Key Cannabis Legalization Wins Could Bring in Upwards of $2 Billion in New Sales
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Marijuana scored a sweeping victory at the ballot box on last Tuesday, with voters approving new markets in Michigan, Missouri and Utah that eventually could generate $2 billion in medical and recreational sales. Across the nation, voters installed the Democrats as the new majority party in the U.S. House of Representatives, improving the odds that lawmakers will pass federal marijuana reforms that benefit MJ businesses.
Cannabis-friendly gubernatorial candidates, meanwhile, won in California, Colorado, Illinois, Michigan, New Mexico and New York. “Voters have once again sent a message loud and clear that it is time to legalize and regulate marijuana,” said Steve Hawkins, executive director of Washington DC-based Marijuana Policy Project.
A recreational ballot measure in North Dakota was the only marijuana initiative that voters rejected. Here are five notable takeaways from 2018’s midterm elections:
1. In Michigan, passage of rec MJ paves the way for a potential $1.7 billion market.
Michigan would be the ninth U.S. state to establish a full-fledged adult-use cannabis program that permits commercial cultivation and sales and the first in the Midwest. Marijuana Business Daily projects annual sales in Michigan could reach $1.4 billion-$1.7 billion within several years of launch.
In addition to Michigan’s status as a large market, the state could create a domino effect in the Midwest, said Kris Krane, president and co-founder of 4Front Ventures, a multistate cannabis operator. “(This) should pave the way for other states to follow suit, likely starting with Illinois through the state Legislature as soon as next year,” Krane wrote in an email to MJBizDaily.
2. Federal reform efforts may get a boost, boding well for business
The House flipping and “the success of more ballot initiatives makes a (federal marijuana) deal all that more possible, though it really depends on what President Trump wants,” Douglas Berman, an Ohio State University law professor, wrote in an email to MJBizDaily.
But what kind of reform? According to Rob Kampia, executive director of the Marijuana Leadership Campaign, the cannabis lobbying community needs to agree on what it wants:
- A comprehensive bill protecting all state-legal marijuana business such as the States Act?
- Legislation that legalizes medical marijuana?
- Or stand-alone bills that address such vexing issues as taxation and banking?
Many in the industry, such as the Cannabis Trade Federation, are pushing for the bipartisan States Act, which would amend the federal Controlled Substances Act to allow each state to determine its own marijuana policies. The bill, in effect, also would allow state-legal businesses to enjoy the same banking arrangements and tax benefits as any legal business in the United States.
3. Federal marijuana reform still could be stymied.
The path to federal marijuana reform -- and new opportunities for cannabis entrepreneurs -- would have been a lot easier if both the House and the Senate had flipped to Democrats. Republicans maintained control of the Senate. Kampia said marijuana reform faces obstacles, in addition to the industry unifying in support of a particular measure:
- Marijuana policy is a low congressional priority when compared to immigration, tariffs and Syria.
- Congress must pass 12 annual spending bills by September, and this will dominate the discourse every single month.
Berman, the law professor, recently cautioned: “It’s the people in leadership who have the power … and whether they want this to get done sooner or later.”
That includes, he said, Sen. Majority Leader Mitch McConnell and President Trump, who has said he would “probably” support the States Act.
4. Missouri voters embrace a business-friendly medical marijuana initiative.
Missouri voters approved Amendment 2, which could lead to $175 million-$275 million in annual MMJ sales within several years of the state’s first dispensary opening, according to MJBizDaily projections. Missouri voters, however, rejected two other MMJ ballot measures.
Diane Czarkowski, founding partner of Canna Advisors, a Colorado-based marijuana consulting firm, considered Amendment 2 the most favorable for businesses. It calls, she noted, for no fewer than 60 cultivation, 80 processing and 192 dispensary licenses based on Missouri’s population. The measure also provides for physician discretion in recommending MMJ. And it would impose a relatively low tax rate of 4 percent.
“It also really holds the state to issuing the applications within a certain amount of time -- the very latest for licensing would be December of next year,” Czarkowski said. “All too often we’ve seen states stall out in putting together a plan.”
5. Key pro-marijuana gubernatorial candidates won.
In Illinois, Democrat J.B. Pritzker, who advocated for adult-use marijuana legalization as part of his platform, handily beat incumbent Gov. Bruce Rauner.
Charlie Bachtell, CEO of Chicago-based, multistate marijuana operator Cresco Labs, said Pritzker’s victory “should result in legalization in Illinois.” However, it will take a while.
“That still has to pass in the next legislative session, and then you have regulatory development that has to take place,” Bachtell noted.
As expected, Gov. Andrew Cuomo won a third term as governor of New York. Cuomo has warmed to marijuana, and state lawmakers are seriously considering legalizing adult-use marijuana.
The article originally appeared in Marijuana Business Daily.
Jeff Smith can be reached at email@example.com
Kate Lavin and Joey Peña contributed to this report.