Coming into 2020, policymakers in eight states expressed support for regulated medical or adult-use cannabis sales, and advocacy groups in nine states had efforts underway to include legalization on ballots in November. With cannabis already legal for medical use in 33 states; legal for medical and adult-use in 11 states; and more members of Congress – even those who previously opposed legalization – now supporting cannabis policy, state legalization agendas were moving quickly. But what was set to be a banner year for the cannabis industry has been slowed down by COVID-19. Nevertheless, COVID-19 has shown legal, regulated marijuana’s place as an “essential business,” even if state legislative activity may not come until 2021 or later.
COVID-19 has shortened and reprioritized many states’ legislative sessions, eliminating time to hammer out crucial details of cannabis legalization laws, such as establishing a robust tax structure and ensuring compliance to decrease the illicit market. Already, at least five state legislatures considering legalizing cannabis in 2020 – such as New York – are expressing doubts they still can this year. In Arkansas, North Dakota, Missouri, Oklahoma, Idaho, and Nebraska advocacy groups had to pause efforts to gather ballot signatures due to social distancing rules. In Montana, a county district judge even ruled against using e-signatures in place of in-person signing. Additionally, cannabis legalization measures tend to appear on ballots during presidential election years – when voter turnout is higher – leaving legalization by vote efforts to 2024.
The effects of the coronavirus pandemic cut both ways for the cannabis industry. Some businesses are cutting jobs, selling operations, are unable to remain open or are have constrained by social distancing rules, and are eligible for federal stimulus funds. Other cannabis businesses are resilient and have hired thousands of new employees across a half dozen states since the coronavirus began. In March, weekly sales topped $134 million in California, Washington, Nevada, and Colorado, a 17% increase from the weekly average in 2019. And Metrc’s track-and-trace data shows an almost 75% increase in system bandwidth usage since October 2019.
Despite facing setbacks in the face of COVID-19, the cannabis industry still has economic potential for states looking to increase revenues and create news to pad budget shortfalls projected to reach $350 billion in 2021. While cannabis tax revenue would not cover all losses, it would help states build revenue in the coming years. For example, Colorado has raked in over $1.2 billion in legal cannabis revenue since 2014 and California’s legal cannabis market generated $635 million in state and local tax revenues in 2019.
Still, states should be careful not to rush in. After serving almost 20 years in law enforcement and as the Director of Colorado’s Marijuana Enforcement Division during legalization, I know firsthand that new legislation and regulation should not be taken lightly – no matter how dire a state’s economic circumstances. Creating an entirely new, regulated industry – one that merges agriculture, manufacturing, retail, the environment, public health, and social justice – takes time, careful planning, and adequate resources. When states are ready to usher in a robust, legal cannabis market, it’s important to be patient to get the details right. State legislators, regulators, cannabis businesses, and public interest groups should take advantage of this unprecedented “layover” period COVID-19 has created to start planning these details collaboratively.
This article first appeared in Forbes on May 20, 2020.