The past 12 months have been a very exciting time in the cannabis industry. The jury is out on Cannabis. According to public opinion polls from Fox News, CBS, Pew Research Center and several other national polls, between 51% and 58% of respondents were in support of legalization. The highest level of support comes from the age range of 18-34 showing a staggering 71% support among the demographic in favor of full legalization in the US.
In 2015, several states voted for some form of medical or recreational cannabis, and many more have taken decriminalization measures. With a year of recreational cannabis now completed in Colorado and Washington, and the start of full legalization in Oregon, the tide seems to be slowly but steadily shifting towards proliferation. The most support seems to be in liberal states with the western reaches of the nation showing the most support.
Reflecting back on 2015, here were a few of the notable developments that resonated throughout the cannabis industry.
Currently there are Twenty-Three (23) states and the District of Columbia that currently have laws legalizing cannabis usage in some form. Four (4) States that have completely legalized cannabis for adults 21 and older with varying degrees of success.
A number of states have also decriminalized the possessions of small amounts of marijuana replacing criminal charges for civil fines. Despite these state actions, the Federal government has yet to change it’s position on legalization although there has been verbal support from the Obama administration.
On the medical side several states opened their first cannabis dispensaries to the public. Nevada, Massachusetts, Minnesota, Delaware and Illinois all had their first medical dispensaries open their doors. Though sales have been slow going in these states for various reasons, 2016 should be a landmark year for legalization in many of these newly developing cannabis markets.
Recreational Cannabis Boom
Colorado, Washington, Oregon and Alaska have all completely legalized the sale, cultivation and possession of cannabis with Colorado leading the way. On January 1st 2014, Colorado opened its first recreational cannabis stores, which effectively combined their medical and recreational markets. By the end of 2014 statewide, the cannabis market generated over $700 million in gross revenue with approximately $44 million in tax revenue collected. Washington by comparison opened its recreational market in July 2014 and finished the year with $64 million in total sales with $16 million in tax revenue collected.
The revenue figures for 2015 has eclipsed the previous year marks substantially as anticipated. There are estimations that Colorado gross sales will approach $1 billion for 2015 with $125 million in tax revenue collected from close to 800 stores servicing about 5.5 million residents. Washington by comparison generated $420 million in retail sales with over $80 million going to the State coffers in the form of an excise tax. This revenue was generated at 197 licensed stores servicing 7 million residents.
Meanwhile, Oregon started a partial foray into recreational cannabis sales by utilizing the existing network of medical dispensaries selectively approved for recreational sales of cannabis flowers to anyone 21 and older. July 2016, Oregon will completely open its recreational market. Alaska, with no medical dispensaries or infrastructure will likely take much longer to develop as a viable market.
With the level of success, both fiscally and socially, that was achieved in relatively small states that legalized recreational cannabis, it should be expected that 2016 will be a big year for ballot measures calling for legalization. There are several states that are gearing up for potential 2016 ballot initiatives. Massachusetts, Maine, Missouri, Ohio, Nevada, California and Hawaii are the states that will most likely make it to a vote.
On the West Coast, with Washington and Oregon taking legalization measures, California is the next in line. At the end of the session in 2015, Californians passed the Medical Marijuana Regulation and Safety Act. This piece of legislation sets up the regulatory framework for a state recognized medical marijuana industry. California, being one of the largest states with a population of over 38 million residents, has had a vibrant quasi grey market with an estimated 2,000 stores operating within the state. Despite the lack of reported sales figures, estimates of the California market are conservatively $3-$5 billion dollars annually with an estimated $450-750 million in tax revenue should the state impose a 15% tax rate.
In the northeast, Maine will likely be the first stat to fully legalize cannabis consumption. With Maine being the first domino to fall, we should see rapid support in other northeast states, with rapid movement in New England likely following suit thereafter.
Ohio had a ballot measure to legalize cannabis late in 2015. The legislation to legalize cannabis featured a basic monopoly on cultivation being designated to 10 pre determined groups comprising wealthy residents. Unsurprisingly, there was overwhelming opposition with the proposed legislation getting shot down by a margin of almost 2:1 against. In 2016 don’t be surprised if there is a second attempt to pass a legalization measure.
The Federal Government has taken a “wait and see” approach regarding its cannabis policy. Perhaps the results in the four recreational states that are operating have not been convincing enough to urge country wide reform on the archaic cannabis laws. The most obvious steps the Federal Government could take to lead the proliferation charge is to deschedule cannabis.
By removing cannabis from a schedule 1 designation, the Federal Government would pave the way for banking reform. In October 2015, the Federal Reserve said in a court filing that it would not accept money from the sale of cannabis. Without the backing of the Federal Reserve, there are a very limited amount of banks that can provide banking services to legitimately operating cannabis businesses. We will not likely see a change in the Feds position without some action from the Federal Government.
2016 should be another exciting year in the cannabis industry. With public opinion steadily growing in support of legalization, and the hysteria of an election year, I would not be surprised to see cannabis proliferation take the forefront in this countries national conversation. With so much at stake, we can only wait and see.