When my government career pivoted to the legal medical cannabis industry over 10 years ago, I recognized that public acceptance and consumer demand were trending upwards. But I could not have predicted the widespread acceptance we see today. In fact, I vividly remember discussing with my Colorado colleagues in 2010 how we might see the state legalize adult use in our lifetimes. Legalization came to Colorado two short years later in 2012.
Currently, one in three Americans live in a state where cannabis is legal. And in this year’s elections, New Jersey, Arizona, South Dakota, Mississippi, and Montana – predominantly Republican-held states – legalized cannabis use and sale in some form. While those state’s regulators may not personally be proponents of legalization, it is their obligation to serve and protect the will of the electorate. This means addressing a host of concerns ranging from consumer protection to social equity. As someone who had a seat at the table when Colorado – the first state to legalize – established its regulations, I can uniquely offer best practices to these potentially skeptical legislators who are filtering through the noise.
To start, the key to ensuring states can reap the economic benefits of their legal cannabis market is balanced regulation. Striking this balance can be a challenge for those on both ends of the political spectrum, but it’s critical to a strong foundation that keeps consumers safe. Some states, such as Colorado and Massachusetts, have formed new agencies to create these regulations, while others have bolted the regulatory responsibilities onto existing agencies. In most states, these agencies fall under another function of government, such as the department of health or taxation. Where these new agencies are housed will greatly determine their regulatory emphasis going forward. For example, an agency under the department of health might focus more on public information campaigns and laboratory testing, while an agency under law enforcement might focus more on industry monitoring and non-compliant business practices.
Next, lawmakers must map out the licensing process in a way that is equitable for businesses of all sizes and entrepreneurs of all backgrounds. Licensing new or existing cannabis businesses can delay the legal market, especially if there is a tight timeline for legalized sales to being. One of the biggest components of licensing is determining if your state will cap the number of licenses and, if so, what that number is. License caps can impact the state’s ability to stand up an equitable, regulated market and many states with limited licenses have been embroiled in disruptive lawsuits.
It’s also important to ensure the state’s timeline doesn’t overlook licensing approvals at the local level. Local licensing frequently lags behind state licensing because counties and municipalities wait until the state laws and regulations are designed before starting their own licensing process. And requirements such as land use can take months – or longer – to get approved. In short, the decisions lawmakers make around license approvals impact consumer choice, local decision making and where legal cannabis profits flow.
Then, the state must develop its tax scheme. As I have previously written, state governments should strike a balance that doesn’t undermine the legal cannabis marketplace and turn consumers towards the often cheaper, unregulated market. And in addition to how much businesses and consumers will be taxed, state leaders must determine where those new taxes will be spent. In Oklahoma, medical cannabis taxes are reinvested into the state’s Medical Marijuana Authority (OMMA) to fund the agency and excess goes to “common education.” This year, OMMA was able to give $42 million to the state’s education and drug and alcohol treatment programs.
Once the market starts to get underway, these balanced regulatory structures are better equipped to support public safety. This is especially important in light of the 2019 vaping crisis and supporting targeted product recalls. “Having proper testing requirements, thresholds that effectively protect patient safety, and laboratories that can accurately test for contaminants and potency are all vital to efforts aimed at ensuring that the medical marijuana and medical marijuana products available is safe for patients,” said Dr. Kelly Williams, Interim Director, OMMA. “Being able to clearly and accurately associate test results with a specific batch of medical marijuana or medical marijuana product is the key that holds that process together.”
No matter what system is set up in which state, I can say with certainty that things will change. When I served as Director of the Colorado Marijuana Enforcement Division 6 years ago, I saw firsthand why state regulators need the authority and autonomy to revise rules as markets develop. And I have also seen why it’s critical for regulators to be human, learn from their mistakes, and to always make time and space for industry stakeholders to be heard. I look forward to seeing the unique frameworks that each of these states develop and how they can shape new best practices for 2021 and beyond.