The Cannabis Industry In US Gets A Big Boost On Election Day
Residents of New Jersey, Montana, Arizona, and South Dakota have voted in favor of legalizing recreational cannabis by adults from November 3. Now, after the use of cannabis become legal in these states, it is estimated that cannabis will generate around $400 million in adult-use sales during the first year and $950 million by 2024, and almost $63 million in annual state tax revenue and an extra $19 million in local taxes, according to estimates done by Marijuana Business Daily.
This is might not be the only good news for proponents of legalization after Nov. 3. Supporters of the pro-cannabis vote are hopeful that legalization will have a domino effect in the states neighboring New Jersey like New York, Connecticut and Pennsylvania.
These three states have already allowed medicinal marijuana sales and have been looking forward to the legalization of adult-use for years, keeping in mind tax revenue, job creation, and the willingness of most residents in favor of full legalization. Though there were high chances of legalization after the blue wave during the 2018 midterm elections, there weren’t enough votes in the favor of legalization in both houses last year. Medicinal marijuana measures have been passed in Mississippi and South Dakota.
Three more states-Montana, South Dakota and Arizona have included adult-use legalization initiatives in their November ballots. Residents of Mississippi will also vote on a bill for allowing medicinal sales of cannabis. If all the five measures are passed, medicinal marijuana will be allowed across 38 states of the US as well as in Washington, D.C, and Puerto Rico.
How Has The Cannabis Industry Fared Since The Outbreak of COVID-19?
Legalization is another aspect of the strange trip that the cannabis industry has undergone in the US since the outbreak of the pandemic. Marijuana sales have increased during this period, mainly because of federal stimulus money and stay-at-home orders. There are high prospects of continued growth also.
Total cannabis sales across the US in 2020 as per Arcview Market Research’s projections are to be around $15.8 billion as compared to $12.1 billion in 2019. The numbers are unexpectedly high in adult-use states. For example, Illinois recently reported record-breaking marijuana sales of $67 million in September for the fifth month in a row, which is a record. Oregon witnessed adult-use sales go up by 30% above projections since the start of the pandemic, averaging $100 million each month over the summer.
What Is The Federal Stance On Cannabis Legalization?
Based on the result of the US’s presidential and Congressional elections, the chances of full federal legalization, which means total removal of the restrictive Schedule I drug classification under the Controlled Substances are much greater now. There are high chances that the widespread injustices done on America’s almost century-old cannabis prohibition, especially on people of color, can be removed once and for all.
The Trump administration has so far had a complicated relationship with cannabis. It withdrew a policy of the Obama period which prevented federal prosecutions for marijuana-related offenses and made immigrants ineligible to apply for citizenship if they consumed marijuana or were employed in the cannabis industry. However, Trump had earlier favored the rights of states to legalize cannabis and signed the 2018 Farm Bill which legalized hemp, which is a non-intoxicating variety. Trump is running for reelection based on a law-and-order platform and hasn’t promoted federal legalization so far. Therefore, even if Democrats win a decisive victory in the Congressional elections, it’s still not clear what would be his stand on the issue.
Former Vice President Joe Biden, who is Trump’s opponent, also has a complex history with cannabis. He supported the 1994 crime bill as a senator which lead to the imprisonment of numerous minor drug offenders. However, while he was serving as Obama’s vice-president, the administration issue Cole Memo, which allowed state-legal marijuana businesses to operate without any type of federal interference. Bidden and vice-presidential candidate Kamala Harris support the decriminalization of adult-use marijuana, moderate level of rescheduling, and federal medicinal legalization, enabling states to establish laws and removing cannabis convictions done earlier, but not federal legalization.
How Lucrative Are Business Opportunities In The Cannabis Market?
Though decriminalization and expungement are essential for legalization, offering business opportunities for minorities in legal cannabis is also important, David Abernathy, the vice-president of research and consulting of Arcview Group, an Oakland-based company which helps cannabis businesses connect with investors, stated. “It’s harder for communities of color to participate in the industry as it gets better capitalized and folks from other industries move into it with their connections,” he quoted. This is the reason behind the pushback in some state initiatives which disqualify people with drug convictions from working in the cannabis industry. The level of economic boost that the states will receive from cannabis sales will to a great extent depend on the tax structure and each state’s approach to licensing and regulation. Jurisdictions will often add an excise tax on sales of weed apart from a state general sales tax.