Saturday, January 29

Legal recreational marijuana had a big victory during the elections

(CNN Business) — There is still a lot of uncertainty about the 2020 elections in the United States, but one thing is clear: recreational marijuana had a great night at the polls.

Voters in Arizona, Montana, New Jersey, and South Dakota authorized the use of cannabis for adults. Thus, the total number of states that approved it for that purpose increases to 15.

“It was overwhelmingly approved, it wasn’t close races,” said John Hudak, a cannabis policy expert and deputy director of the Brookings Institution. “This is a resounding victory for cannabis,” he opined.

Most industry estimates consider Arizona and New Jersey to be multi-billion dollar markets in a few years. Companies like Curaleaf Holdings and Scotts Miracle-Gro have been making chess moves long before Tuesday’s election to ensure their capitalization.

Curaleaf, which operates cannabis businesses in 23 states, invested heavily to increase production and its retail presence in both states, said Joe Bayern, president of the company.

Scotts, known for its plant and garden business, invested heavily in recent years in acquiring companies in the hydroponic sector. This is a soilless gardening process popular with cannabis growers of all sizes. Scotts contributed $ 800,000 to efforts to legalize recreational cannabis in New Jersey, according to state election financial records.

“With New Jersey, we are not just looking in the context of New Jersey, but the entire Northeast Corridor,” said Jim King, Scotts executive vice president of corporate affairs, in an interview with CNN Business.

‘New Jersey surrounded’

Industry members and analysts say New Jersey is likely to unleash a ripple effect of legalization measures in the Northeast, especially in New York and Pennsylvania.

And if those dominoes fall, that’s good for Illinois-based Cresco Labs. The company has marijuana cultivation, production and retail operations in Massachusetts. And also in states where medical marijuana is legal like New York and Pennsylvania, Cresco CEO Charlie Bachtell said.

Cresco has taken an operational approach to anchoring its businesses – Sunnyside grow centers, production facilities and dispensaries – in “well-regulated areas that are supported by large populations.”

“We have New Jersey surrounded,” Bachtell said.

Bachtell also expressed optimism that state measures will influence the federal landscape.

“With every new state that passes or adopts an adult cannabis use law, you have to think that there are now two more senators in the city of Washington representing states that have adult cannabis laws,” Bachtell said.

Bethany Gomez, CEO of the Brightfield Group, a market research and analysis company that specializes in the cannabis industry, projects that the US recreational and medical cannabis industry will see $ 19 billion in sales this year. It also predicts that it will grow to $ 24 billion in 2021. And that, with this week’s additions and possible new additions like New York, it will reach $ 45 billion in sales by 2025.

The obstacles facing the marijuana industry

However, the industry faces obstacles at the federal level.

A Senate led by Republican Mitch McConnell means legislative measures on marijuana will not go forward, especially under a Biden administration.

“Mitch McConnell is a human ‘no’ machine,” Hudak said. This is something he just doesn’t like. He does not see the political benefits, “he said.

That is bad for the industry. Its members say it is urgent to address regulatory loopholes that are key for companies operating within state legal systems but trading an illegal product at the federal level. Cannabis companies say they cannot easily bank or obtain traditional financing. This is because they are subject to a tax law from the 1980s written to punish drug traffickers. They say they have a hard time insuring their businesses and don’t qualify for federal disaster aid.

“That’s a big, stinking problem when 1 million acres of the Emerald Triangle caught fire,” said Tiffany Devitt, head of government and consumer affairs for CannaCraft, which is based in Sonoma County, California. The company makes around 200 cannabis products from brands like Care By Design, Hi-Fi Hops, and AbsoluteXtracts. Devitt was referring to a major cannabis-producing region in Northern California that has been hit hard by the recent wildfires in the state.

Reasons for optimism

However, there is reason to be optimistic, Devitt said. And he noted the possible parallels to the end of alcohol prohibition and the desire to stimulate economic growth during the Great Depression.

“A similar trajectory could be observed in the case of cannabis, where the economic problems we face as a country are making people realize the fact that the cannabis industry can, in fact, be a benefit to the community as a whole from a labor point of view, “he said.

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