The result of the historic U.S. Presidential Election was nearly matched by pro-cannabis votes that passed in eight of the nine states with ballot initiatives. As a result, CBE has been looking forward to identifying what to expect next after the election. We wanted to share some thoughts about the ramifications of the successful medical marijuana votes in Arkansas, Florida, Montana and North Dakota and the recreational victories in California, Nevada, Massachusetts, and Maine. Remarkably, over 63% of the US population will have legal access to Medical and almost 21% to Adult Use/Recreational Marijuana as a result, upon the rolling out of rules and licenses.
We all have come to the conclusion that it’s not a matter of “if” any longer, but definitely a “when” question regarding the end of cannabis prohibition. The successful addition of the states mentioned above have further solidified this notion, but now face the challenges that Colorado Governor so succinctly stated last Sunday on 60 Minutes. The states will have to regulate, enforce and continually update their oversight to make sure that quality standards, compliance and consumer protection are all enforced vigorously by the industry itself and governing parties.
Ending Cannabis Prohibition
In the case of California, be prepared for a long drawn out licensing process because of all the regulatory bodies involved. This includes the concurrent developing regulatory issues and rules facing medical and adult-use marijuana, as well as the current amount of non-tax paying and unlicensed operators that are distributing their cannabis around the country illegally (some speculate that 70-80% of the black market pot in the country comes from the Golden State), plus the “Al Capone” state and federal back tax issues that these black market operators face. Like the end of the prohibition of alcohol with the repeal of the 18th amendment, things didn’t transition easily, states were given back the right to regulate alcohol and in some states, the 21st amendment didn’t matter, they stayed dry for years.
The briefing on Constitution Daily, “Five interesting facts about Prohibition’s end in 1933” is a short and sweet reminder of how the transition actually occurred, even though it didn’t have states already operating in a legal local environment in conflict with Federal law like we now do. What strikes me about the difference between the end of alcohol prohibition and cannabis prohibition is the unique issue of medical versus adult use, and what that means in the future.
CBE believes cannabis entrepreneurs, investors, state and local and federal regulators must anticipate the inevitable truth that medical marijuana, as it is currently being licensed, will not survive the end of federal marijuana prohibition. Medicine in the US is only medicine when approved through the existing arduous process that includes clinical trials to approve efficacy in treating maladies followed by the Food and Drug Administration (FDA)
I just can’t see a way around this. It would require turning a battleship around in a narrow creek, and the patients that rely on the true medicinal values of cannabis waiting even longer for a cannabis prescription during regulatory oversight turnover from States to the FDA. Ultimately, the existing channel for drug distribution to patients in the US (pharmacies, insurance company run prescription plans, hospitals, clinics, etc.) will be responsible for distributing these approved derivative products from cannabis. Connecticut was pretty smart in requiring pharmacists to own dispensaries!
Potential Issues After Prohibition Ends
Additionally, medical marijuana licensees that don’t have retail licenses are in jeopardy of losing their investment without a guarantee of transitioning to retail licenses. Look at what happened recently in Washington State, where adult-use dispensaries are essentially responsible for selling cannabis through retail as a large number of pre-I-502 medical dispensaries lost their investment when they didn’t win licenses during the recent I-5052 process. States writing and issuing new rules (like Ohio, Pennsylvania, etc.) should be protecting the businesses that still have to contend with the issue of competition in their local enterprise zones when they issue medical licenses to produce, process or dispense cannabis.
The move of Alcohol, Biotech, Life Sciences, Pharma and Tobacco companies to claim their piece of the “Green Rush” will accelerate. Like the villain said to Neo in one of my favorite movies of all time, The Matrix: “It’s inevitable Mr. Anderson”, so players in the industry can either chose to work with these potential partners or ignore the fact that they are not only already here, but that they will be here in numbers that cover the great plains for miles and miles…” This is similar to the warning that Kevin Costner gave the Sioux in Dances with Wolves.
The issue of interstate commerce will need to be addressed, as to not step on each state’s tax windfall from the nationally legal crop. Hemp will be an equal partner in the end of prohibition, and the separate complicated issues surrounding the regulation of a crop with many viable commercial applications (medical, nutraceutical, building materials, paper, manufactured parts, garments, canvas and rope etc.) will also create its own unique set of challenges.
And let’s not forget the implications for those who have run a foul of prohibition and the booming, multi-billion dollar prison cottage industry. Ending cannabis prohibition will surely have a large cost societally in the form of repatriating former non-violent drug offenders who should be free to rejoin society that was wrongly taken away and to fight the losing battles that have taken place over the last 40+ years with the War on Drugs.
Ah, but don’t feel too bad for the impediments of ending prohibition. The last gaspers are holding on to their dream of extending Federal prohibition with a Trump win. The movement has feared an Attorney General along the lines of Chris Christie (I don’t see that happening after this month’s Bridgegate convictions in New Jersey), but a Trump victory creates uncertainty on the “when” question and more time for prohibitionists to continue to be a roadblock as the industry develops. Just ask our friends in Colorado that have successfully beaten back challenges to dosing and even shutting down pueblo County.
On the Bright Side
As an advocate for the Federal legalization of cannabis, it is a sunny day today; its wonderful to have the chance to face these new opportunities and challenges head-on. It’s time to see the new industry come together under a new reality that the United States can be a major player internationally in setting the new standard for a world that has taken the first step to rationally and prudently deal with this miracle plant—which has in centuries past been a part of the natural balance of the planet and its people. It’s time to see the puritanical purge imposed by the arrogance of the Nixon Administration and their successors and the ugly scorched earth trail that it created in our rear view mirror, as we move in a new direction together.
Keep your heads down, continue to work your butts off and execute on this great venture. CBE will continue to help pulling together and participating in conversations of how to make the next great international industry successful in years to come with the epicenter squarely centered here in the U-S-of-A!!