Cannabis is now legal for over 100 million Americans medicinally and/or recreationally; however, many still view the industry through the lens of historical stigma. As students of history, we should recognize and understand the deeply entrenched narrative of the “War on Drugs” campaign that discriminately categorized the cannabis industry as ethically objectionable.
At EEC, my cannabis investment firm, we believe cannabis can provide a generational wealth opportunity. However, we also believe it is a powerful agent of change. While we are definitively capitalists, we are also socially conscious investors who believe in doing good in the world while creating value and profits. Contrary to these misperceptions of what we believe to be an often-misunderstood industry, our experience investing across 65+ portfolio companies and engaging with thousands of cannabis consumers has opened our aperture and deepened our conviction.
As we struggle as a society to rebuild from Covid-19’s crisis on our economy and our health, we believe cannabis can be a lever for good. Cannabis legalization on a federal level could result in $128.8 billion in tax revenue and 1.6 million jobs.
Understanding the current and potential applications can help consumers and investors break away from the stigma surrounding cannabis. Consider how cannabis is making a meaningful difference in the world today:
Potential Medicinal and Therapeutic Benefits
Cannabis has already been demonstrated as potentially medicinally effective, especially in the management of chronic pain, PTSD, anxiety, and cancer treatment side effects. Cannabidiol (CBD), is the main ingredient in the child-seizure medication Epidiolex, which is the first FDA-approved medicine derived from an active ingredient from marijuana and has helped children with rare, severe forms of epilepsy. We may just be beginning to understand the ground-breaking medicinal and therapeutic impact of the cannabis plant.
Not a Gateway Drug, but Maybe an Off-Ramp Drug
The narrative around cannabis being a “gateway drug” to more dangerous substances is a misconception. A gateway drug theory prevailed into the 21st century claiming that early cannabis use leads to the use of the more harmful substances. Then in 2002, a study was published invalidating this presumption stating “marijuana has never been shown to have a gateway effect.” The CDC states that while more research is needed, the majority of cannabis users do not graduate to more harmful “harder substances.” Cannabis legalization has instead been linked to lower rates of opioid-related overdoses, death and harm. Interestingly enough, states with legalized cannabis have seen a 25 percent drop in opioid death rates than states where there is no legal access.
Public Safety and Crime
A long-held belief is that cannabis use could result in increased levels of car crashes, but documented fact patterns appear to be the contrary in states that have legalized. In both Colorado and Washington State after legalization, research shows there was no significant increase, or even difference, in car crashes pre-legalization. Early research has previously indicated a drop in alcohol sales in places where marijuana becomes legal, meaning people are buying less alcohol and therefore drinking less.
Another common misperception is that the legalization of cannabis will increase crime. The truth is, prohibition has not worked. Despite best enforcement efforts, inexpensive, illegal cannabis is still widely available; the illicit cannabis market was estimated to be worth $66 billion in 2019. Criminalizing cannabis has been shown to put money in the hands of criminals, such as cartels, rather than supporting the budgets of state governments.
Education and Elimination of Stigma
It could be argued that cannabis is safer than some legal substances as more than 20,000 people die each year due to overdoses as no one has ever been reported to overdose from cannabis. While we cannot categorically assume this is causation, not correlation, we can know that legalization of the plant has not had the increase and negative criminal, or underage usage many had anticipated.
While the above reasons are indicators that the cannabis industry is effectuating positive change globally, we at EEC believe there is materially more potential from this space. We continue to find the data demonstrates we are just at the beginning of a generational wealth creation event.
The question becomes: How do we as leaders in the cannabis industry educate others to remove the stigma? Here are some steps we’ve taken to break these barriers and stigma that may help you do the same:
• Put your money where your mouth is. We are investing in a social equity platform through our portfolio company, which will allow minority owners access to capital. Consider evaluating where you can make the most impact with your capital when it comes to breaking barriers and stigma.
• Ensure your brand is moving toward the future and not focusing on the past so as to avoid perpetuating any misconceptions. This means 21st-century branding that is fresh and modern as opposed to an approach that plays into stereotypical stoner stereotypes. What does that mean? Think less tie-dye and green leaves front and center.
• Invest in your community. Our portfolio companies are often some of the largest employers and tax centers for their communities. Make sure you are working with your local city council to direct your tax dollars and assist with training local populations.
At the end of the day, the way we will erase the stigma is by clearing the fog on those who are actively involved in the industry, the mothers, fathers, executives, neighbors in every city — all working collectively to increase access to a plant they believe will better society.