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The Impact of The US Presidential Election on The Global Cannabis Industry

The Impact of The US Presidential Election on The Global Cannabis Industry

The impact of the results of the 2020 US Presidential Election will extend around the world effecting numerous industries in some capacity. Supply chains will inevitably have to be rethought and the impact of the legal status of cannabis throughout the world is likely to shift significantly towards legalisation if cannabis is to be federally legalised in the United States.

It appears that Joe Biden has been victorious in the election, while the result is being disputed and has yet to be legally confirmed, the majority are assuming that Biden will be inaugurated in January 2021.

The impact on the global cannabis industry that the election result cannot be understated. With New Jersey, Arizona, South Dakota and Montana all passing legislation after the election that permits possession of cannabis by those over 18 years of age. There are now 15 states in the United States that have legalised cannabis in a recreational capacity.

The election result will influence how cannabis is controlled on an international scale. Federal legalisation would enable US companies to enter foreign markets which would result in a significant capital injection into the sector. It could also allow companies to have a more secure financial setup, especially in the US.

The momentum of cannabis legalisation seems to be increasing across the world and the stigmas surrounding cannabis seem to be subsiding for the most part. More evidence is required to prove the long-term safety of cannabis use and efficacy of using cannabis as a medicine. Once this evidence is obtained, it is likely that medical consumption will initially increase due to the available clinical evidence. Then as cannabis becomes more respected as a therapeutic and a medicine, the logic behind criminalising cannabis and not allowing the legal commercialisation of cannabis will crumble. Ultimately leading to a tidal wave of cannabis legalisation and investment around the world into ensuring cannabis is widely consumed. 

Advertising

Within the UK CBD market, brands cannot currently advertise their products with Google or Facebook. Amazon also outlaws CBD for the time being, however there is a CBD pilot program underway.

Having the ability to advertise on Google, Facebook and Instagram is crucial to any modern e-commerce business. However, CBD companies are currently unable to do this. CBD brands have to use clever marketing campaigns to allow them to advertise their CBD products. The use of landing pages and other mediums means that the return on investment of these advertising campaigns is severely impacted and the marketing campaigns are not as effective as they would be if CBD could be directly advertised.  

If the US were to change their stance on cannabis and initiate the process of decriminalising and recreationally legalising cannabis, it would change the perception of cannabis in the eyes of the large tech companies that have such power over a company’s ability to advertise their products. 

Once CBD brands can freely advertise on Facebook and Google it will result in a dramatic upturn in revenue and will allow more customers to experience the benefits of CBD. 

CBD products are the first step and over time more cannabis-based products and services will have the ability to advertise their cannabis offerings on Facebook and Google. 

Amazon is obviously a major player in any industry that involves e-commerce. Once CBD is allowed to be sold on Amazon it will mean that Amazon will become a new battleground for CBD brands to gain market share.

Legislative change in the US one of the key factors that will drive Amazon, Facebook & Google to allow CBD and then cannabis brands to advertise and list their products on their respective platforms.

Medical Cannabis 

While the recreational legalisation may seem a long way off in many countries. Medical cannabis has been accepted more widely. With many countries legalising medical cannabis, the foundation for wide-spread prescriptions has been laid. However, while medical cannabis is legal in many countries including the UK, not many patients are actually able to obtain a medical cannabis prescription. In the UK patients have to front the cost of the medication and the consultations themselves meaning it often costs more than £500 to get prescribed medical cannabis. This is unaffordable for the majority of the population and if patients have to pay this much for the medicine, it is never going to be prescribed to thousands of patients, which is what is required to ensure medical cannabis becomes a definitive option for patients.

Clinical Trials

Large scale clinical trials are required to prove the efficacy and safety of cannabis as a treatment option before it can be prescribed on a large scale. The cost of undertaking a clinical trial is likely to be in the tens of millions and as cannabis is often a generic, the motivation for companies to spend such a vast amount of money on a clinical trial is not currently there. This is because unless a medication can be protected by a patent, the data and medication that is used in a clinical trial it is unlikely that the company who pays for the clinical trial will ever recuperate their investment.

One option is to ask participants in a clinical trial to front the cost of the medication. However, this would make acquiring patients to partake in the clinical trial more difficult and it means that patients will drop out of the trial more frequently, for reasons not associated with the efficacy of the medication.

US Federal legalisation would increase the incentive for US cannabis companies and more pertinently, large pharmaceutical companies to examine the viability of conducting a large scale clinical trial to prove the efficacy of cannabis on treating chronic pain conditions.

