Cannabis
Government Shut Down Another Gut Punch To Cannabis Industry
While consumer use soars, mom and pop businesses are struggling, a shutdown will be be another blow to the marijuana industry
A vast majority of the public and most leading medical institutions support better access to legal cannabis, but a few in DC are against the plant and the thousands of mom and pop businesses in the industry. Now, at the potential government shut down another gut punch to cannabis industry. Rescheduling would not only provide a path for increase research and patient care from medical marijuana, but would allow the mom and pop businesses which make up the bulk of the industry to have the same tax benefits as nail salons, car repair shops, and local restaurants. It would also allow a great ease of doing business which would help business owners and consumers alike.
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The potential government shutdown could significantly impact the ongoing process of marijuana rescheduling, which has been a major focus of the Biden administration since 2022. The Drug Enforcement Administration (DEA) is currently considering rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act, a move that could have far-reaching implications for the cannabis industry and medical research.
The rescheduling process, which began with President Biden’s instruction in October 2022, has already experienced delays. A preliminary hearing in December 2024 resulted in plans for evidentiary and testimonial proceedings between January and March 20252. A shutdown could further postpone these critical hearings. The Republican-led House Appropriations Committee attempted to block the Department of Justice from using federal funds to reschedule cannabis in July 2024. A government shutdown could exacerbate funding concerns and potentially halt progress on the rescheduling efforts. The rescheduling proposal is currently under review by the White House Office of Management and Budget and is subject to public comment. A shutdown could interrupt this review process and delay the collection and analysis of public input.
Despite state legalizations, the cannabis industry, which has been operating in a federal legal gray area due to the conflict between state and federal laws. And despite being a cash cow for regional government economies, it could face increased uncertainty during a government shutdown:
State-licensed marijuana operators, already existing in a legal limbo, may face additional uncertainty regarding their status and future operations. Questions about the retroactive effect of rescheduling on existing tax liabilities for marijuana operators would remain unresolved during a shutdown.
Rescheduling marijuana to Schedule III would potentially ease restrictions on medical research and help millions of patients. From military veterans and chronic pain suffers to cancer patients, medical marijuana has become mainstream and a mainstay. A shutdown could delay more progress, impacting ongoing and planned studies and patients.
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While a government shutdown would likely be temporary, its effects on the marijuana rescheduling process could have lasting consequences:
The expected timeline for a final rescheduling rule, initially anticipated for September or October 2024, would likely be pushed back significantly3.
The momentum gained in the rescheduling process, including the public comment period that garnered a record 43,000 comments, could be disrupted2.
Any delays or interruptions in the process could potentially strengthen arguments in ongoing legal challenges, such as the lawsuit brought by Doctors for Drug Policy Reform questioning the DEA’s witness selection process
Since the last downturn, more states have legal marijuana – with its strong revenue stream
It seems economic uncertainly has arrived. Wall Street has taken a major tumble as unemployment seems to rise. Consumer confidence has been shaken as prices on staples, including eggs, remain high. Tariffs with neighboring countries are threatening jobs and household budgets. While the federal government is less concerned, state budgets could take bigger hits. But will legal cannabis, will marijuana help states during economic uncertainty?
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Marijuana legalization has emerged as a powerful economic tool for states, offering a lifeline during uncertain economic times. By fostering job creation, generating significant tax revenue, and stimulating local economies, the cannabis industry has proven to be a transformative force. Already, three states make over $500 million in annual tax revenue from the plant.
The cannabis industry is one of the faster-growing sectors in the U.S., with job opportunities spanning agriculture, retail, manufacturing, and ancillary services such as compliance and marketing. Over the past decade, legal cannabis jobs have surged, with projections indicating continued growth should the federal government allow. For instance, states like Massachusetts already report more cannabis-related jobs than traditional professions like cosmetology. This job creation not only reduces unemployment but also injects income into local economies through consumer spending on essentials like housing and transportation.
Legal marijuana markets generate billions in tax revenue annually. States have embraced legalization use these funds to bolster budgets and invest in critical public services. For example, Colorado allocated $7.3 million from cannabis tax revenue to homeless services and housing initiatives1. Nationwide legalization could further amplify this impact, with estimates suggesting $8.5 billion in annual tax revenue for all states combined. These funds are often reinvested in education, infrastructure, public health programs, and community development projects.
Cannabis legalization revitalizes local economies by attracting businesses and increasing demand for commercial real estate. Most cannabis business tend to be mom and pop business including retailers, farmers and local regional producers of products. From cultivation facilities to retail dispensaries, the industry drives investments in equipment and infrastructure that benefit both urban and rural areas. Moreover, every dollar spent on cannabis generates an additional $2 in economic activity through a multiplier effect. States like Alaska, Colorado, and Massachusetts demonstrate how per-capita economic benefits can significantly enhance local prosperity
“Cannabis drives economic growth, creates jobs, and generates tax revenue while offering a safer alternative to alcohol. It’s a less harmful recreational substance and a valuable medicine to millions of Americans” shares industry expert Jesse Redmond, Head of Investor Relations & Business Development of LEEF.
Legalization also reduces the financial burden of enforcing marijuana prohibition. The U.S. spends approximately $7.7 billion annually on drug enforcement. By redirecting these funds toward education, regulation, and community support programs, states can achieve both economic savings and social equity.
They have become very popular for smoking – especially marijuana, but are vapes in danger now?
Is your vape in danger? It has become an increasingly popular method of consuming cannabis along with e-cigrettes. It has become a popular alternative to traditional smoking. E-cigarette technology has been adapted for marijuana use, allowing users to vaporize cannabis concentrates or flower without combustion.This trend has led to a shift in consumer demand, with some marijuana dispensaries reporting that roughly 50% of their business now comes from concentrates and extracts, many of which are packaged in cartridges for use in vape pens. But now, the new tariff policies have far-reaching consequences, including potential impacts on the vaping industry.
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In 2022, approximately 4.5% of American adults used e-cigarettes, while 5.8% of Canadians vaped in the past 30 days. It trends was higher among men (6.5%) than women. While some products are reusable, while others are disposable, which means a high turn over for the product. China has established itself as the global leader in marijuana vape production, dominating the market with its vast manufacturing capabilities and technological innovations.
Fast forward to 2025, and the current administration’s tariff strategy has significantly expanded. It is implementing a 25% tax on imports from Canada and Mexico. These actions have sparked retaliatory measures from trading partners, raising concerns about inflation and the potential for a severe trade war.
The economic impact of these tariffs has been substantial. Estimates suggest 25% tariffs on Canada and Mexico could reduce long-run GDP by 0.2% and eliminate 223,000 full-time equivalent jobs The combined effect of tariffs on Mexico, China, and Canada is expected to increase federal tax revenue by $142 billion in 2025, translating to an average tax increase of $1,072 per U.S. household.
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For the vaping industry, which relies heavily on Chinese-made devices, these tariffs pose a significant challenge. Small business owners who sell e-cigarettes or are a mom and pop marijuana dispensary face the prospect of increased costs and potential shop closures. Customers mentally have a limit on products. The lack of alternative manufacturing sources for vaping products makes the industry particularly vulnerable to these trade policies.
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