually means retaining some sort of legal counsel as well, which many small-scale growers do not currently do (even if they should).

 

Clearly, there is an economic argument to be made by growers on both sides of the issue, but the benefits of legalization to the government, recreational customers, and especially medical marijuana patients may be enough to sway public opinion in favor of federal legalization. When that happens, we will truly see how legalization affects the income of marijuana growers.

 

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