If a large US company were to undertake this project, upon the collation of data that strongly supports the efficacy and safety of cannabis in treating chronic pain they could then look to ensure their formulated medicine is more accessible in the US. It would also provide the data to present to national health services in Europe such as the NHS. The influence of large US pharmaceutical companies cannot be understated, and they will realistically have a major say on how/when cannabis prescriptions become available on the NHS. 

US Federal legalisation is probably going to have to come into effect before cannabis becomes available to obtain via an NHS prescription, so a US government with sympathetic views towards cannabis is integral to the evolution of the medical cannabis sector as well as the potential recreational industry. 

United Kingdom 

The CBD market in the UK is ever growing and due to the Novel Food legislation coming into force in April 2021, it will have definitive legislation in place for OTC cannabis derived products on a national level. Definitive legislation on a national level is so crucial for sectors to grow as it allows investors to assess the legal landscape to then make a decision on whether it is a sector that they deem to viable and worth investing in.

If marijuana is to be federally legalised in the United States, the impact on the UK market is sure to be great. US cannabis companies could then export to the UK making UK CBD brands and medical cannabis companies of great interest to larger US players. The increased investment would ultimately grow the industry and the legislation now in place for the CBD industry in the UK could be the foundation that a recreational industry is built upon. 

The US influence on the medical cannabis sector in the UK could be tremendous. US pharmaceutical companies already are extremely influential within the UK’s medical and pharmaceutical sectors. If these large pharma companies are suitably incentivised to promote cannabis medications whether it be on the NHS or privately, the UK medical cannabis market could experience massive growth at a rapid pace. 

Australia  

The election result is likely to have some influence on the Australian market to some extent. It is likely to be more of a cultural impact than a legislative change. If Biden is to be the President, having a US Commander and Chief that is pro-decriminalisation and that may work to implement actual legislative change it could have a positive effect on investor sentiment and the political narrative about cannabis.

Once the narrative on cannabis begins to change from within the White House it will gradually de-risk cannabis markets such as the CBD market and eventually the recreational market to large US corporations who may look to benefit from the wave of global commercialisation of cannabis.

The influence the US government has over global intergovernmental agencies, capital markets law and global trade cannot be underestimated.

Brazil 

Federal legalisation of cannabis could define the future of cannabis in Brazil and would dramatically improve the viability of Latin American cannabis business plans.

A definitive decision on legislation in America could lead to Brazil following suit.

Currently, patients in Brazil can import cannabis products on a compassionate basis. If cannabis exports were to be legalised from the US it would mean that the US market would most probably become the source of the majority of Brazil’s imports, which in time may lead to US cannabis companies building an infrastructure to serve the Brazilian market.

Germany

While Germany recently rejected a recreational marijuana bill. A change of position from the US government may ensure that the bill is tabled again and is voted on by the German government. 

The Medical Cannabis market in Germany is booming and this should be ample evidence that a recreational legislative change could be extraordinarily successful in Germany. There is a growing cannabis infrastructure in Germany and if the US is permitted to export cannabis. It is inevitable that US companies would consider many existing and growing German companies for acquisition or investment.

Mexico

Mexico seems to be gearing up for recreational legalisation. Federal legalisation in the US that would allow exports to Mexico could have a dramatic impact on the Mexican market. Once US companies to export to what will be a very large market, there will inevitably be substantial investment from US companies into Mexico.

Psychedelics 

The state of Oregon became the first US state to legalise psychedelic mushrooms. This could be the start of another wellness trend with people initially looking towards mushrooms supplied as supplements such as Chaga, Lion’s Mane and Reishi. With the ongoing development of psychedelic therapies across the world with Compass Pathways leading the way.

Psychedelic therapies and treatments are being developed to be a potential solution to treat severe depression and PTSD. These innovative therapies could present a medical and psychological solution that is far beyond the current mental health treatments that are offered to patients. 

A progressive view to natural medicines that have been used for centuries could also allow an escape from the addictive nature of opioids and anti-depressant drugs that often have harmful side effects.

Conclusion

A probable Biden win is likely to be the most beneficial result for the cannabis industry. The party that controls the Senate will also have a profound impact on the progression of both the US and global cannabis industries.

If the United States of America fully embraces the legalisation of cannabis it will be a historic decision that will leave the global cannabis industry on the precipice of launching a cataclysmic industry, the like of which has not been seen since the end of Alcohol prohibition in 1933.

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