Currently, cannabis is legal for adult recreational use in Alaska, California, Colorado, Massachusetts, Maine, Michigan, Nevada, Oregon, Vermont, Washington and the District of Columbia. On January, 1, 2020, Illinois became the 11th state to legalize cannabis recreationally. Additionally, as of 2019, 33 states and Washington D.C. passed measures either legalizing or decriminalizing medical marijuana. An additional 13 states focused on legalizing the use of cannabidiol (CBD) for medical purposes, not to be confused with the 2018 Farm Bill regulating hemp cultivation.
According to reports, over a dozen states could potentially be working towards shifting their cannabis laws this year, whether in terms of decriminalization or legalization. The prospective states to keep an eye on include New York, New Jersey, New Mexico, Vermont, Connecticut, Rhode Island, Arizona, Arkansas, Missouri, Montana, North Dakota, South Dakota, Pennsylvania, Oklahoma; and on the medicinal side specifically, South Dakota, Alabama, Mississippi, Kentucky, Idaho and Nebraska. Additionally, Virginia could see a decriminalization measure appear on its 2020 ballot.
As we’ve already seen in legal states such as California, Colorado, Michigan and Illinois, the work doesn’t end just because the law passed. In fact, there is a tremendous amount of work to be done on matters such as ensuring compliance, safety, accessibility, product availability and consumer education, to name a few. Many legal states are also calling for significant reform in areas such as state tax and licensing, with many facing difficulties due to competing with the illicit market. Given that states decide on a municipal level whether or not to allow for legal cannabis business, “legal” is not synonymous with “equal access,” leading many to favor federal legalization to ensure a level playing field.
With a significant amount of states to keep an eye on as progress is made leading up to Election Day, let's break down where certain states stand right now in regards to cannabis legislation and what some are proposing for the 2020 ballot.
Recreational use of cannabis officially became legal in Illinois, with its first day of legal sales yielding nearly $3.2 million in sales according to state officials. The rest of the month proved to be quite fruitful as well, garnering more than $39.2 million total spent on recreational cannabis. As reported, of that number, about a quarter ($8.6 million) came from out-of-state residents. Illinois, which is the second state in the Midwest to allow for recreational cannabis sales after Michigan, also experienced a product shortage, prompting shops to instate strict buying limits or designating certain days of the week to recreational sales. The shortages in supply are anticipated to persist for months, with the state's 21 cultivators working to keep up with demand.
Additionally, while cannabis sales are now recreationally legal on a statewide level, over a dozen municipalities do not allow dispensaries per local voting outcomes. For a complete list of which municipalities do or do not permit the legal sale of marijuana, see here.https://abc7chicago.com/5553943/ On top of making way for legalization, the state also cleared the records of more than 11,000 people with non-violent cannabis offenses as part of the law's expungement measure.
Michigan dispensaries began the legal recreational sale of cannabis on December 1, 2019, roughly a year after voters approved Prop 1, which made the state the 10th in the country to end cannabis prohibition for adults. Recently, the state Marijuana Regulatory Agency, which oversees the marijuana industry in Michigan, released a series of statistics analyzing the status of the newly minted recreational marijuana market, as well as released data related to the medical market, which has been serving patients since 2008.
As reported, for its first month of legal recreational cannabis sales, December 2019 yielded nearly $6.5 million in recreational sales and $24.9 million in sales for medical patients. According to their report, the state logged $2.6 million in recreational sales between Jan. 13 and Jan. 19, making for the highest weekly total since stores first opened on Dec. 1. During 2019's fiscal year—running from Oct. 1, 2018 to Sept. 30, 2019—medical marijuana dispensaries sold $219 million worth of marijuana.
While the pace of sales is on the rise, it is not without criticism regarding climbing prices, licensing fees, a decline in registered caregivers and a decline in registered medical patients overall. As of Jan. 2, the Michigan Marijuana Regulatory Agency has issued 54 business licenses to recreational cannabis companies, 26 of which are retail permits. Similar to other recreationally legal states, it is up to the municipality whether or not they will permit recreational sales. As reported, of the 1,773 cities, villages and townships that make up Michigan, almost 1,400 have opted out of allowing marijuana businesses operate (making for more than 78% of the state).
California, which has emerged as a frontrunner in cannabis legislative efforts, has entered its third year of recreational sales. Following its second year, there are now three new laws in effect as of Jan. 1, 2020. First is the Assembly Bill 34, which will let licensed businesses donate products to medical marijuana patients in need. Second is Assembly Bill 37, which allows cannabis operators to deduct expenses (a business practice previously blocked due to federal law). Thirdly, Assembly Bill 1810 is now in effect, making it illegal for passengers in limos, taxis and other commercial vehicles to consume cannabis.
Additionally, many in the legal cannabis market are calling for a complete overhaul to its tax structure. According to reports, legal cannabis is taxed at effectively 40% and up (roughly the same as hard liquor) but the state announced it will increase cannabis excise taxes by 12.5% and cultivation taxes by 4% as of Jan. 1. While the state's current tax rate of 15% is relatively standard compared to other legalized states, the state excise tax is only one part of the bill. There is also up to 10% in sales taxes on non-medical cannabis being opposed, plus cities that permit cannabis operations often impose local taxes of 5% to 20%. Growers also pay a state levy of $9.25 per ounce for dry flowers or $2.75 per ounce for leaves.
