Legalization of cannabis: how it will affect the economy?

25 June 2022, 15:10 | Business
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At a meeting of the Cabinet of Ministers, a bill was recently approved that will regulate the circulation of plants of the hemp genus (Cannabis) for medical and industrial purposes, scientific and scientific and technical activities. Bill No. 7457 was registered on the website of the Rada on June 10, and already on June 14 it was supported by the Verkhovna Rada Committee on National Health, Medical Assistance and Medical Insurance with a proposal to adopt the document as a basis.

According to the government, the bill should increase the access of patients to the necessary treatment for a number of diseases. Medical cannabis could prevent suffering and improve patient care. It facilitates the course of a significant number of pathological conditions, in particular:.

post-traumatic stress disorders, in particular those resulting from military operations;

neurological diseases. Preliminary findings suggest that medical cannabis may have a positive effect on the treatment of Alzheimer's disease, Huntington's disease and Tourette's syndrome;

digestive tract diseases;

chronic pain of neuropathic origin.

Cannabis-based drugs are used in palliative care to alleviate a complex of symptoms in cancer patients. Some studies show that cannabis preparations are useful for the treatment of post-traumatic stress disorder, which is very common in military veterans..

In addition to expanding access to cannabis-based medicinal products, the government believes that the adoption of the bill will allow:.

contribute to the development of medical science and the pharmaceutical industry, in particular, to start clinical trials of cannabis-based drugs, cannabis resin, cannabis extracts and tinctures, as well as tetrahydrocannabinol (its isomers and their stereochemical variants) in order to more deeply study the possibility of its use for medical purposes;

carry out lawful activities for business entities to cultivate cannabis, use such plants for scientific, educational and medical purposes without violating Ukraine's international obligations to prevent the circulation of narcotic drugs and substances;

contribute to attracting international investment in science and industry in Ukraine.

Due to the peculiarities of the current legislation, introduced back in the 90s of the last century (the Law of Ukraine "

At the same time, the effectiveness of the use of cannabis plants for medical purposes has been confirmed both by some scientific studies and the conclusions of specialized international institutions.. Thus, in the reports of the Expert Committee of the World Health Organization (WHO) on drug addiction for 2018 and 2019, based on the analyzed data, the constituent substance in the plant (cannabidiol) has significant therapeutic potential and is effective in the treatment of various pathological conditions..

In December 2020, the UN Commission on Narcotic Substances decided to exclude cannabis and its derivatives from Schedule 4 of the 1961 UN Convention on Narcotic Drugs..

Now the use of hemp plants for medical purposes (and sometimes for recreational) is allowed in many European countries (including Germany, Spain, the Netherlands, Italy, Czech Republic, France, Portugal, Poland, Greece, Austria, Denmark, Belgium, Croatia, Luxembourg,.

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Key factors driving the development of the global cannabis cultivation market:.

ever-growing demand for hemp-based products among patients (in the US, the number of patients using cannabis plants for medical purposes was about 5.5 million, in Canada - about 400 thousand and in the EU - 340 thousand);

an active policy to legalize cannabis for medical and recreational purposes in countries around the world, in particular in North America and Europe. Proponents of legalization point to the need for its introduction as a possible catalyst to accelerate recovery from the economic crisis caused by the COVID-19 pandemic..

The global market for the cultivation of legal cannabis was estimated at about $324 billion in 2021.. USA. At the same time, it can be expected that in 2022 it will reach $392 billion.. and will continue to grow annually by an average of more than 20%. Thus, in 2030 the market can reach $1.8 trillion.

So, in addition to creating a legal market and increasing patient access to new treatments and pain relief, the legalization of cannabis has a number of additional economic effects: increased tax revenues and investment, created new jobs and reduced crime rates..

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In this context, one of the clearest examples is the consequences of the legalization of cannabis in the United States.. Thus, this year the legal cannabis industry in the United States (cultivation and sale) will have a total economic impact of $ 100 billion.. , which is 20% more than in 2021. Cumulative tax revenues of all states that legalized cannabis (37 out of 50) reached $3.7 billion in 2021. And this is not taking into account the revenues received by the local budgets of cities and towns.. In addition, in 2021, the six states that approved cannabis use have yet to start collecting tax revenue..

Most states use these tax revenues to fund public schools, healthcare facilities, mental health programs, childcare, public transportation, environmental protection, and more.. At the same time, experts note that if cannabis in the United States were recognized as legal at the federal level, and not just at the level of individual states, then the benefits for the US economy would be even more impressive - an additional $ 100 billion. total federal tax income through 2025.

Another economic effect for the US economy from legalization is the creation of new jobs.. As of the end of 2021, more than 321 thousand workers worked in the industry, which is 77,300 people (32%) more than in 2020. Employment levels in the cannabis industry are constantly growing - by 2025, the industry can be expected to employ up to 600,000 people, and if legalized at the federal level, up to a million. The average salary in the industry is higher than the average salary in the whole country.

Growth in employment and wages is driving up housing costs in states that legalize cannabis. At the same time, the demand for commercial real estate is also increasing, indicating an increase in job opportunities and economic growth.. Investments in the development of the industry and scientific research are also increasing.

Given the potential of the industry, the Argentine Congress recently passed a bill to create conditions for the opening of the domestic cannabis industry (cultivation and sale), as well as for the export of both medical and industrial cannabis. According to the Argentine leadership, legalization will create new jobs, increase productivity and introduce new types of exports for the country, which is now facing a deep economic crisis after the coronavirus epidemic.. The government believes that the industry can create about 10 thousand. new jobs over the next two years and bring the country $500 million in revenue. and $50 million. export.

The legalization of cannabis in Ukraine also creates a number of advantages, in particular, it will allow:.

conduct economic activities for the circulation of cannabis plants for medical and scientific purposes;

to help citizens of Ukraine who suffer from neurological diseases, diseases of the digestive tract, mental disorders, oncological diseases and side effects of chemotherapy, chronic pain syndromes, etc..

receive additional tax revenues to the budget;

help attract new investments to Ukraine;

stimulate an increase in tax revenues;

create more new jobs;

develop medical science by starting clinical trials of drugs based on hemp plants to study in more depth the possibility of their use in medical practice.

The innovations of the Ukrainian government during the war are progressive and quite relevant, since they will not only help Ukrainians suffering from neurological diseases (including post-traumatic stress disorders), but also create conditions that will contribute to economic recovery.

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Read more articles by Andrey Tereshchuk at the link.

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