The SAFE(R) Banking Act vote and the Biden administration’s review of the federal status of marijuana have garnered headlines and applause from many drug reform advocates and cannabis industry leaders. But without congressional action to protect small businesses, federal marijuana reform threatens to give an unfair advantage to a handful of national corporations while hobbling thousands of local farmers and neighborhood shopkeepers.
Under current law, state-licensed marijuana companies are denied the use of basic financial services. That means no checking accounts, no tax credits, no small business loans. For the cannabis industry’s emerging billion-dollar corporations, that’s not a problem. They’re able to expand and gobble up smaller companies (and their licenses) using private equity money and funding rounds in the hundreds of millions of dollars.
Small businesses can’t compete on that scale. Unless Congress acts, the Biden administration’s plan to merely reschedule marijuana is likely to supercharge the rise of national cannabis conglomerates while strangling local community-scale businesses.
This should be a bipartisan win-win. Support for small business and marijuana legalization are two rare issues where Republican and Democratic voters find common ground. A recent Gallup poll found Republican support for legalization now tops 51 percent, while 81 percent of Democrats want to end pot prohibition. Both parties compete to be seen as the one true BFF of Main Street mom-and-pops.
And yet party leaders on both sides are poised to embrace a lose-lose. In a study recently published by Ohio State University’s Drug Enforcement and Policy Center, we found that America’s $26 billion legal cannabis industry is quickly consolidating into the hands of a few well-financed national players. In 2018, the seven largest multistate cannabis companies accounted for only 3 percent of the legal industry’s annual revenue. By the end of 2022, that share had grown to nearly 18 percent.
If the trend continues, the cannabis industry might soon resemble America’s beer industry: a market dominated by a handful of global corporations with small businesses competing for an ever-shrinking slice of the pie.
Hellbound and Down 