"The legalisation of cannabis could generate 50,000 jobs and 350 million euros for the state"

The prolonged confinement has managed to flatten the propagation curve of the Covid-19, but it has also left the Spanish economy crippled, as thousands of companies have been forced to close, and hundreds of thousands of workers have lost their jobs.

Perhaps this is a golden opportunity to take a step forward and finally clear up the legal situation surrounding cannabis in Spain, which floats in a kind of on-going limbo, enjoying social tolerance despite legal insecurity and the arbitrary behaviour of police towards cannabis clubs, the most visible elements of the huge business that cannabis is in our country.

A recent report by the Barcelona-based Gestoría Teruel consultancy, commissioned by the DMT Advocats law firm, highlights the massive economic and employment potential that cannabis's regularisation would entail: legalisation could create 50,000 direct jobs (8,100 in Catalonia, 7,200 in Madrid, and another 2,300 in the Basque Country), in addition to raking in some 350 million euros per year in VAT for state coffers, and another 20 million euros in Social Security contributions.

We spoke to Pau Teruel, the author of the aforementioned study. His consultancy has been advising nearly 40 cannabis associations and clubs in Catalonia for more than ten years, to the point of having a department exclusively dedicated to these activities.

As Pau explained to us by phone, "many people who set up a cannabis club do not know what they have to do legally, so we advise them." For example, "imagine that an association is not paying VAT and, after five years, the Tax Office investigates it. This could lead to criminal proceedings, or, in any case, ruin for its partners. One of the problems caused by the current legal uncertainty surrounding cannabis and its by-products is that the clubs (some) comply with the Tax Office and pay their VAT , but they don't deduct their expenses, which represent 50% of their billing. If a gram of marijuana is sold, say, at ten euros, five of them go in expenses (cultivation, transport, property rental, electricity, water ...), but many associations are not deducting, out of fear that the police will locate their plantations".

These non-deducted expenses make up the so-called "underground economy", an economic giant "that should emerge, forming part of the GDP," according to Teruel. The "Economic Study of cannabis associations, development and perspectives (2019-2020)" includes three examples of the impact that the legalisation of cannabis has had in other territories, including California, Canada and Israel.

In the case of California, the prosperous US state that legalised cannabis in 2016, the plant and its by-products generate annual revenues of between 15.88 and 20.18 billion dollars, which means between 1.19 and 1.51 billion dollars for the state through consumption taxes; and there it they are just 7.5%, about one third of Spain's (21%).

Medical Cannabis

The case of Israel is perhaps even more interesting, as the country has become a world leader in the export of medical cannabis. There, Teruel explains, the government not only does not repress production companies, but has even "invested 43 million euros in medical cannabis start-ups."

The Israeli model could be perfectly extrapolated to Spain, both because of our country's ideal climate, and the undeniable know-how of the Spanish cannabis industry, a leader in Europe, even ahead of Holland, as indicated by entrepreneur Brais Nieto in a recent interview.

Why, then, do politicians not take action? Why is cannabis still in a legal limbo, subject to the whims of judges and police? Pau Teruel prefers not to get involved in politics, so he bounces the question to his colleague lawyer Martí Cànaves, of DMT, whom La Mota interviewed last week: "Prohibition must generate even more money than the drug itself."