A customer sets fire to a shop in Lowell Farms, America’s first official cannabis cafe serving farm-to-table dining and smoking cannabis on October 1, 2019 in West Hollywood, California.
Mike Blake | Reuters
New Jersey is expected to approve an election initiative to legalize adult marijuana (also known as recreational marijuana) on election day next month. In addition to raising the 61% of the likely Garden State voters for the measure, its passage is expected to generate up to $ 400 million in adult sales in the first year and in sales of $ 950 million by 2024. Will generate nearly $ 63 million in annual state tax revenue and additional local taxes of $ 19 million estimated by Marijuana Business Daily. In an economy ravaged by the coronavirus pandemic, legal weed seems like a great idea.
This may not be the only good news for post November 3rd proponents of legalization. They hope that New Jersey’s pro-pot vote will have a domino effect in neighboring states when similar efforts are considered. “As soon as New Jersey goes, it will spark an arms race along the east coast, bringing New York, Connecticut and Pennsylvania to the point,” said DeVaughn Ward, senior legal advisor for the Marijuana Policy Project, a Hartford cannabis advocacy group.
These three states already allow the sale of medical marijuana and have been seeking legalization for adult use for several years, taking into account tax revenues, job creation, and the will of the majority of residents in favor of full legalization. The legislative stars seemed aligned after the blue wave of the 2018 midterm elections, but ultimately there weren’t enough yes votes in the respective state houses last year. Then there was a pandemic in March that put legalization bills on hold until the next year.
Three other states – Arizona, South Dakota, and Montana – have adult legalization initiatives on their November polls, and the Mississippians will be voting on a bill to allow drug sales. If all five are successful, medical marijuana will be legal in 38 states, Washington, DC and Puerto Rico, and used by adults in 14 of them, plus DC.
Legalization is another step in the long, strange road the US cannabis industry is going through in the year of Covid. Marijuana sales have soared during the pandemic, thanks to home orders and federal stimulus funds. And the prospects for further growth are good.
According to Arcview Market Research / BDSA, total cannabis sales in the United States are projected to reach $ 15.8 billion this year, up from $ 12.1 billion in 2019. In states that consume adults, the Numbers breathtaking. For example, Illinois recently reported its fifth straight month of record-breaking marijuana sales, which hit $ 67 million in September. In Oregon, adult sales have increased 30% above forecasts since the pandemic began, averaging $ 100 million a month this summer.
“Overall, the industry is doing pretty well,” said Chris Walsh, CEO of Marijuana Business Daily. “Some companies are struggling, but in general we haven’t seen an overwhelming number of layoffs or companies go out of business.” A big boost, he added, was that most states considered cannabis companies essential during the pandemic. “They could stay open while the economy practically stalled,” said Walsh.
A customer holding a cannabis product as he leaves the Natural Vibe store after legal marijuana for recreational use went on sale in St. John’s, Newfoundland and Labrador, Canada on October 17, 2018.
Chris Wattie | Reuters
With marijuana remaining illegal at the federal level, the industry was not eligible for funds distributed through the Small Business Administration’s paycheck protection program. “It’s just another irony about the irony of how the country deals with cannabis in general,” Walsh said. House Democrats have included the industry in previous and proposed Covid stimulus packages, but to no avail.
Depending on the outcome of next month’s presidential and congressional elections, the likelihood of full federal legalization – meaning it will be removed from its highly restrictive Appendix I drug classification under the Controlled Substances Act – could be greater than ever. Additionally, there’s a good chance the rampant injustices disproportionately inflicted on people of color during the nation’s nearly century-old cannabis ban will be overcome.
The Trump card The administration had an enigmatic relationship with cannabis. It overturned Obama-era policies that prevented federal prosecution of marijuana crimes and banned immigrants from citizenship for using marijuana or working in the cannabis industry. Still, Trump previously endorsed states’ right to legalize pot and signed the 2018 Farm Bill that legalizes hemp, its non-intoxicating strain. He is running for re-election on a law-and-order platform and has never promoted federal legalization. Even if Congress turns blue all the time, it’s hard to predict where it might come up on this matter.
Trump’s democratic opponent, vice president Joe Bidenalso has a complicated history with cannabis. As a senator, he campaigned for the 1994 Crime Act that sent tens of thousands of underage drug offenders to prison. During her tenure as Obama’s vice president, the government issued the Cole memo, which paved the way for state-licensed marijuana companies to operate largely without federal interference. Biden and fellow campaigner Senator Kamala Harris support the decriminalization of adult marijuana, moderate debt rescheduling, and federal drug legalization that allow states to set their own laws and overturn previous cannabis convictions – albeit not through legalization the covenant.
Harris and Rep. Jerry Nadler co-sponsored the Marijuana Opportunity Reinvestment and Expungement (MORE) Act last year, which was designed to remove cannabis from the Controlled Substances Act and eliminate criminal penalties under federal law. The MORE Act would also expedite expulsion, impose a 5% tax on cannabis products to fund criminal and social reform, and prohibit denial of any federal public benefits based on marijuana use. Congress was due to vote on the bill in September, but it was likely to be delayed until next year.
In addition to tax revenue and job creation, social justice reform is the strongest argument in favor of legalization at both the federal and state levels. Criminalization and incarceration, especially of minorities, dates back to the Marijuana Tax Act of 1937 and was fundamental to drug laws. “The war on drugs has historically been and continues to be disproportionately directed against color communities,” said David Abernathy, vice president of research and advice at Arcview Group, an Oakland-based company that brings together cannabis companies and investors and is also on the board of directors of the Minority Cannabis Business Association.
While decriminalization and eradication are paramount to legalization, providing business opportunities for minorities in legal cannabis is equally important, Abernathy said. “It is more difficult for color communities to get involved in the industry as it becomes better capitalized and people from other industries get into the industry with their connections,” he said. For this reason, there have been setbacks in some government initiatives that exclude those convicted of drugs from working with cannabis.
On the investment side, Abernathy noted that there was a significantly slower capital market even before Covid than in recent years. But with the industry booming during the pandemic, it was “a good place for some investors to invest money during this volatile time,” he said. Next year, especially if legalization initiatives are successful, “we expect this growth trend to continue.”
Another positive trend is the increasing sophistication of cannabis companies with publicly traded companies like Tilray, Cronos Group, Aurora cannabis, GW Pharmaceuticals and Canopy growth as prime examples. They are among the startups involved in pharmaceuticals, CBDs, foods, vapors, and smokable products, as well as the cultivation and distribution of cannabis where permitted in the US and other countries. If marijuana becomes legal nationwide in the US, these endemic players will likely be backed by conventional food, beverage, tobacco, and other consumer goods companies that have been expecting a multi-billion dollar global cannabis market for years.
Additionally, the industry has the potential for significant job growth, said Aaron Smith, executive director of the National Cannabis Industry Association in Washington. According to a Leafly report last year, 250,000 people are already working with legal cannabis, “but with new states on board and [possible] Federal legalization that could turn into tens of millions of jobs, “said Smith.” Given the current economic climate, policymakers and voters should scour this industry for its economic potential. “