According to a report by Arcview Market Research, in partnership with BDS Analytics, legal cannabis sales totaled $9.2 billion in North America in 2017, a market that is anticipated to reach $24.5 billion in sales by 2021, as perceptions shift and policies are reformed.
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As an advocacy organization dedicated to the growth and advancement of a responsible cannabis industry where public safety is the foremost priority, the National Cannabis Industry Association (NCIA) has been leading the way since 2010, leveraging the shifting momentum to help its 1,700 members gain access to expanding market frontiers.

In 2017 alone, $790 million in tax revenue was generated in only five U.S. states, but if legalized the market could generate upwards of $132 billion in tax revenue that could be used to improve community health, safety and wellbeing.

Where cannabis is legal, there has been a marked decrease in violent crimes. Colorado experienced a six percent decline in violent crimes between 2009 and 2014, while Washington experienced a whopping ten percent decrease. Studies have also proven that there is no associated increase in adolescent use or car accidents where cannabis is legal.

Though it is still considered illegal at the federal level, recreational cannabis use has been legalized in ten states, (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, Washington and now Michigan, as well as the District of Columbia) and in nine of these states it is regulated similarly to alcohol. Medical use of cannabis is legal in thirty-three states as well as the District of Columbia, Guam and Puerto Rico. Counting cannabidiol (CBD)-only programs, the number goes up to 47.

During the 2018 U.S. Midterm Elections, cannabis was the focus of ballot initiatives in Michigan, Utah, Missouri and North Dakota. Over fifty-five percent of voters in Michigan approved legislation that would allow adults twenty-one years of age and older to purchase and possess cannabis for recreational use, signaling a momentous victory and a shift in perceptions in the Midwest.

When asked what’s next for Michigan, Morgan Fox, Media Relations Director for the National Cannabis Industry Association, noted, “The state must now undertake the task of working with stakeholders to develop the regulatory structure for the legal cannabis market there, with estimates that stores will open in 2020.”

He added, “The passage has already spurred nearby states to accelerate their consideration of cannabis policy,” including Illinois where a committee has been struck up by Governor-elect J.B. Pritzker to not only launch retail markets, but beat Michigan to the punch.

As the second-most populous state in the U.S. to legalize cannabis behind California, Michigan is a significant indication that public perception has shifted. In fact, Gallup polls on Americans’ views of marijuana over the last fifty years indicate a steady trend in favor of cannabis legalization.

Those who support cannabis reform have grown to sixty-six percent or a two-to-one margin. The support for medical marijuana is even greater. States like Florida, New Hampshire, Ohio, Pennsylvania, Virginia and Wisconsin all polled positively. In fact, when the state of Michigan passed its ballot initiative during the Midterm elections, it did so at greater margins than anticipated.

Results in Missouri and Utah fell in line with projections, as both states voted in favor of legalizing medical marijuana. Viewed as traditionally conservative states, this is a major victory. According to Fox, “Missouri was notable in that there were several medical cannabis initiates on the ballot, and the best one passed, contrary to popular campaign wisdom that similar initiatives on the same ballot will split the vote.”

In Utah, the legislature overruled the ballot initiative in a planned compromise bill, which limits the number of dispensaries and expands the number of qualifying conditions. For Fox, despite the compromise, “Utah is a major win considering the opposition of Mormon leaders and the traditionally conservative electorate.” In Maryland, Democrat Ben Jealous ran such a successful campaign that it has even helped the incumbent Republican Governor Larry Hogan entertain the idea of legalization. New Jersey and Virginia elected new governors who ran on campaigns partly based on reform.

Another major win for the industry recently came in Vermont, when it became the first state to take steps to legalize cannabis through state legislature instead of ballot measures, which will create a pathway to legalization for other states where referendum and ballot initiatives are harder to achieve.

In Oklahoma, a traditionally red state, a medical cannabis bill was approved, though much work remains to be seen to get Congressional Republican leaders on board in an impactful way. Evidence of the resistance is the continued effort by the House Rules Committee to block cannabis amendments, three dozen or more of which have been blocked from consideration for floor votes during the 115th Congress.

In North Dakota, Measure Three failed, which would have allowed adults twenty-one years of age and older to purchase, possess, grow, use and sell marijuana for recreational purposes and would have expunged previous marijuana convictions from criminal records. While it would have been one of the largest victories for cannabis reform in the U.S., the language used in the ballot initiative when it came to regulation and taxation was too vague and ultimately led to its demise.

“North Dakota was a truly grassroots effort, with some help from national groups, but campaigning for any ballot initiate is difficult in such a low-density state and especially such a conservative state. Opposition groups also greatly outspent the campaign,” said Fox when asked what could be learned from the failed ballot initiative in North Dakota.

North Dakota was the only state where the ballot initiatives pertaining to cannabis did not pass, though medical marijuana remains legal. It was one small hiccup in an otherwise successful midterm election campaign that has led the way for what will be a successful 2019 with more big changes and hopefully substantial ground made in terms of cannabis reform at the state and federal levels.

