Why is not cannabis legalized at the federal level in the USA?


A vast majority of Americans want to legalize cannabis

While cannabis industry is an unstoppable phenomenon in the world, the US federal government doesn’t want to legalize it. It was Canada the first industrialized country which legalized cannabis. And later it was Mexico the country that decided the same.

66 per cent of the Americans want to federally legalize pot. This is two out of three citizens. 33 states have legalized medical marijuana, 10 of them allow adult use. If cannabis were completely legal in the U.S.A. and Canada, it would be the most profitable cannabis business in the world. The federal government still continues including cannabis in Schedule I classification. As long as this federal classification continues, there will be a severe limit on cannabis’s potential within the country.

The reasons behind

It is quite difficult to understand why if two thirds of citizens want to legalize cannabis the government continues maintaining the prohibition.

Firstly, the subject depends on party point of view. In Gallup’s October 2018 poll, 75% of Democrats and 71% of Independents wanted the legalization of the substance and only 53% of Republicans. Even though this was an all-time high for GOP support in Gallup polling, it wasn’t enough for legalization. With the Republicans controlling the Senate and the Oval Office, there is no need to “hurry up” in order to push for legalization; no matter if most Americans want a real reform.

It is important to understand the importance of cannabis for voters. An April survey made by the University of Quinnipiac showed that cannabis was not important enough among voters to decide their vote. The people were asked if they would vote a candidate who shared most of their opinions but remained opposite to cannabis legalization. Only 13% said they wouldn’t vote for that candidate and 82% answered they would continue voting for him. Therefore, cannabis is not too important for voters and politicians feel safe maintaining a policy against the legalization.

And of course, money is behind the subject too. Legalization means problems for federal government. Being cannabis a substance included in Schedule I drug, those companies that deal with cannabis cannot be allowed to take normal corporate income tax deductions, per Section 280E of the tax code. Only costs of goods sold can be deducted from revenue and most important cannabis companies pay a quite high effective tax rate.

But if cannabis were legalized, the weed companies would not be subject of Section 280E, which would mean accost of $5 billion in total tax revenue during the next decadefor the federal government.

In addition, creating a federal excise tax on legal weed is not a solution. Because taxes, no matter if they are state or federal, means a more expensive product comparing to the black market. Some locals in California pay about 45% in aggregate tax, which means a more expensive weed and, therefore, a good way to drive consumers to the black market.

Probably the only way to get federal legalization would be that the Democrats had a comfortable majority of seats. In addition, the real benefits of legalization should surprise the lawmakers.

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