By Raza Lawrence Esq. (Margolin & Lawrence)
Despite all the negativity this year involving politics, COVID-19, and police brutality, 2020 is shaping up to be a bombshell year for cannabis businesses and consumers in America. Yes, cannabis remains illegal under federal law (which trumps any conflicting state law under the Supremacy Clause of the US Constitution), classified as a Schedule 1 drug under the Controlled Substances Act, and subject to harsh criminal penalties. Yes, president-elect Joe Biden and his VP Kamala Harris both have long histories of throwing cannabis sellers in prison, and Democratic politicians voted against including marijuana legalization in their 2020 platform. But, all around the country this year, we are seeing big signs that cannabis is becoming a legitimate mainstream business on the cusp of breaking out big time. Cannabis is already a major force in the economy, posting approximately $20 billion in annual sales in the US, and it’s only going to get bigger with more and more places legalizing cannabis sales.
Early in 2020, as most of the country and economy was subjected to strict lockdowns, cannabis was deemed an “essential” business in many places. This allowed the entire cannabis industry to continue operating like normal while everything else was closed. Startup cannabis businesses were able to get up and running, expanding their base of customers who were stuck at home and in search of something natural and healthy to improve their mood.
The latest pleasant surprise for the cannabis industry was the November election. After years of slowly moving reform of our cannabis laws, this election has been a true game-charger for the cannabis industry. Voters in several states passed new initiatives legalizing cannabis. Voters in Mississippi and South Dakota, both of which Trump won easily and are dominated by Republican voters, approved the legalization of medical cannabis. South Dakota also voted to legalize adult-use, recreational cannabis, as did Arizona, Montana, and New Jersey. In most places, the cannabis initiatives passed by large margins. We now have 36 states that have legalized medical marijuana, and 15 states that have legalized marijuana for all adults.
Many cities and counties around the country also voted in this election to legalize cannabis sales. In California, where local governments have discretion whether to allow or ban commercial cannabis activity, out of 38 ballot measures around the state that would legalize cannabis sales, only six were losing based on initial election results. Among other places in the state, Artesia, Banning, Calabasas, Costa Mesa, Grass Valley, La Habra, Lemon Grove, Madera, Marysville, Oceanside, Ojai Porterville, San Bruno, Vacaville, and Ventura all voted to open up cannabis retailers and other businesses. All of these new local measures will lead to new licensing opportunities.
While 2020 has turned out to be an extremely divisive year for many issues, the one thing Americans with all political views seem to agree on now is that cannabis should be legal. The tide has clearly shifted, and it feels like it won’t be long until the industry is legal across the country. It’s hard to find any politicians these days who argue to keep cannabis illegal by making claims that it’s a “gateway drug” or that it will somehow harm the health of adults or children.
The new, friendlier environment for cannabis has opened up opportunities for entrepreneurs in all facets of the industry – cultivation, manufacturing of cannabis oil and edibles, testing, distribution, and retail (storefronts and delivery). Every state approaches cannabis licensing a little differently, and it’s important for anyone contemplating getting into the industry to understand the applicable local, state, and federal laws and regulations, which can be voluminous and confusing. Hiring attorneys with experience navigating the laws, managing relationships with neighborhood and community groups, and working through the local government licensing process, is smart for anyone seeking to start a new business in this industry. Because cannabis remains subject to local, state, and federal criminal penalties, including substantial fines and jail time, and a criminal conviction involving cannabis sales can bar people from future licensing in the industry, it’s very important to follow the law and to start up and operate cannabis businesses by the book. By working with attorneys who have experience in the industry, entrepreneurs can ensure that they are taking the right steps to protect themselves and their assets and maximize their chances of business success.
https://www.njleg.state.nj.us/2020/Bills/A0500/21_I1.HTM – NJ Bill for Adult Use
https://sosmt.gov/wp-content/uploads/I-190.pdf – Montana Bill for Adult Use
Cities in California: Artesia, Banning, Calabasas, Costa Mesa, Grass Valley, La Habra, Lemon Grove, Madera, Marysville, Oceanside, Ojai, Porterville, San Bruno, Vacaville, and Ventura
https://www.lemongrove.ca.gov/home/showdocument?id=3037 (Lemon Grove)
https://www.counties.org/sites/main/files/file-attachments/san_mateo_county_-_sent_120517_-_item_no._3_ordinance.pdf (San Mateo County San Bruno)
For more information about this post, contact Margolin & Lawrence.