Kratom, known as Mitragyna Speciosa, is an evergreen tree from the same family as the coffee plant. It is commonly grown in wild, tropical areas, such as rainforests in Indonesia, Malaysia, Thailand, Myanmar and Papa New Guinea. For centuries, locals in East-Asia have harvested and used kratom for general well-being, increasing energy and stamina, as well as pain relief and relaxation. Recently, however, the natural plant has been under siege by government and big pharmaceutical companies through constant negative news articles and misleading data points. This article will discuss the monetary effects for banning kratom from a governmental perspective. But also shed light on the economic and societal benefits of keeping kratom legal.
History Kratom in the U.S.
In August 2016, the DEA proposed the listing of kratom as a schedule 1 drug, the same category as heroin, LSD, ecstasy, and cocaine, due to its opiate-like effects in the body. However, the proposition was removed in October, the same year.
In 2017, the FDA identified 44 deaths related to kratom. However, only one case investigated was linked to pure kratom usage. 43 of the possible 44 cases involve subjects who were found to be on multiple other potent substances at the time of death. This includes illicit drugs, opioids, benzodiazepines, alcohol, gabapentin, and over-the-counter medications, such as cough syrup.
In 2018, the Food and Drug Administration (FDA), issued yet another health warning on kratom, claiming it had “potential deadly risks.” This was backed by a total of 36 deaths in the country, which had no substantial evidence. In fact, scientists and researchers have challenged the new FDA claims as “misleading” and based on “junk science“.
Status of Kratom in the U.S.
Since there are no federal regulations on kratom in the United States, each state is responsible for establishing their own rules. Depending on different states, kratom may be legal, illegal or in the process of being regulated or banned. Therefore, users must keep up-to-date on regulatory issues, to determine whether it’s legal to purchase and use kratom in their state.
- Rhode Island
- New Hampshire
In all the remaining states, it is still legal to consume, purchase and sell kratom. However, the legality surrounding kratom is constantly changing. Therefore, it is important to constantly monitor these issues to ensure you aren’t violating any state laws.
Pending Bans on Kratom
- Ohio – Kratom is legal currently, but the Board of Pharmacy is recommending a ban
- New Jersey – There is pending legislation on by the Assembly Law and Public Safety Committee
Common Public Reasons for Banning Kratom
- Lack of research—While there is very little scientific research supporting the use of Kratom, many sources online agree that there are around 5 million active users of Kratom across the U.S. In 2016, when a public petition was released on govto keep it legal, more than 118,000 people signed. And when the DEA planned to temporarily remove access to kratom for the American population, they received more than 23,000 public comments during a 6-week period, in which 99.1% voted in favor of kratom.
- Kratom is related to death— In 2017, the FDA identified 44 deaths related to kratom. Shortly after the FDA’s claims, however, scientists and researchers responded and called the agency out on their use of ‘Bad Science’ and ‘Misleading Information’ when calculating Kratom-related deaths. 43 of the possible 44 cases involve subjects were using Kratom along with various other substances at the time of death. This includes illicit drugs, opioids, benzodiazepines, alcohol, gabapentin, and over-the-counter medications, such as cough syrup.
Monetary Benefits for Banning Kratom
In the U.S., the decision by some states to ban kratom has outraged many advocates (be it the primary user or family members). This anger is understandable because, as noted above, most justifications behind the bans are irrational and weak. Why would you ban an herb that is helping hundreds of thousands of people across the country?
Some community members have pointed out that states could actually make tax revenue by regulating the sale of Kratom. So why ban Kratom?
In order to make the decision, all states have analyzed the numbers for both sides: regulating kratom as well as banning kratom. While most states believe it benefits their economy more to keep kratom legal, others have decided banning kratom will result in greater monetary benefits. Here are some of the benefits for banning kratom:
1. Fines on Kratom Sale and Possession
Individual states understand that by keeping kratom illegal, “black markets” for kratom will be created for thousands of users within their state borders. They also understand that, with a little bit of extra police patrol, they can crack down on these illegal vendors and gain revenue through handing out fines for illegal kratom sale and potentially even possession.
2. Sale of Confiscated Kratom
In May 2019, 2 Texas men were arrested for possession of Kratom. Even though they only carried about 170 grams of Kratom, they were charged for drug trafficking and had their Kratom confiscated. Additionally, any out-of-State businesses that attempt to ship Kratom products into their State borders will likely have their Kratom seized.
Guess what happens to the confiscated Kratom? Correct. They will most likely be sold to other counties or states where kratom is legal, creating another stream of income for the State government.
