Setting aside for a moment the lingering conflicts over the outcome of the 2020 election, what exactly do the results mean for the cannabis industry? Is there finally a realistic hope for federal decriminalization?
Yes and no.
Overall, the news trends in the right direction. Four more states – Arizona, Montana, New Jersey and South Dakota – passed ballot measure legalizing recreation use. As we’ve seen in many places, legalization does not equal a competent rollout, but that’s a positive sign. (In some states, support for legalization outweighed support for either Presidential candidate.)
That brings the total of states legalizing recreational use to 15, and in fact cannabis remains completely prohibited (no medical use either) in only six states. So that would appear to be a continuing groundswell of nationwide backing for the idea.
The sticking point, however, remains at the federal level, where marijuana continues to abide on the list of controlled substances. The chilling effect of this reality on the industry is hard to overestimate, but two of the bigger factors are that financial institutions are averse to dealing with even the most legitimate enterprises, and the continuing prohibition on interstate commerce.
Will that change? The apparently divided government would suggest not. Both President-elect Biden and Vice President-elect Harris are in favor of the idea, and cannabis stocks saw big increases as the election results became known. However, most of the action towards removing cannabis from the controlled substances list has been initiated by Democrats, and the House and Senate will remain under Republican control.
That picture could change, however, and if it does it might represent one of the few positives to come from the COVID-19 pandemic. Government bodies at all levels – federal, state and local – are facing huge budget shortfalls due to reduced tax revenues during the lockdown. Legislators are sure to have their eyes on any potential means to rectify that situation, and cannabis fills the bill.
State and local tax revenues from legal cannabis totaled $1.9 billion nationwide in 2019. One analyst believes that number could jump to $70 billion with removal of the federal roadblock. It’s hard to imagine politicians at any level turning up their noses at a potential cash cow of that magnitude.
As more and more large and populous states turn to legalization (the smart money is on Connecticut, New York and Pennsylvania to be next in line), the pressure will at some point become too much for federal legislators to resist.
Let’s hope that “at some point” comes sooner rather than later.
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