2016 has been a landmark year for the Cannabis industry. Ballot initiatives to legalize various forms of Cannabis (marijuana) were held in nine states during the 2016 general election. Ultimately, residents in eight of nine states decided to support cannabis legislation in some form or another. Voters in Maine, California, Nevada and Massachusetts approved recreational marijuana use, while residents in Arizona rejected a similar proposal. In Arkansas, Florida, North Dakota and Montana, residents voted in favor of legalizing medical marijuana (MMJ). Following the election, the number of states with legalized forms of cannabis has increased to:
- 30 states including Washington, DC and Puerto Rico with medical marijuana
- 8 states plus Washington, DC with recreational marijuana
However, the Cannabis industry is watching President-Elect Trump’s transition into the White House with great reservation. Several key nominees have a less-than-friendly history towards the industry and observers have concerns that the federal prohibition may tighten even as more states move to legalize. Thus far, all signals from the administration have indicated that states’ rights will be upheld and more states are expected to make moves towards legalization in 2017.
On November 8, Arizona was the only state to reject an initiative that would allow 21-year-olds to possess up to one ounce of marijuana, and grow up to six plants in their home. Voters rejected the proposal with 52 percent of the vote and more than 2 million ballots cast. Prior to the election, polls showed even sentiment. Both sides shelled out nearly $6 million in advertisement and campaigning. Republican Senator John McCain voiced support for Prop 205, but Republican Governor Doug Ducey openly opposed it. Based on exit polls and surveys, many “no” voters questioned the regulatory environment and the projected tax revenue.
Voters overwhelmingly supported Proposition 64, which allows consumers to carry up to an ounce of pot. An adult can now grow six plants at home and purchase eight grams of concentrate. Fifty-six percent of Californians approved the ballot measure, making marijuana legal for nearly 23 percent of America’s population. Prop 64 also allows licensed stores to sell marijuana, with the state aiming to issue licenses throughout 2017. Legal marijuana means a large and lucrative market is now available to growers, and investors are gearing up to make a significant sum of money. However, state regulations and laws have not been specified and many are waiting for the fine ink to dry before making a large investment.
Voters in Maine approved marijuana legalization by less than one percent—four thousand votes—on November 8. However, because the decision was so narrow, the Maine Secretary of State authorized a recount. The State now plans to recount more than 700,000 votes. If the recount confirms the vote, the initiative will legalize, regulate and tax marijuana, and allow 21-year-olds to purchase and possess up to 2.5 ounces of marijuana, more than twice the legal amount in Oregon and California. Although retail businesses or social clubs aren’t expected to open for another year, legalization for personal cultivation will take effect on December 10. Question 1 also allows non-medical marijuana to be sold by state-licensed and locally-approved businesses. Maine officials say it will take nine months to issue licenses for recreational retailers.
53.6% of voters in Massachusetts approved “Question 4. The initiative calls for legalizing marijuana while regulating it in a manner similar to alcoholic beverages. A commission will be created to regulate marijuana in the state. Marijuana is currently permitted only for medical use in Massachusetts. It is projected to be an economic boon to the entire New England region.
Fifty-four percent of Nevada voters approved recreational marijuana legislation. Question 2 legalizes recreational use, possession, cultivation and sale of marijuana to anyone 21 and over. On January 1, 2017, Nevada residents will legalize the possession of up to 1 ounce of marijuana. Nevada lawmakers must now implement a regulatory framework throughout the next year. All revenue from a 15-percent sales tax on marijuana will go towards regulatory efforts, as well as substance abuse and support education. Regulators will develop licensing procedures, requirements, product testing, packaging, record keeping and revenue collecting procedures.
Four years after rejecting an MMJ initiative, Arkansas approved it this November. Arkansas’s approval of MMJ is a significant indicator that attitudes towards MMJ in the bible belt are changing drastically. With roughly 53 percent of the vote, residents of the Natural State passed medical marijuana usage for 17 medical conditions. Issue 6 prohibits the Arkansas legislature from making marijuana illegal, while placing MMJ under the control of Arkansas’ Alcoholic Beverage Control, and a yet to be created medical marijuana control commission. The state projects roughly $2.5 million in additional annual tax revenue. Ninety percent would go to a vocational training fund and the state’s general revenue fund. The remaining 10 percent allocates to the Alcoholic Beverage Control Administration Division, the Alcoholic Control Enforcement Division, the Medical Marijuana Commission. The amendment stipulates the commission will create eight cultivation facilities and 20-40 dispensary locations. The commission will limit an individual to one dispensary or grow operation, but Issue 6 opponents fear MMJ licenses could turn into a pay-to-play system.
The Sunshine State approved a constitutional amendment with more than 70 percent of the vote, giving Floridians the right to MMJ. Amendment 2 permits MMJ for those suffering from a debilitating illness as determined by a physician. In November 2014, Florida voters supported the initiative with roughly 58 percent support. However, Amendment 2 was an initiation to change a constitutional amendment, which required 60 percent of the vote. To pass in 2016, Amendment 2 had to clear the same hurdles. Amendment 2 also includes several more ailments than the 2014 amendment, including cancer, epilepsy, glaucoma, HIV, PTSD, ALS, Crohn’s disease, Parkinson’s disease and Multiple Sclerosis. Based on various estimates, roughly 450,000 voters may be eligible for MMJ. While the Department of Health will regulate MMJ in one of the largest markets in the country, they have not determined how much enforcement or administration will cost, nor do they have a precise tax revenue figure.
With more than 63 percent of the vote, North Dakota residents approved MMJ for certain debilitating ailments. Measure 5’s approval comes four years after residents rejected a similar proposal. Under the 2016 legislation, Measure 5 makes it legal to possess up to 3 ounces for treatment for roughly a dozen conditions. The North Dakota Department of Health will partner with law enforcement to regulate and enforce violations. The Department of Health is also charged with issuing licenses for distribution facilities and selecting nonprofit organizations that can serve as dispensaries. Under Measure 5, dispensaries will operate under a limited model with 1,000 plants and 3,5000 ounces of “usable” marijuana. According to projections from the North Dakota Legislative Council, the Department of Health could receive up to $4.8 million in revenue from 2017-2019. Though the council said operating expenditures could exceed up to $7.4 million. Government officials believe it will take a year to provide a regulatory framework and issue licenses for distribution.
Voters in Montana approved a mandate that expands an existing MMJ law with 54 percent of the vote. In 2004, voters approved MMJ, but state legislators administered new regulations (SB 423) in 2011 that strictly limited dispensaries and users. Senate Bill 423 restricted medical marijuana advertisements, the amount of users a dispensary served and the number of patients a doctor can recommended marijuana to. The ballot initiative, I-182, removes provider limits on the number of patients a doctor treats, as well as the dispensary requirements. The law also permits grow operations to hire employees for cultivation, dispensing requirements and MMJ transportation. Moreover, the law also prevents law enforcement from conducting unannounced inspections of MMJ facilities.
Danny Restivo and Brett Goldman Contributed to this Report