With the state's current tax structure, it is becoming increasingly difficult for licensed cannabis operators to stay afloat. As a result, illicit businesses are dominating the market. As reported by an audit made public in September, the black market for cannabis is estimated to be at least three times the size of the regulated industry. The illicit market has caused a variety of problems, ranging from health risks (due to products not being subjected to state testing) to a crackdown on the website Weedmaps for including non-licensed businesses on its database. As such, experts are projected that 2020 will be a "make or break" year for the legal cannabis industry in California.
Additionally, in California, a lawsuit challenging a policy allowing for delivery of marijuana products anywhere in the state (including into areas where local municipalities have banned cannabis stores) is slated to go to trial. The trial is scheduled in Fresno Superior Court on April 20. The lawsuit was filed by 24 municipalities and Santa Cruz County, contending the California Bureau of Cannabis Control (BCC) for overstepping an authoritative boundary by permitting statewide delivery services.
Alaska, which has allowed for legal recreational cannabis use since 2015, made history by opening one of the first state-approved cannabis retail spaces with on-site consumption. While cities in other states have approved such measures in the past, this marks the first time there has been a state-issued approval for retail stores to be allowed to smoke or consume marijuana products on site. Alaska's rules regarding on-site consumption took effect in 2019.
As of Jan. 1, 2020, a new set of rules pertaining to the sale of CBD went to effect, most notably impacting how products are to be labeled. The new regulations include adding hemp extract (CBD intended for ingestion) into the existing Florida Department of Agriculture and Consumer Services (FDACS) Division of Food Safety programs. Businesses were given between 30 and 45 days to become compliant with the new laws. Full details regarding the new rules can be found here. https://www.fdacs.gov/Cannabis-Hemp/Hemp-CBD-in-Florida Additionally, proponents were not able to secure the 766,200 signatures needed to place adult-use cannabis initiatives on the ballot in time for the 2020 election. Advocates have noted they will be focusing on getting recreational marijuana on the ballot in 2020 instead.
On Jan. 8, 2020, New York Gov. Andrew Cuomo presented his annual State of the State address, during which he vowed that cannabis will be legalized in New York this year. During his speech, he noted that a legalized marijuana program could yield more than $300 million a year in tax revenue and encourage economic activity that could yield billions once properly implemented. Cuomo also shared his plans to work with neighboring states, as well as explained that the legislative effort would include a "long-overdue" criminal justice reform. There are still some roadblocks to overcome, including dictating where revenue would be allocated and the specifics of its criminal justice reform initiative.
This November, South Dakota is set to become the first state to vote for adult-use and medical marijuana at the same time. The state's ballot will include both a recreational and a medical initiative, allowing for voters to consider separate measures in the same election. As reported, the recreational initiative calls for a 15% sales tax and the state Department of Revenue would determine licensing.
Voters in Mississippi will be able to decide on a medical cannabis program in the 2020 election this November. The Mississippi Medical Marijuana Amendment is on the ballot and will determine support for establishing a medical marijuana program in the state.
The state of New Jersey is set to vote on legalization of recreational marijuana in November. If the ballot measure passes, New Jersey residents ages 21 and older will be allowed to use cannabis recreationally.
With Gov. Michelle Lujan Grisham taking office in 2019, many are optimistic about New Mexico joining the ranks of states with legalized cannabis. As reported, a bill to legalize recreational cannabis (Senate Bill 115, the Cannabis Regulation Act) is currently awaiting a hearing in the state Senate Judiciary Committee.
While Vermont legalized low-level cannabis possession in 2018, this year's election may result in the legalization of retail sales. The bill is still making its way through the state legislature, where it has been approved by the Senate but not by the House. If the House approves, reports claim it will likely enter a conference committee to ensure both chambers' versions are agreed upon. Gov. Phil Scott (R) is reportedly reconsidering his opposition to recreational cannabis sales.
Virginia is currently making strides in its state legislature with SB 2, a cannabis decriminalization measure. The bill passed in the Senate this January and is now one step closer to becoming a law.
Connecticut Gov. Ned Lamont has called for marijuana legalization in his State of the State address on February 5, 2020. While the budget proposal itself doesn't include language that would establish legalization (such as New York or Rhode Island), funding has been proposed to help establish a framework for cannabis regulation.
Rhode Island is among those to keep tabs on regarding marijuana legalization this year. Gov. Gina Raimondo has called for a state-run legalization program, including her proposal in the budget for the 2021 fiscal year. The proposal, although already facing pushback from lawmakers, marks the first time Raimondo's office has moved forward with a legalization proposal.
Arizona, Arkansas, Minnesota, Pennsylvania, Idaho, Nebraska, Montana, Kentucky, Oklahoma, Missouri and North Dakota are among those working towards possibly having a ballot initiative included in 2020. In these states, activists are working to collect the number of valid signatures needed to have such cannabis-related initiatives appear on the ballot for 2020. The deadlines for ballot inclusion vary by state.