3 Big Questions Coming Out of the Election

The quality of our lives is often the result of the quality of questions we ask. With over a week to breath since the election, there is no shortage of articles and analysts forecasting what may come for the cannabis industry. Like many of you, we have been reading these articles and listening to the Zoom webinars. Although we may not have the answers to what the future holds, we have questions that are fundamental to the future of the cannabis industry.

1). What does Joe Biden mean by "decriminalization"?

Throughout their presidential campaign, Joe Biden and Kamala Harris have both said they are in favor of decriminalization as a solution to marijuana issues. Unfortunately, this is broad. Neither have defined what decriminalization means to them. Could this mean rescheduling? Could this mean de-scheduling? Could they commute all of the sentences of federal prisoners that have cannabis convictions? There’s a plethora of executive action they can take. After all, the Drug Enforcement Agency is an executive agency that is under the president’s control.

Looking on their past records could be instructive for what might happen in the future. The seminal Cole Memorandum was issued while Joe Biden was Vice President of the United States. Kamala Harris, which we have written about in the past, is a sponsor in the Senate of the MORE Act.

Throwing more fuel on this question, is that the Biden transition team recently released its transition plan on racial equity. There was nothing in it about cannabis policy.

2). Will this create a network effect to bring more states recreational?

This election was historic for cannabis legalization for adult use. Five more states voted to bring cannabis online recreationally. This is something to celebrate. While those states will start doing significant revenue in the coming year, the question remains: who will be next?

What neighboring states, or competing state economies, will look to their neighbors and rivals that are grossing hundreds of millions to billions of dollars in annual revenue and decide to take the plunge?

One state in particular that might create this network effect is New Jersey. New Jersey sits at the economic center of the United States neighboring both New York and Pennsylvania. If New Jersey can lead to unlocking the rest of the tri-state area, the economics of cannabis will multiply significantly. New York, which is hypersensitive about COVID-19 spreading through travel, may actually accelerate its adult use legalization action by its state legislature for fear of the residents traveling to and from New Jersey to buy legal cannabis.

Also, what about Florida? Will other large states persuade Florida's massive economy to bring adult use cannabis to its citizens?

What about Minnesota? Its neighbors South Dakota, Illinois, and Michigan have adult use marijuana legalization. Illinois has yielded over $100 million in tax revenue in 2020 since adult use became legal. Michigan is also enjoying significant revenue. Minnesota is a state with a balance budget amendment and a looming budget deficit. Will it be persuaded by its neighbors and take the plunge?

3). Will Congress be able to pass necessary cannabis reform?

There are a number of things Congress can do today to help the cannabis industry prosper. The Democrats have retained control of the House, and could presumably pass pro cannabis policy on a moments notice. However, the cannabis industry needs the Senate as well, and 67 votes to break a filibuster and pass legislation. The question is do Senate Republicans have the political willpower and the interest to do it?

Will there be bipartisan support in the Senate for pro-cannabis issues? There are five Republican senators representing adult use states (Alaska, South Dakota, Maine). Will they be be a voice in their caucus and advocate to their colleague about pro-cannabis issues? The leading voice in the Republican Senate caucus for cannabis legalization over the last few years had been Cory Gardner from Colorado, who lost his reelection to John Hickenlooper. Who will step in and fill the void that he leaves and the Republican caucus?

Who will win the Georgia runoffs? The answer will determine the balance of power in the Senate. If the Democrats win, a number of pieces of legislation are going to be easier to move that assuage some operating concerns facing the cannabis industry. For example, SAFE banking, which GOP Senate Banking Committee Chairman Mike Crapo has refused to hold any vote on. If the Republicans can win the Senate runoffs in Georgia, Crapo presumably will remain the chair of the Senate banking committee. However; if the Democrats are able to win just one of the seats in Georgia, then the balance of power will shift and there would likely be a more favorable chairman for cannabis issues.