3. Money from Lobbyist and Special Interest Groups
In efforts to push certain bills past State lawmakers, special interest groups and individuals may band together in an attempt to influence the government’s decision. Usually this comes in the form on donating large sums of money in lobbying or other “special favors” that eventually tie back to money. This is by far the greatest motivator for the State government to keep Kratom illegal, at least for a short period of time. In the long term, once special interest groups realize no amount of money can influence your stance on kratom, they will stop investing money into lobbying initiatives.
4. Continued Demand for Pain-Relieving Pills
By keeping kratom illegal, patients with chronic pain will continue to use and purchase traditional pain-relieving pills. Presumably, in these states, manufacturers of prescribed drugs create a larger profit margin for producers (and therefore more tax revenue for the State government). Sometimes, these drug companies may even be fully or partially owned by the State, giving the local government even more incentive to prevent access to kratom.
5. Maintain Support from Big Pharmaceutical Companies
In the US, big pharmaceutical companies and the government are closely linked. To put this in perspective, approximately 75% of the FDA’s total budget currently comes from new drug application fees and “user fees” from big pharmaceutical companies. And the last thing these companies wants is competition from a natural plant that can cure your pain. By banning kratom or—in the case of the FDA—spreading false and harmful news about kratom, governments can maintain their relationships with big pharmaceutical companies.
Monetary Benefits for Kratom Regulation and Legalization
Aside from a few unusual states that have banned kratom, most states have decided that kratom legalization benefits their economy more than an outright ban. Here are some of the benefits for regulating kratom:
1. Business Licenses and Registration Fees
When a business is producing and selling ingestible, consumer products (be it food, beverage, drugs or kratom) special business licenses and registration fees apply. This is to ensure that every product sold to consumers is safe and non-lethal. A representative from a health organization may visit your operations several times to ensure proper compliance with workplace safety and cleanliness guidelines. In addition, businesses can conduct proper lab testing on products to enhance health and safety standards.
This is an important step towards legitimization of Kratom because consumers need to feel safe whenever they buy kratom. Especially if consumers decide to buy kratom online rather than through offline stores, trust is even more imperative.
2. Fines for Non-Compliant Businesses
Companies that operate without a license or violate any other state regulations are non-compliant, and will be charged with penalties and potentially jail time. Fines vary with the profits made and the amount of neglect. Starting with a breach where you didn’t know and, by exercising reasonable diligence, would not have known that you violated a provision.
3. Tax Revenue from Existing Kratom Businesses
Around the world, individuals and businesses are required to pay taxes in order to fund various governmental and public expenditures. Failure to pay, along with evasion of or resistance to taxation, is punishable by law. Similar tax regulations should apply to law-abiding kratom companies.
In Canada, the small business tax rate is 10%, while the general corporate tax rate is 28%. In 2017, the U.S. changed its top corporate tax rate from 35% to one flat rate of 21%.
4. Fees for Regular Health and Safety Audits
In Canada, businesses are inspected each month by health and safety authorities. This is to ensure that all businesses are compliant with applicable occupational health and safety laws, regulations, and policies. Depending on the industry, this may also include mandatory health and safety training for employees.
In the U.S., the Occupational Safety and Health Administration (OSHA) is in charge of assuring safe and healthful working conditions by setting and enforcing standards in the workplace. In order to remain fully compliant, kratom companies may be required to pay a fee for regular audits.
5. Legitimize Kratom and Increase its Market Size
Even with potentially deadly products like cigarettes and alcohol, consumers continue to utilize them because (1) proper regulations are in place, (2) labels clearly state the side effects, and (3) government aren’t constantly writing negative news about the product.
By properly regulating the sale of Kratom, consumers will be more inclined to try out the product for chronic pain. In the U.S., over 60 million people are suffering from chronic pain—this is a huge market. As more consumers decide to buy kratom to relieve pain, businesses will make more money and taxes collected will therefore increase.
Summary of Points For and Against Kratom
- Fines on kratom sale and possession
- Sale of confiscated kratom
- Money from lobbyist and special interest groups
- Continued demand for pain-relieving pills
- Maintain support from big pharmaceutical companies
- Cost to increase police patrol for kratom-specific cases
- Opportunity cost of obtaining business and licensing fees from regulation
- Business licenses and registration fees
- Fines for non-compliant businesses
- Tax revenue from existing kratom businesses
- Fees for regular health and safety audits
- Cost to increase scrutiny on kratom businesses
- Opportunity cost of obtaining lobbyist donations and fines from kratom businesses