I need to preface this with I’m a capitalist and that I’m not advocating for the breakup of existing industries but the marijuana industry isn’t developed and where it was developed it was done contrary to federal law.
Politicians are constantly advocating for real financial opportunity for the common person. The US and most states could greatly improve the quality of life for ten of thousands of Americans and foster the development of thousands of small businesses, real chance for mom and pop businesses to spring up everywhere if the emerging marijuana industry is properly regulated by both the Federal and State governments.
The US is about to be presented with a rare economic opportunity that could revitalize many impoverished pockets of America. A new industry is emerging and it could benefit 1000s of communities if properly implemented. With the pending federal legalization of marijuana, Congress has an opportunity to create 10s of thousands of millionaires as opposed to 10 billionaires. If federal marijuana laws are structured in a way that doesn’t allow for industrial-scale production, limited sales to 100 pounds per farm each month, and taxed interstate sales at over 100% you could revitalize 1000s of impoverished communities across the country. If large-scale production of marijuana is allowed this opportunity will be missed. The trickle-down effect of properly regulating the production of marijuana will be tremendous if 10s of thousands of new millionaires are created as opposed to 10 billionaires. The large scale farms will be owned by the already rich and there will be no trickle-down effect that would stimulate the economies of 1000s of rural and impoverished urban areas. Industrial production will provide minimum wage jobs for very few as opposed to 1000s of small producers that can pay reasonable wages, make reasonable profit, and help their local communities in the process. The barriers to entry are low, minimal start-up costs, limited space is required and the margins are huge. There are already many Americans that are benefiting from this emerging industry and if improper federal regulations are imposed it will destroy current, successful small-scale producers and foster the dominance of a few well-funded producers in states that benefited from breaking federal laws.
The same applies to NY State. If the license fees were reasonable NY State could create 10,000’s of good-paying jobs across the state. If the current proposals are allowed to go forward it may make a few families in NY State rich but I doubt that NY State will ever be competitive in the industry because of its late entry into the industry. California and Colorado will dominate the market offering little room for other states to compete. Even neighboring Massachusetts has a head start and could prevent any NY State industry from emerging. There already exist investment opportunities in MSP(multi-state partnerships) that are flooded with capital and ready to dominate the industry.
Look at the alcohol industry and use microbreweries and boutique distilleries as an example. Microbreweries and boutique distilleries have been very successful and created pockets of reasonable wealth in many communities. Had the alcohol industry never been allowed to develop commercial production tens of thousands of breweries and small distilleries would have opened to fulfill the demand for liquor. There wouldn’t be 5 families that became billionaires but 1000s of small breweries and boutique distilleries that employed more workers than industrial-scale production and more evenly distributed the wealth created by liquor. This is where the US has a great opportunity with the marijuana industry. If proper federal regulation is developed there is a tremendous opportunity to create reasonable wealth for many Americans. If not then 5 groups from California and Colorado will dominate the market further enhancing the wealth of their investors and only benefiting those 2 states. Edibles and vape cartridges can be produced locally with safety regulations that already dominate many of the states currently allowing production. If you don’t concentrate the potential wealth that will be derived from the marijuana industry in a few hands the economic benefit to America will be tremendous.
This applies to NY State more than most. If NY State properly regulated the marijuana industry. It could create 1000’s of millions dollar a year businesses. You could have urban farms as well as rural ones. Dispensaries and the other businesses like vape and edibles that develop can be local. This could revitalize the mom and pop small business in every county. Fees could cover the salaries for inspectors and regulators and a 30% tax could bring in over a billion dollars in tax revenue. Impoverished communities, urban and rural, could be revitalized by the pockets of reasonable wealth created by these small mom and pop businesses.
The federal and state governments have a unique opportunity to create real and reasonable wealth for 10s of thousand of Americans as opposed to tremendous wealth for only a handful. This is all politicians’ chance to prove if they stand for opportunity for all or excessive wealth for a few.
Marco Bellin, CPA