In our previous blog post, we delved into the economic side of cannabis, as one more reason to consider its legalization, and we considered the business volume that the cannabis sector represents in countries like Uruguay and some states in the US. According to some estimates, Spain could earn more than €3.312 billion per year.

Spain represents an attractive market for the cannabis industry, with a well-established cannabis culture, half a million daily consumers, four million occasional users, and millions of tourists and students with a taste for marijuana who visit us every year.

Estimates show that we leave Millions of dollars that could contribute to improving our welfare state are in the hands of drug traffickers.

According to a study carried out by the doctor in Economics Iván Ayala, published in issue 250 of the magazine Cáñamo, in October 2018, the Spanish state would earn around 3,312 million euros per year: 1,021 from VAT, 486 from excise taxes, 371 from corporate taxes, 1,407 from personal income tax and social security, and 27 from taxes derived from exports. The total volume of the legal cannabis business was then estimated at around 8,514 million euros annually.

This study made its assessment based on a hybrid regulatory model, meaning that part of the demand would be supplied through non-profit channels (home cultivation and social clubs like ours) and the rest through commercial channels. If the million kilos of marijuana needed to supply the annual Spanish demand circulated exclusively through commercial channels, the turnover would amount to approximately 12 billion euros.

Foreign Arrivals

Faced with a hypothetical regulation of cannabis, some foreign companies have begun to move to position themselves in the Spanish market. For years now, some cannabis clubs, especially in our city of Barcelona, ​​have been beginning to be controlled by foreign capital. It's no coincidence that certain North American investment firms have organized parallel events in the wake of the Spannabis fair held in Cornellà de Llobregat (the most important in the cannabis sector in our country and Europe). A fair that the American cannabis journalism giant High Times Holding Corp bought at the end of January 2019 for around $7 million.

Another clear example of the arrival of foreign capital in our country is represented by the Las Vegas-based firm Freedom Leaf, which acquired a 40,000 m2 greenhouse in the municipality of Benifaió (Valencia) to plant hemp. Needless to say, the examples go beyond mere anecdotes and are quite numerous.

The plant isn't the whole business

In Spain, despite its illegality, the cannabis industry has been growing at a rapid pace for years. The market offers countless products associated with or derived from the plant that are completely legal.

In a consumer society like ours, the emergence of all kinds of "cannabis products" was to be expected. We found it all. From beers to beauty products, although the big business has always been growing accessories: indoor planting cabinets, seeds, substrates, lights, fertilizers, fans, extractors, etc.

Seeds are the jewel in the crown because seed banks, through the development of unique genetics, have managed to launch hundreds of varieties onto the market, resulting in multi-million-euro businesses. The expansion of cultivation has allowed the opening of grow shops (specialized stores) throughout Spain. These stores sell the products needed for growing, as long as the seeds have less than 0.2% THC. This way, they avoid taxation.

A significant portion of consumers, especially the most frequent ones, turn to home-growing to supply their supplies, with the consequent expense of planting them. It's difficult to estimate the millions of euros that Spanish citizens spend on this practice. There's no doubt there must be quite a few, because we know that the Spanish company Leaf Life, based in Madrid and Barcelona and one of the most important in the sector in our country, already had a turnover exceeding 12 million euros in 2016.

What will the model be in our country?

It remains to be seen what economic model for cannabis regulation the Spanish legislature will offer: whether it opts for an ultra-liberal one or prefers a hybrid system based on small businesses.

An ultra-liberal model will open the doors to foreign investment, with the risk of dismantling the current associative structure. This model will in no way generate the 100,000 jobs that the hybrid model based on small businesses, self-employed workers, cooperatives, and associations like ours will create.

We would like to think that Spanish regulation will move away from a model of unbridled capitalism and give greater priority to the current associative structure, represented by many consumer associations like ours.

We are uncertain about how the regulatory model will be structured and what socioeconomic scenario it will open up. The uncertainty is heightened by the lack of transparency with which the Spanish Agency for Medicines and Medical Devices has granted licenses for hemp cultivation to date. Furthermore, there are some indications that the pharmaceutical lobby has its own interests in the sector.

The legal cannabis business is a multi-million dollar fortune. We would like to think that Spanish regulation will move away from a model of unbridled capitalism and will give greater priority to the current associative network, represented by many consumer associations like ours, but, unfortunately, we have no evidence to support our claim otherwise.