Kratom, known as Mitragyna Speciosa, is an evergreen tree from the same family as the coffee plant. 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, the natural plant is under attack by government and big pharma through a bombardment of negative 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 listing kratom as a schedule 1 drug, the same category as heroin, ecstasy, LSD and cocaine. However, the proposition was withdrawn in October, the same year.
In 2017, the FDA identified 44 kratom-related deaths. However, experts have noted that only one case was linked to pure kratom usage. 43 out of the possible 44 cases involve subjects that were under the influence of various other potent substances at the time of death. This includes opioids, illicit drugs, alcohol, benzodiazepines, and other OTC medications, such as Tylenol.
In 2018, the FDA issued yet another health warning on kratom, claiming “potentially deadly risks.” This was backed by 36 kratom-related deaths nationwide, which had no substantial evidence. In fact, scientists and researchers publicly dismissed the new FDA claims as “misleading” and based on “junk science“.
Status of Kratom in the U.S.
In the United States, each state is responsible for establishing their own regulations since there are no federally binding laws on kratom. So 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 little scientific research supporting Kratom, many sources online have asserted over 5 million active users across the U.S. In 2016, when a public petition was released on the White House’s official website to keep it legal, more than 118,000 people signed. And when the DEA declared a temporarily ban on kratom, more than 23,000 public comments flooded the agency’s website within a 6-week period. Of 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, and over-the-counter medications, such as Tylenol.
Monetary Benefits for Banning Kratom
The decision by some U.S. states to ban kratom outraged many advocates and their close friends or family members. This anger is unsurprising because of the weak justifications behind the bans. Why ban an herb that is helping millions of people?
Community members have correctly identified that states could earn tax revenue by regulating Kratom business. So why ban Kratom?
In theory, all states have analyzed numbers for both sides of the coin: regulating kratom and . banning kratom. While most states have decided to keep kratom legal due to the monetary benefits, others have decided banning kratom will be more beneficial. Here are the economic arguments for banning kratom:
1. Fines on Kratom Sale and Possession
By making kratom illegal, “black markets” for kratom will be created for thousands of users within state borders. Therefore, with just a little bit of policing effort, states can crack down on kratom transactions and, as a result, gain revenue through issuing fines on illegal kratom sale and possession.
2. Sale of Confiscated Kratom
In May 2019, 2 men were arrested in Texas for possession of Kratom. Despite carrying less than 170 grams of Kratom, they were charged for drug trafficking and had their product confiscated. Furthremore, all other attempts to ship Kratom into their State borders would likely have resulted in confiscation.
What happens to all the confiscated Kratom? They are most likely re-sold to other cities, states or even countries where kratom is legal. Hence, creating yet 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 often band together to influence decisions. Usually this comes in the form of large non-profit donations or other “special favors” that eventually tie back to money. This is a major reason for State governments to keep Kratom illegal. However, in the long term, special interest groups may stop investing money into lobbying initiatives when further efforts seem futile.
4. Continued Demand for Pain-Relieving Pills
If kratom becomes illegal, chronic pain patients will continue purchasing traditional prescription medication. Presumably, manufacturers of pain-relieving pills create a larger profit margin for producers (which benefits the state when it comes to tax revenues). These pills are generally cheaper to manufacturer (since they are not organic) and are also more expensive for users. Sometimes, these drug companies may even be fully or partially owned by the State, giving the local government even more incentive to prevent kratom access to pain patients.
5. Maintain Support from Big Pharmaceutical Companies
In the US, more and more people are realizing the deep ties between government and big pharma. To put it into perspective, approximately 75% of the FDA’s budget is supported by drug applications and “user fees” from pharmaceutical companies. The last thing these companies want is competition from a natural plant that can relieve or cure pain. By banning kratom or spreading false news stories about kratom, governments can maintain their relationships with big pharmaceutical companies.
Monetary Benefits for Kratom Regulation and Legalization
Aside from a few unusual states, kratom is legal for sale and possession in the U.S. Most states have decided that legalization kratom benefits their economy more than an outright ban. Here are some of the economic arguments for regulating kratom:
1. Business Licenses and Registration Fees
Businesses that produce or sell ingestible, consumer products (i.e. food, beverages, drugs or kratom) must apply for special business licenses and pay registration fees. This provides consumers a peace-of-mind that products sold are safe and non-lethal. A representative or officer may visit the facility several times to conduct appropriate workplace safety and cleanliness audits. In addition, businesses can conduct proper lab testing on products to enhance health and safety standards.
This is an important step towards legitimizing Kratom because consumers can feel safe buying government-regulated products. This is particularly important nowadays considering most consumers buy kratom online rather than in physical stores.
2. Fines for Non-Compliant Businesses
Companies operating without a license are non-compliant, and will be charged with heavy penalties and potentially jail time. Generally, 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 to completely disregarding regulations that were known to the operator.
3. Tax Revenue from Existing Kratom Businesses
It is common knowledge that individuals and businesses around the world are required to pay taxes to fund the government. Failure to pay, along with tax evasion, is punishable by law. The same tax regulations must also apply to 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 ensures that all businesses are compliant and up-to-date with current health and safety regulations and policies. Depending on the industry, it 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 healthy working conditions by setting and enforcing standards in the workplace. 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 negative 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. Therefore, as more consumers decide to buy kratom to relieve pain, businesses will make more money and taxes collected will increase.
Summary of Points For and Against Kratom
- Fines for sale and possession of kratom
- Sale of confiscated kratom
- Donations from special interest groups
- Continued demand for prescription pain-relieving drugs
- Maintain support from big pharmaceutical companies
- Cost to expand policing efforts for kratom-specific cases
- Opportunity cost of business and licensing fees that result from regulation
- Business licenses and registration fees
- Fines for non-compliant businesses
- Tax revenue from existing kratom stores
- Fees for mandatory health and safety audits
- Increased market size due to market legitimacy
- Cost to monitor new kratom businesses
- Opportunity cost of donations received from lobbyist groups
Credits to KratomGuides.com