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News Article

Cannabis Regulation: Catalyst for Employment, Economic Recovery

By Alessa Flores | Wed, 09/30/2020 - 13:55

According to estimates from the United Nations Office on Drugs and Crime (UNODOC), more than 269 million people use drugs in the world and drug use is estimated to have increased by 30 percent between 2009 and 2018. Since 2018, cannabis has been the most widely used drug. It is estimated that 192 million people consume it and UNODOC estimates it is produced in (at least) 172 countries worldwide. 

The UNODC World Drug Report 2020 revealed that global consumption is increasing despite the fact that COVID-19 has a far-reaching impact on world drug markets. However, "movement restrictions limit access to precursors and essential chemicals, so some producers may be forced to seek new ways to manufacture drugs," the report explained. UNODC believes that traffickers may need to find new routes and methods, as travel restrictions prevent them from crossing borders.

For some related to the industry of cannabis, its legalization could be a potential source of economic reactivation. Guillermo Nieto, President of the National Association of the Cannabis Industry (ANICANN), explained in an interview with Heraldo Mexico that “the legalization of cannabis will promote the development and availability of better medicines and inputs for the industry that will translate to more jobs and a strengthening of the country's economic recovery.” Nieto invited the Senate to revisit the subject that today is pending in the country.

In Mexico, cannabis represents a potential market of US$5 billion, according to ANICANN. While globally the SBU Group estimates that the cannabis industry has an annual turnover of approximately US$13 billion, this figure is expected to increase to US$22.8 billion by 2020, according to a Fortune Magazine article. Likewise, SBU Group revealed that there are more than 100 cannabis companies listed in different stock exchanges with a capitalization value of US$68 billion. "The benefits represented by the legalization of cannabis in Mexico are undeniable, ranging from generating new jobs to collecting taxes and attracting new investments," Nieto explained. 

According to figures from the Ministry of National Defense, in 1Q20 alone, 54,260kg of cannabis were seized, while in 2019 a total of 170,323kg were confiscated. "If the market had been legal under these conditions, the amount of cannabis seized would have represented an income of at least MX$2.2 billion (US$99.7 million) in 1Q20 and up to MX$4.8 billion (US$217.6 million) in plant sales, without considering the conversion of cannabis into other products."

The legalization of cannabis can also have a powerful effect on drug trafficking and the monopoly it represents. “In the legal market, the wealth generated by cannabis is not concentrated in a single person, thanks to commercial practices linked to other legal products, producers, distributors and the creation of new workplaces in the public sector and in the private sector,” said Nieto.

Photo by:   jcomp
Alessa Flores Alessa Flores Senior Journalist and Industry Analyst