Now Reading
How Cannabis Legalization Could Reduce Southern European Debt

How Cannabis Legalization Could Reduce Southern European Debt

Avatar
How cannabis legalization could decrease Southern European debt

Cannabis legalization could help with budgetary issues in Southern European nations that have high levels of debt.  Germany financed growth in Southern Europe with expensive loans. After the Euro debuted, Southern Europe borrowed low-interest loans from capital markets.  Rapid growth ensued at the same time the housing market was undergoing an unsustainable boom in the US.  Coincidentally, the US housing market collapsed at the same time as the European debt markets.

The collapse of the financial markets froze credit.  Business activity plunged and companies laid off large numbers, especially in Southern Europe. With tax revenues coming in lower due to the terrible economic conditions, the debt of Southern European nations mushroomed.  At this particular time cannabis legalization had not taken off in the United States, and outside of Amsterdam it did not really exist.

Bailout

Germany and the other Northern European Union nations essentially bailed out the South, directly and via the European Union.  Bailing out meant swapping out the debts of earlier investors for European Union debt. Therefore, debt swaps lowered interest, but not principle. There’s a looming debt crisis, especially with the boomer generation retiring.  Of course, there will be continued money transfers from North to South. But instead of using debt instruments, why shouldn’t the Southern European nations provide the Northerners something they need. This is where cannabis legalization comes in. 

How Cannabis Legalization Will Reduce Debt

Recreational cannabis is still illegal in Europe as a whole. The exception is the Netherlands, where the government has not fully legalized cultivation.  In Spain, it is in a gray area. A number of European nations have legalized medical cannabis. Germany is widely using medical cannabis to the point where it actually imports medical cannabis.  However, Germany, as a colder nation doesn’t have the best conditions for growing cannabis. Southern European nations are much more able to grow cannabis. Southern European nations can use cannabis exports to reduce debt.

Recreational and medical cannabis is legal in Canada, and Canadian companies got a jump start on developing the cannabis economy.  After Spain legalizes cannabis, they will be amble to get investment from these same Canadian cannabis companies. Portugal will get additional investment once recreational cannabis is legalized. This will lower Portuguese debt.

Exports

Portugal already exports medical cannabis to Germany.  Tilray made its first medical cannabis shipment from Portugal to Germany in September 2019.  Other companies invest in Portugal as well. A Canadian company, Aurora Cannabis purchased Portuguese medical cannabis company Gaia Pham LDA.  The French government is now discussing legalizing medical cannabis in France. France would be another major market for Portugal’s medical cannabis exports.

Market Development

Spain is likely to legalize cannabis by 2023.  The Vice President of Spain, Pablo Iglesias is pro-legalization, and so his political party Podemos.  Podemos is a part of the center-left coalition government that has formed. Even one of the parties on the right not included of the coalition, Ciudadanos is in favor of marijuana legalization.   Once the government completely legalizes marijuana in Spain, as a country 5 times the size of Portugal, Spain would attract even more investment.  Domestic recreational use is estimated to bring in 3 billion to 6 billion euros annually to the government.  The government would use a part of this income for debt service. The development of new cannabis medications and exporting cannabis products to Northern Europe would bring in more money.

Cannabis legalization is currently in limbo in Italy.  The court rulings and legislative back and forth have left cannabis in a gray area.  It’s technically legal to grow cannabis for self-use and to use at home. Italy has not legalized broad, commercial use. But as legalization spreads throughout other European nations, Italy too is likely to see legalization.  And as a Southern European nation, it has an excellent climate for growing cannabis. As Italy has fabulous cuisine, they could make fabulous edibles for export. Italy would service debt with this income. In just a few years after legalization, we’ll have new cannabis versions of amazing Italian dishes.

See Also
tingey injury law firm 6sl88x150Xs unsplash 180x180 - How Cannabis Legalization Could Reduce Southern European Debt

Research

Canadian companies don’t simply grow and export dry cannabis to other EU markets.  They export pharmaceutical-grade cannabis products made in their laboratories.  Canadian companies do research on new medical cannabis products.  They employ a diverse group of people, from growers to shippers, chemists, lab technicians, researchers, plant breeders, among many others.  So not only do they bring money into Portugal in terms of tax revenue, they employ a wide variety of skill sets. The same can happen in Spain and in other Southern European nations.

Size of Market

Of course, Northern European nations need to legalize recreational cannabis.  Germany is the biggest economy in the EU. Legalization there will be followed by other European nations.  Germany’s governing center-right party, CDU, is now actively discussing legalizing recreational cannabis. Finland is the latest EU nation to consider legalization. The European cannabis market is estimated to be worth 136 billion dollars by 2028.  That means huge revenues could go to the Southern European nations from the North as legalization proceeds.  These new revenues could be used to pay down debt and offer public services. Also whenever cannabis is completely legal, the money that law enforcement saves from not having to arrest people for selling will also help with debt.

Europe has a total population of 747 million people.  That’s more than the population of the United States and Canada combined.  The cannabis markets in the United States and Canada are certainly more advanced, but with more people on a long term basis Europe will be more profitable. Governments could use this income to pay down debts. It won’t take long for the European markets to catch up and surpass the North American markets. The Global Cannabis Report expects this will happen by 2024.  Some estimate the percentage of cannabis users in Europe to between 6% and 11%.  Regular users don’t count occasional users and this is likely a conservative estimate.  Therefore the potential number of users is huge.

Effect on Industrial Hemp Production

Of course, once the flower is harvested, there’s the rest of the plant.  The stalks and leaves are essentially no different from hemp and companies could use them for the same purposes.  While Northern Europeans grow hemp, Southern Europe is capable of producing much more due to the more favorable weather and as a by-product of cannabis production.

Comments
Scroll To Top