Cannabis: Elon Musk can smoke it, so why shouldn’t Rishi Sunak tax it?

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Is cannabis good for you?


Medically, this argument continues to roll on. But pragmatically, legislators are increasingly devolving decisions about the drug to the individual. Thus Cannabis is now completely legal in 14 states of the USA, and effectively allowed in several others. It’s also legal in Canada, and South Africa, and a couple of other jurisdictions around the world.


Noteworthy that it’s the English-speaking nations leading the way, and noteworthy too that in this respect the UK and Australia are the laggards.


But how much longer can it last. Long gone are the days when the media and popular press were able to whip up hysteria about pot-smoking dopeheads and cause moral panic, as they famously did with the film Reefer Madness.


These days moral panic is generated by outing Rita Ora for hosting an illegal birthday party or by castigating Gina Carano for the contents of her twitter account.


Cannabis use is a long way down the list, to the point that although it turned heads and raised eyebrows when the world’s richest man, Elon Musk, publicly smoked it on the popular Joe Rogan show.


Yes, Musk has been publicly censored by US regulatory authorities more than once, but not for that. And naysayers – both on Musk and on cannabis – would do well to take note that it was only after his public display of reefer madness with Rogan that Tesla recovered its poise and shot up the rankings to take the slot at the top of the world rankings of car companies by market capitalization/


Cause and effect? Probably not.


But the more salient point is that smoking cannabis, and smoking it publicly at that, didn’t do Musk, or any of his investors any harm.


With Musk, you either think there’s madness where he’s involved, or there isn’t. The reefer is a side issue.


All of which indicates a clear direction of travel. With the Democrats, a party traditionally more favourably disposed to cannabis, now firmly in control of the USA’s most important levers of power, it seems a racing certainty that the overall environment is going to become more lax. The question is how soon?


Remember the issue of gay marriage? That seemed intractable, and even President Obama was on the record as against it at one point. But attitudes suddenly shifted, and legalization of gay marriage swept across the country with amazing rapidity.


The same could happen with cannabis.


And as with the USA, so with the UK.


The British government, having suddenly found itself lumbered with a GBP400bn additional debt burden it wasn’t expecting to have, is frantically scrabbling around for new ways to raise revenue.


Some sort of tax on e-commerce would seem equitable, given that bricks and mortar companies have been forced out of business as a direct consequence of the government’s own lockdown policies.


But given the precedent now set by the USA, Canada and elsewhere, the legalisation and consequent taxation of cannabis would seem to be a no-brainer. After all, since cannabis use in the UK is effectively decriminalised anyway, making the de-facto reality official and above board would involve little more than the stroke of a pen. Then, the entrepreneurial companies can move into the space, clean up the seedier side of the industry, and turn a small part of the black economy legitimate.


Such a move wouldn’t solve all Rishi Sunak’s problems. But the precedents are there.


In just under two years between early 2018 and late 2019, California’s cannabis sales generated US$411.3mln in excise tax, US$98.9mln in cultivation tax, and US$335.1mln in sales tax. Cannabis sales in Colorado in 2019 were valued at US$1.7bn, and overall sales in the US are expected to triple over the next three years to more than US$30bn.


The UK’s economy is smaller and structured differently. But there’s no doubt that, as with electric vehicles, this is a growth industry. The UK government has been falling over itself to help out the nascent lithium and battery metals industry that’s currently growing up at breakneck speed in Cornwall.


But isn’t it time it also took a leaf out of Elon Musk’s playbook, and properly investigated the effects of cannabis on its own fiscal wellbeing. Conservative governments are by their nature cautious. But amongst up-and-coming generations of voters this could well be a vote winner.

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