2016: A Pivotal Year for Marijuana Reform

November 9, 2016

On November 8, five states (California, Maine, Massachusetts, Nevada, and Arizona) voted on whether to legalize recreational marijuana.  Four other states (Florida, Arkansas, North Dakota, and Montana) had medical marijuana initiatives on the ballot.  Now that the results are in, there is little dispute that 2016 has been the most significant year in marijuana policy since President Richard M. Nixon signed the Controlled Substances Act into law over 45 years ago. The night was a near clean sweep for pro-marijuana advocates who have successfully pushed to reform state marijuana laws through ballot initiatives and legislative acts since Colorado’s legalization of recreational marijuana in 2014.

California, Nevada, Massachusetts and Maine all voted to legalize recreational marijuana – doubling the number of legal-marijuana states to eight. Arkansas, Florida and North Dakota legalized medical marijuana for specific medical conditions (Montana voters approved a measure to loosen restrictions on the state’s existing medical marijuana program). Medical marijuana is now legal in 28 states and the District of Columbia. The only loss of the evening came from a failed recreational marijuana ballot initiative in Arizona, which many predicted could go either way. In Arizona, groups opposed to legalization out-fundraised their pro-marijuana counterparts.

Marijuana advocates relied on data, fundraising, and a multitude of grass-roots efforts to support further liberalization of marijuana laws. And marijuana – both recreational and medical – is big business. In 2015, Americans spent $5.4 billion on legal recreational and medical marijuana. Colorado is projected to bring in $140 million in tax revenue from marijuana sales in 2016; and Washington state is projected to make $270 million in tax revenue. Oregon collected $3.48 million in the first month recreational marijuana became legal. These revenues are enticing for lawmakers and their constituents who see regulation and taxation of marijuana as a way to close budget shortfalls.

These gains will seem modest, however, once California’s recreational marijuana industry goes online. California is the world’s sixth-largest economy and home to 40 million Americans. California already sits on a $2.7 billion medical marijuana industry, a figure that could double once recreational marijuana is added. Florida’s legalization of medical marijuana could similarly boost the expansion of the industry on the East Coast. Florida is the third most populous state and legalization presents a huge economic opportunity for would-be marijuana entrepreneurs.

On the opposite side of the ledger, marijuana prohibition has cost the U.S. approximately $465 million per year for arrests for marijuana possession and $3.6 billion to enforce marijuana laws. Moreover, despite decriminalization efforts in several states, many advocates claim marijuana-related arrests still reflect racial bias – marijuana use is roughly equal among whites and African-Americans yet, African-Americans are 3.73 times as likely to be arrested for marijuana possession according to an ACLU report. While many of the most dire predictions regarding marijuana abuse and increased crime in states with legal marijuana have not materialized, concerns have been raised about increased exposure to marijuana by younger children and increased risks of driving while high.

The November 8 results suggest that opinions regarding the use of marijuana in the U.S. have reached a tipping point. This will likely accelerate the acceptance of marijuana in both medical and social settings and fuel the growth of an industry that is already expanding rapidly. A recent Gallup poll confirms the shift in attitudes. As of this writing, public support of legal marijuana has reached 60 percent in the U.S., the highest it has been in 47 years.

This expansion has only been possible due to the federal government’s willingness to let states dictate marijuana policy so long as they do not compromise key federal priorities; such as preventing distribution of marijuana to minors and preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, or cartels.

While marijuana legalization was merely a footnote in the presidential election, there are no indicators to suggest federal policy will change under a Trump presidency. During the campaign, neither Trump nor Clinton said they would depart from the Obama Administration’s policy of not interfering with existing state marijuana laws and industry participants. Moreover, Mr. Trump said he is “in favor of medical marijuana 100%” and has suggested that marijuana legalization is best handled on the state level. Nevertheless, marijuana remains an illegal Schedule-I controlled substance under federal law and Mr. Trump has not expressly called for rescheduling or legalization at the federal level. Despite these reservations, the election results are a massive success for marijuana advocates and those looking to expand medical and recreational marijuana into new markets.

The Regulated Substances Blog is intended to keep readers current on developments regarding medical cannabis legalization and regulation and is not intended to be legal advice.  If you have any questions, please contact the author Peter Murphy at pmurphy@eckertseamans.com.  You may also contact Daniel Clearfield at dclearfield@eckertseamans.com, Robert Hoffman at rhoffman@eckertseamans.com, or any other member of our Regulated Substances Group.   

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