Posternak Blankstein & Lund LLP is now Arent Fox. Read the press release

Several States May Join the Cannabis Legalization Bandwagon this November

Election Day 2020 is around the corner. Today, cannabis use is legal either for medicinal or adult recreational use (or both) in 35 states.

Of those, adult recreational use is legal in 11 states and Washington, D.C. However, cannabis (“marijuana”) is still a Schedule I drug under the federal Controlled Substances Act, meaning that it is considered by the federal government to be the most addictive kind of drug with no medical benefits. For context, heroin is also a Schedule I drug, while cocaine is classified as Schedule II. In recent years, efforts to legalize cannabis at the federal level have failed, and the Attorney General’s guidance on whether it will prosecute participants in the cannabis industry has swung from eager execution of the “War on Drugs” to the Cole Memorandum’s promise to look the other way, to the current tepid observation of state legalization. Neutral observers and advocates alike believe that it is only a matter of time before cannabis is descheduled, and the federal government is likely taking note as policy evolves among the states. On November 3rd, voters in several states will decide whether to legalize cannabis use within their borders. (Where available, links to the ballot measures are provided below.)

Adult Recreational Use (no prescription required)

Arizona’s ballot measure, “Smart & Safe Arizona,” (which survived a legal challenge) would:

  • Allow adults aged 21 and older to possess up to one ounce of cannabis (with up to five grams of marijuana concentrate), and grow up to six plants at home.
  • Create a market for regulated and taxed sales. Sales would be subject to the state’s sales tax and a 16% excise tax.
  • Allow licensing for about 160 retail stores throughout the state, with the majority of licenses reserved for the pre-existing 130 licensed medical dispensaries. An additional 26 licenses would be reserved for social equity applicants.
  • Allow employers to maintain drug-free workplace policies.
  • Delay rule changes to allow delivery services until January 1, 2023.
  • Create a process for people previously convicted of cannabis crimes to petition for expungement.

Montana has two companion measures on the ballot.

  • Measure I-190 would legalize adult use of cannabis (medical use has been legal since 2004), and subject it to a 20% tax.
  • A companion constitutional amendment, Initiative 118, would amend the state constitution to set the legal age for purchasing, consuming, or possessing cannabis at 21 (the constitution currently defines “adult” as an individual aged 18).

New Jersey’s ballot measure would:

  • Effective January 1, 2021, amend the state constitution to legalize the recreational use of cannabis for adults age 21 and older, as well as the cultivation, processing, and sale of retail cannabis (medical cannabis has been legal in New Jersey since 2010).
  • Prohibit a cannabis-specific excise tax, but subject recreational cannabis to the normal state sales tax, and any additional taxes imposed by local governments.
  • Create an online portal to allow individuals with cannabis convictions (possession charges of up to five pounds) to expedite expungements, and allow certain charges to be downgraded or dismissed.
  • Dedicate at least 25% of licenses to residents of “impact zones” disproportionately impacted by the “War on Drugs.”

South Dakota’s “Constitutional Amendment A” would:

  • Legalize the recreational use, possession, and distribution (up to one ounce) of cannabis for individuals aged 21 and older.
  • Allow local jurisdictions to ban any category of license (e.g., cultivation, testing, retail).
  • Impose a 15% tax on recreational cannabis.
  • Require the state legislature to create a medical cannabis program and legalize the sale of hemp by April 1, 2022.
  • Designate the state Department of Revenue to oversee the program.

Medical Use

Mississippi’s voters will consider two measures, “Initiative 65” and an alternative, “Initiative 65A.” The original measure, proposed by citizen advocates, would:

  • Allow patients with qualifying conditions to use medical cannabis.
  • Limit distribution to licensed medical dispensaries.
  • Create a system to permit caregivers to administer cannabis to debilitated individuals.
  • Designate the Mississippi State Department of Health as the agency responsible for regulation and enforcement.

The alternative measure, proposed by Republican state legislators, would:

  • “Restrict smoking marijuana to terminally ill patients; require pharmaceutical-grade marijuana products and treatment oversight by licensed physicians, nurses, and pharmacists.” To date, there is no standard definition of “pharmaceutical-grade” cannabis.

South Dakota’s “Initiated Measure 26” would:

  • Establish a medical cannabis program for individuals with a physician-certified debilitating medical condition (including minors).
  • Allow patients to possess a maximum of three ounces of cannabis, plus additional cannabis products.
  • Allow non-residents with out-of-state registration to buy and possess medical cannabis.
  • Allow patients to grow three plants at home, and more with a physician’s approval.
  • Designate the state’s Department of Health as the regulatory and enforcement agency.

Cannabis businesses, advocates, policymakers, and consumers will be closely following this year’s election results for several reasons. First, a popular growth strategy for cannabis businesses is to expand by acquiring smaller existing operations in states with new opportunities (e.g., states that previously only allowed medicinal use but now allow recreational sales). More consistent regulation across state lines increases expansion opportunities and can help multistate companies streamline operations. Second, as an increasing number of states legalize the use of cannabis, and data regarding the impacts of legalization become more abundant, federal pressure to deschedule or fully legalize cannabis will continue to grow. Third, as all levels of government consider creative ways to recover from the economic crisis fueled by COVID-19 and this year’s onslaught of natural disasters, tax revenue from cannabis sales may become particularly attractive.

In addition, several measures are pending for 2021 and beyond:

Adult Recreational Use

  • Arkansas, “Arkansas for Cannabis Reform” (missed the 2020 signature deadline due to COVID-19).
  • Florida, “Make it Legal Florida,” (aiming for Nov. 2021).
  • Ohio, “Regulate Marijuana Like Alcohol” (aiming for Nov. 2021).
  • North Dakota, “Legalize ND” (aiming for 2022).
  • Missouri, “Missourians for a New Approach” (aiming for Nov. 2021).
  • Oklahoma, “New Approach PAC” (aiming for Nov. 2021).

Medical Use

  • Idaho, “Idaho Cannabis Coalition” (aiming for 2022).

Contacts

Continue Reading