Author: Josh Adams, Ph.D. Published: 11/9/2020 NFD
Q: What are the implications from Election Day for the U.S. legal cannabis markets and industry?
A: While a divided country spent last week wondering about the U.S. presidential election outcome, cannabis came out a clear winner. Throughout all five of the states which considered reform measures on their ballots, legal cannabis programs took the day.
Voters in each Arizona, Montana, and New Jersey voted to approve adult-use initiatives. South Dakota voters approved two measures, simultaneously legalizing cannabis for both medical and adult use. Finally, Mississippi voters passed a medical cannabis initiative. Outside of increasing consumer access to cannabis, the newly legal markets are estimated to generate $1.2 billion in revenue by 2022, and help the overall U.S. market to surpass$3.3 billion by 2025.
While former U.S. vice president Joe Biden has been elected president, Republicans are poised to retain control of the Senate, while the Democrats hold a slimmer majority in the House for the 117th Congress after a projected “Blue Wave” failed to materialize. Expected stonewalling from a Republican-controlled Senate will likely stall any legislative agenda from the Biden administration, including moves to push for further liberalization of federal cannabis laws. Additionally, given the narrow margins of Biden’s win, there may be little political will to take on cannabis reform.
Similarly, Republican control of the Senate (pending January run-off elections for two seats in Georgia) suggests that consideration of the MORE Act is unlikely in the near term. The SAFE Banking Act may see some movement, as there has generally been bipartisan support for bringing regulatory clarity to cannabis banking and expanding financial services to cannabis businesses. That will be increasingly important with new cannabis markets coming online, if only for the efficiencies associated with regulatory oversight and taxation.
However, any movement toward wholesale federal reform remains unlikely in the near term. Regardless of whatever cannabis-related activity happens at the federal level, individual states appear to be on course to lead the way. With the five new states legalizing cannabis in some manner, social, economic, and political momentum seem set to expand the nation’s regulated marketplace. Aside from the needs and desires of cannabis consumers, the appeal of tax revenue and jobs are forcing states to consider legalized cannabis for the benefits it brings, and to drive legalization efforts forward.