U.S. Cross-Border Cannabis Shopping: The Trend Continues To Grow

Illinois has become the latest U.S. state to commence the legal sales of recreational cannabis, starting January 1, 2020. What immediately accompanied cannabis legalization in Illinois? A sudden surge in “visitors” from neighboring U.S. states.
 

Cross-border cannabis shopping.

It’s yet another growing trend in the U.S. cannabis industry. A new state becomes cannabis legal, and residents of neighboring states rush in to purchase cannabis – despite recreational cannabis remaining illegal in their own state.

Why should cannabis investors care about this trend? Two important reasons.

First, it’s yet another indication of the enormous unmet demand for legal cannabis in the United States. Future cannabis sales along the path to full legalization in the U.S.

Secondly, such cross-border cannabis shopping is placing increasing pressure on other state governments to fully legalize cannabis in their own jurisdiction. Consider the economic costs of failing to legalize cannabis once an adjoining state does so.

First, there is the immediate loss of consumer dollars. A resident in a non-cannabis legal state travels to a neighboring state to buy cannabis.

Those consumer dollars are subtracted from the state economy. The jobs generated by those consumer dollars flow to the neighboring state. The taxes paid by the workers in those new jobs also go to the neighboring state.

There is the direct loss of tax dollars. Illinois’ government (and its taxpayers) raked in over $300,000 in taxes on the first day of legal cannabis sales in Illinois. Those tax dollars add up.

Just ask Colorado. The most successful U.S. state has hauled in well over $1 billion in state cannabis taxes since legalizing cannabis in 2014.

From 2013 to 2018, 25% of visitors listed “cannabis” as a reason for visiting Colorado. That’s a lot of cross-border shopping.

Perhaps most embarrassing for non-legal states is the extra spending on anti-cannabis law enforcement.

State A legalizes cannabis and gets all the economic benefits from legalization. (Neighboring) State B doesn’t merely lose out on all those consumer and tax dollars. It has to spend even more on anti-cannabis law enforcement – as its own residents flout these archaic cannabis laws and return to the state with cannabis in their pockets.

The alternative is for such states to throw up their hands and not even attempt the extra policing. But then why continue to criminalize cannabis consumption (and lose out on the economic benefits) if you’re not actually going to enforce Prohibition?

As more states legalize this will become yet another cannabis Domino Effect in the United States.

Having even one cannabis-legal state as a neighbor puts significant economic pressure for a state government to legalize. What happens as states start to have two or even three cannabis-legal states on their border? Residents fleeing the state in all directions to spend money in neighboring states.

And if a state government obstinately refuses to legalize cannabis as the economic bleeding gets worse and worse? How long will voters tolerate such fiscal stupidity?

More than that, Americans want legal cannabis.

New data shows that 90+% of Americans want (at least) the legalization of medicinal cannabis. Overwhelming majorities from all age groups and all political affiliations. A Cannabis Revolution.

The growing trend of cross-border cannabis shopping illustrates the strength of demand for cannabis among U.S. consumers. It also illustrates a growing trend of civil disobedience among Americans toward archaic cannabis laws.

The genie is out of the bottle. (Almost) everyone knows there was never any justification for cannabis Prohibition.

Americans have lost all respect for these archaic Prohibition laws against cannabis. Increasingly, they simply ignore them.

It provides a very simple equation for both state and local governments.

Embrace cannabis legalization and enjoy all the economic benefits. U.S. cities have experienced only positive benefits from cannabis legalization.

Or, bury their heads in the sand. Continue with Prohibition.

Force their residents to travel to neighboring states (or counties) to purchase their cannabis, or simply have them buy it from the black market. Waste even more money on anti-cannabis law enforcement to try to stop them.

Cannabis legalization is about health and safety. Allowing people to obtain all the health benefits from cannabis, via (legal) regulated and inspected cannabis products.

Increasingly, cannabis legalization is also about the economics. As more and more states feel the economic pain of cross-border cannabis shopping, the pressure mounts to legalize.