(Photo by Christopher Furlong/Getty Images)
My colleague at ARC Advisory Group, Chris Cunnane, has done interesting writing on the marijuana supply chain. He has followed that article up with more recent research and writing.
While the US has become more partisan, curiously marijuana has become less so. It is currently legal in a mix of 20 red and blue states as well as Washington DC. The 20 states where it is legal includes Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, and Washington D.C. Starting next week, recreational marijuana sales will be legal in Maryland, and over the next two years, will be legal in Virginia and Minnesota. All told, from these states, a conservative estimate is that the recreational marijuana industry is poised to garner over $25 billion in revenue by the end of 2023.
As increasing numbers of cultivations licenses are granted, the cost of marijuana can plummet. In Massachusetts, for example, in October of 2022, the average price for a gram of flower dropped to $7.76. This was an all-time low, according to the most recent data from the state’s Cannabis Control Commission. Needless to say, Mr. Cunnane points out, “cannabis is no longer worth its weight in gold.” A core principle of economics states that as prices decrease, usage increases.
In the last few years, we have seen how disruptions in one industry can ripple out and affect other industries. Recreational marijuana is different; the smooth operation of this industry can negatively impact other industries. This is particularly true for transportation, manufacturing and warehousing. Economists call this a negative externality.
Recreational Marijuana’s Impact on the Transportation Industry
No truck driver should be driving after using alcohol or recreational marijuana. The difference, however, is how long the substance can stay in the blood stream. A blood test can measure alcohol in a person’s body for up to 6 hours after their last drink, while breathalyzer tests work for between 12 and 24 hours. Urine tests, such as the ethyl glucuronide (EtG) test, are also effective for around 12-24 hours after use. Typically, THC, the psychoactive component of marijuana, is detectable for up to 90 days in hair, anywhere between 1 day to a month or longer in urine (depending on how often the individual uses it), up to 24 hours in saliva, and up to 12 hours in blood.
More than 100,000 truck drivers have been removed from the industry in the past three years due to positive marijuana tests. And most have not returned, according to a new study by the American Transportation Research Institute. ATRI released the report, “Impacts of Marijuana Legalization on the Trucking Industry,” on June 5 in response to concerns about the increasing use of marijuana by truck drivers. The problem is increasing due to the recreational legalization of marijuana. Drivers can be placed in a prohibited status even for testing positive while using the drug for medicinal purposes. The ATRI report seeks to shed light on why so many medium- and large-truck drivers are leaving their jobs after failing a marijuana test, and likely accepting lower paying jobs.
The ATRI analysis also documents the strategies and implications of the two pathways the federal government can take in response to advancing legalization efforts. The first pathway, maintaining the current prohibition policy where marijuana remains a Schedule I drug, would “continue the trend of removing thousands of drivers annually from the industry through positive tests for past marijuana use”, ATRI said.
The second pathway, a scenario in which the federal government eases restrictions and possibly removes marijuana from the Schedule I designation, has significant challenges as well. Prior to any federal legalization action, the report identifies several protections that must be in place for employers in safety-sensitive industries. These include the “development of a nationally recognized marijuana impairment test and impairment standards, as well as provisions that protect a carrier’s ability to screen employees for drug use.”
In other words, drivers would be able to use the drug recreationally but then a test would show that the affects had worn off and they were safe to drive. This would put marijuana testing on the same ground as alcohol.
Researchers at Massachusetts General Hospital have found a noninvasive brain imaging procedure that could be the answer. The technique uses imaging technology known as functional near-infrared spectroscopy (fNIRS) to measure brain activation patterns that correlate to impairment from THC intoxication. The researchers believe that inexpensive, lightweight, battery-powered fNIRS devices are possible.
Recreational Marijuana’s Impact on Warehousing
In 2022, more workers had quit the labor force than had joined it; millions of people quit their jobs. Jobs in retail, restaurants, trucking, and warehousing are particularly hard to fill. This was known as the great resignation. Meanwhile, the growth in e-commerce is driving the need for more workers for the warehouse.
To make up for this gap, it became apparent that companies need to adjust their policies around who qualifies for a job and be more open to hiring those with criminal records. Over the last few years, criminal records have been more scrutinized, as more people that have been incarcerated or arrested for marijuana charges have been released. But depending on the company, prior marijuana charges or a positive marijuana test can make a big difference in the hiring process.
It is also interesting to watch how some of the country’s largest retailers and warehouses are changing their tune. In June 2021, Amazon announced that it would exclude marijuana from its comprehensive pre-employment drug screening program for unregulated positions (e.g., positions not regulated by the Department of Transportation), and those not within Amazon Air. The company also reinstated the employment eligibility for former employees and applicants who were previously terminated or deferred during random or pre-employment marijuana screenings.
By conducting a simple search on Indeed.com, there are now multiple listings that include terms such as “No Drug Test Warehouse” and “No Drug Test Required.” This is not a surprise, especially as warehouse labor numbers continue to shrink and more states become cannabis friendly.
The primary author of this article is Chris Cunnane. Mr. Cunnane is a research director for supply chain management at ARC Advisory Group.
