Vancouver, Canada • Economists will often refer to a “boom and echo.”
But it’s pretty rare for the echo to come almost 100 years later!
That’s the situation investors face today when they look to capture the genie powering the trend to pot legalization in the US, Canada, and around the world.
Investors are turning to companies like Chemesis International Inc. (OTC: CADMF; CSE: CSI). With headquarters in Canada, operations in Costa Rica, California and Colombia, and more deals in the works, Chemesis stands ready to exploit the global changes coming to the pot business, for both medical and recreational uses.
The slow end of the marijuana prohibition is eerily like the wind down of the alcohol prohibition of the 1920s — proving history can come close to repeating itself.
Governments Look for Tax Windfall
Before alcohol faced prohibition in 1920, the temperance movement had to address the tax issue.
In the US, alcohol tax generated 40% of the government’s budget. That created a big challenge to those who wanted America to go “dry.” How do you replace the alcohol tax revenue?
In 1913, the 16th amendment created the federal income tax. That was the first step that changed the revenue stream for the government.
So, you can thank the teetotalers for the income tax we have today.
Income taxes far surpassed the liquor taxes. That cleared the path to a constitutional amendment declaring the prohibition against alcohol manufacture and sales. In 1919, the 18th Amendment or “Prohibition” was passed.
Everything was good during the roaring twenties, but then the Depression hit. Tax revenue began to drop. By 1933, tax revenue sank 60% from 1930.
The 21st amendment in 1933 repealed Prohibition, mostly because the government needed the alcohol taxes.
Some very wealthy people, like Pierre DuPont and Andrew Mellon, fully backed the repeal of prohibition. They hoped new alcohol tax revenue would ward off higher income taxes. Instead, they were hit with a double whammy: The government taxed their booze and increased income tax percentages.
But states continued to collect both booze and income taxes, and today we see the addition of pot sales taxes to the treasury.
MAKING POT DOLLARS WORK FOR GOVERNMENTS
The easiest way to increase revenue for a state: increase taxes. And the “sin taxes” – taxes on booze, smokes, and gambling – are a ready target.
But fewer people smoke, so tobacco taxes aren’t as effective as they once were. So, why not tax pot?
Colorado was the first state to go full bore into pot sales for recreational use.
They report the tax revenues from marijuana are great, making other states green with envy.
In January, Colorado received $2 million in tax dollars from recreational marijuana sales and $3.5 million in pot-related taxes (for products like bongs and vapes.) Summer totals should end up being even bigger, with tourists arriving and able to buy and smoke pot legally.
At this rate, Colorado could end up putting more than $40 million dollars into the state’s budget from pot sales.
First item for this windfall money is school construction. Then Colorado will decide what to do with the next wad of cash coming in from pot sales.
It’s no wonder cash-starved states are eyeing the rollback of marijuana prohibition. Washington was the next state to legalize recreational marijuana, and there are now ten states with loose recreational pot laws (and millions in tax revenue.)
And with relaxed pot laws comes an unexpected financial benefit for these states: lower justice costs. With fewer people facing court and jail time – and expense – for criminal pot violations, states save millions in expenses, and clear hundreds of backlogged cases.
Colorado and Washington both expect to save over $20 million in court costs.
INVESTORS BENEFIT RIGHT ALONG WITH STATES
Reduced regulations and ever-increasing consumer demand (for both medicinal and recreational pot) is also an investor’s windfall.
Working with agricultural, manufacturing and distribution facilities in a variety of locations, Chemesis offers consumers a great variety of much-desired products, and investors a solid base of operations for long-term financial stability.
Increased legal sales puts more money into state coffers, and helps investors see greater rewards for their investments.
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