As Fox noted, “A large number of supportive congressional candidates won their elections, including forty-six out of the fifty-six candidates to which NCIA-PAC donated funds. This, combined with the Democratic takeover of the House and with it formerly problematic key committees, sets the state for major progress in the 2019 Congress.”

Looking ahead, NCIA will work with its members to pursue business opportunities where available, ensuring that they have the best resources available pertaining to best practices. “We will also be hosting industry events in those states to facilitate discussion and networking among people interested in becoming involved in the industry,” explained Fox.

The resignation of Jeff Sessions from the post of Attorney General left many with a sense of optimism, as he was a major barrier in descheduling cannabis federally. He was responsible for rescinding the Cole Memorandum which offered states some protection against the enforcement of federal law. When asked what Sessions’ departure means to the NCIA, Fox responded, “This really depends on who replaces Sessions. William Barr stated during confirmation hearings that he does not agree with legalization but that he will not direct federal prosecutors to crack down on state-legal marijuana businesses.”

There are a number of reasons why the United States is falling behind the global cannabis market. Federal law currently leaves cannabis companies constrained in the United States. Taxation laws like 26 U.S. Code Section 280E bar businesses engaged in trafficking Schedule One or Two controlled substances from tax deductions and credits. Further, the inability to expand beyond state borders limits companies’ ability to grow and reduces access to international capital, which is required to compete on the same level as Canada and Uruguay, the only two countries in the world who have legalized cannabis to date.

U.S. investment is being driven abroad and U.S. companies are falling behind in terms of innovation, product development, research and development. There are numerous American companies investing in cannabis research and product development activities in Israel, with investments expected to reach $1 billion in the next few years. Yet despite being home to more cannabis users when compared with other nations, the United States is already over a decade behind global players like Israel, Uruguay and Canada, countries that are benefiting from government funded research and regulation and without federal reform, it stands to continue to lag behind.

In 2017 alone, Health Canada issued 114 permits to companies to export cannabis oil to other countries, an amount that totaled 400 kilograms, enabling Canada to establish a foothold in markets like Europe with supply contracts or subsidiaries, while U.S. companies are bound by state regulations, limited by federal prohibition and have minimal opportunity to decrease the trade deficit currently being experienced.

Ultimately, a federal policy overhaul is required to remove barriers that prevent institutional investment, promote unfair taxation, and limit banking and research and development activities. Cannabis needs to be descheduled as a prohibited controlled substance so the U.S. can compete in the global market that promises to grow exponentially over the next several years.

An Obama-era policy fix was introduced to approve federally licensed manufacturers of research-grade medicinal marijuana but it was stalled by Attorney General Sessions, who blocked its advancement and stunted one of the more positive policy reforms cannabis has experienced at the federal level.

Nearly two-thirds of Americans already have state-legislated access to cannabis, be it medical or recreational, and there are already frameworks underway to regulate the production and sale of cannabis, without the need for a centralized federal program controlling its operation. In fact, centralized federal control could do more harm than good for the industry in the U.S.

The Strengthening the Tenth Amendment Through Entrusting States – or STATES – Act is bipartisan cannabis legislation introduced by two senators in 2018, Democrat Elizabeth Warren from Massachusetts and Republican Cory Gardner from Colorado to better protect states that have taken reform efforts in favor of legalization and decriminalization from federal interference. A companion bill was also introduced in the House of Representatives, brought forward by Democrat Earl Blumenauer from Oregon and Republican David Joyce from Ohio to amend the Controlled Substances Act of 1970. Should the bills receive house and senate approval, they would likely receive Presidential approval, which signifies the power of state reform and the federal influence it can have.

It is clear that in order for federal changes to be made, Congress must clear a legal pathway for existing cannabis businesses to operate safely, effectively and profitably. The sooner a framework is established and approved, the sooner the U.S. can begin to compete on a national and global scale.

To ensure the U.S. isn’t too late to the game and still has a chance to not only compete but be a leading player, NCIA will continue to do all that it can to advocate, educate and provide networking opportunities for its members to leverage the momentum taking place.

To this end, some of NCIA’s upcoming events include a number of state-specific industry socials and caucuses, as well as its flagship event, the Cannabis Business Summit and Expo. The trade show runs February 12 and 13, 2019, will be attended by over 7,500 attendees and features 120,000 square feet of exhibition floor space and access to over 150 thought leaders and speakers. It runs concurrently with its Seed to Sale Show.

When asked what could be learned from its neighbors to the north, Fox answered, “Canada serves less as a model than as a motivator for the industry to push Congress to allow states to determine their own cannabis policies and end federal prohibition so that the United States can be competitive in the global market.”

If 2018 was any indication of the rate of growth and shifting perception in favor of cannabis policy reform, state-by-state the U.S. is moving in the direction of legalization, meaning 2019 promises to bring even more bipartisan support, more significant policy reform victories and hopefully the eventual descheduling of cannabis, which will allow U.S. cannabusinesses full participation in the market.