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The Shift in Cannabis Reform, and What’s Driving It

Frankly stated, notably on the west coast and in Colorado, the first generation of quasi-legal ganjapreneurs were previously engaged, almost exclusively, in criminal activity at both the state and federal level: No regulations, no taxes, no product or employee liabilities, and regrettably therein, no legal or political credibility.

However, and becoming increasingly self-evident, the second generation of cannabusiness investors, owners and managers that have come into the nascent cannabis space have, in many cases, decades of previous business experience, often in highly regulated and competitive industries.

This necessary maturation in the cannabis industry augers well for expediting political and regulatory reforms, such as banking regulation reforms, that is imperative for the cannabis industry to achieve in the near term.

That’s why I’m cocksure that in the future the funding and impetus for cannabis law reform will continue to transition from that of well-intended social justice funders (i.e., George Soros, Peter Lewis and John Sperling) to that of state and national cannabis-related trade associations (i.e., National Cannabis Industries Association) and individual companies (i.e., like the successful and forward-looking WeedMaps).

Who’ll be driving cannabis legalization in coming election cycles?

Starting in 2012, a more-than-noticeable change in the base and motivation for reforming cannabis laws began to take a predictable and logical turn away from benevolent-but-disconnected-from-the-plant billionaires, to individuals and companies who’re solidly invested in cannabis-related businesses.

The unsuccessful (and controversial) 2015 effort in Ohio to legalize cannabis likely forever broke the not-for-profit cannabis law reform model that’s prevailed since the passage of California’s landmark 1996 Proposition 215 (which, intended or not by cannabis law reformers, effectively legalized medical cannabis, including for production and sale, in some of the state’s jurisdictions).

Tellingly, leaders from national cannabis law reform organizations who met, whilst still in the planning stage, with the Ohio organizers were quickly schooled that investors, not donors, would be the driving force in the state. In the historical year of 2016 for the legalization movement – with citizens voting in states like California, Maine, Massachusetts and Nevada to end cannabis prohibition – the lion share of funding and strategy therein was derived from cannabis capitalists rather than from the traditional funding base of social-do-good billionaires.

States that are in the cannabis crosshairs for 2018 for legalization, via legislation rather than voter initiative, are largely in New England (Connecticut, Rhode Island and Vermont) and the Midwest (Illinois and Michigan). In every state listed above there already are dozens of licensed, regulated and tax paying cannabusinesses in the medical space, who, logically want to dramatically expand their customer base by adding non-medical cannabis consumers. They will be providing the funding and impetus for legalization efforts going forward in 2018 and beyond.

 Regulations and reefer

Currently, with only five states having formally ended cannabis prohibition and replacing the long-failed policy with tax-and-regulate policies (Alaska, Colorado, Nevada, Oregon and Washington), and after several voter-approved initiatives in 2016 soon-to-take-effect in California, Massachusetts and Maine, each anti-prohibition state has wildly varying rules and regulations – some pro, some con, all vexing for those who want to build national and possibly internationally-recognized cannabis brands.

The states coming online with their legalization schemes in 2018 (California, Maine and Massachusetts), all are yet to have regulations set by their respective legislatures, are inherently attempting to learn and adapt their cannabis legislative policies based upon, rationally, the prior experiences incurred from the five vanguard states that are currently regulating and taxing cannabis-related commerce.

In my view, important as the early adopting states are to ending the national eighty year-old prohibition on pot, the pending ‘flip switch’ of California’s massive, largely unregulated and untaxed “compassionate access to medical marijuana” to that of a regulated, taxed and competitive free market in cannabis products for all adult consumers in America’s nation state of California, will mark the swan song for cannabis prohibition in modern America.

Once the largest state in the nation, with an economy rivaling the likes of countries such as France or Italy, California’s change of laws and cannabis commerce will, more than likely, set the precedent for the dozens of states yet to end cannabis prohibition in America, more so rather than Colorado’s truly vanguard legal and economic reforms relating to cannabis policy, or, Massachusetts’ regulation-larded legislative commissions and high taxes.

Why should the massive and profound economic, cultural and political impact California’s previously demonstrated on the nation as a whole, be any different this time around when it comes to cannabis? So goes California’s cannabis policies, so largely too goes the country’s?

However, from a logical and efficient economic point of view, notably trying to effectively organize capital, until such time that the federal government finally capitulates politically (and economically) to the states’ cannabis commerce, the cannabis industry is wildly inefficient with, potentially up to fifty largely distinctive separate and segregated markets, with California, America’s nation state indeed, likely being the harbinger of both what the national market for cannabis products and services will largely come to look like on the nation’s Main Streets, as well as putting sufficient upward political pressure on a historically recalcitrant, law enforcement-dominated and prohibition-oriented federal government.

Federal 0bstinence be gone.. someday

The number one question I receive regularly these days from both potential investors and media is: “When are the feds going to end marijuana prohibition?”

It seems to me at this crossroads for cannabis that there are two tracks for likely national legalization. First, charismatic, forward-looking and politically popular presidential leadership, ideally aided and abetted by a supportive Congress and secondly, the passing of three to four election cycles to both flush out the last remaining pot prohibitionist politicos and the electing of anti-prohibitionists to Congress.

In other words, as a nation, absent a pro-cannabis law reformer getting elected president in the near term, the country is probably six to eight years from the feds finally saying ‘uncle’, and thereby establishing a federal excise tax on cannabis producers.

Allen St. Pierre

Allen St. Pierre

Allen St. Pierre is the vice president of communications for Freedom Leaf, a partner in the investment firm Sensible Alternative Investments and a NORML board member. In 1997, St. Pierre founded the NORML Foundation and was executive director for both NORML and NORML Foundation from 2006-2016.

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