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Marijuana legalization wins in Maryland and Missouri, but industry loses elsewhere
Marijuana legalization’s yearslong winning streak finally stopped at a red wall in conservative states in the South and West, but the 2022 election did bring victories in Maryland and Missouri that together could generate nearly $2 billion in adult-use sales within a few years.
Voters in Maryland approved the 20th adult-use market, one that is projected to generate as much as $600 million in its first year and up to $1 billion by year four.
In Missouri, recreational marijuana was too close to call for much of the election but was declared victorious early Wednesday by major news outlets, winning by about 6 percentage points.
First-year sales of an adult-use marijuana market in Missouri could reach up to $550 million, according to MJBizDaily estimates, with fourth-year sales projected to be $800 million-$900 million.
Elsewhere, recreational legalization measures in Arkansas as well as in North Dakota and South Dakota were defeated, despite a more ambitious measure in South Dakota winning in 2020.
The Maryland and Missouri wins were welcome news for a cannabis industry that navigated a difficult year of shrinking capital markets, falling prices and continued stalemate at the federal level.
“With today’s vote, the industry continues its upward growth trajectory, and the pathway to federal legalization gains momentum as more states pass adult-use cannabis policies,” said Matt Hawkins, the founder and managing principal of private equity fund Entourage Effect Capital.
Green wave, no ‘red tsunami’
Though Republicans appear poised to take control of the House of Representatives, Senate Majority Leader Chuck Schumer – who has vowed to legalize marijuana federally – might yet maintain control of his chamber. Whether Kentucky Republican Mitch McConnell remains Senate Minority Leader or replaces Schumer might not be known until December.
By Wednesday morning, the Senate was tilting toward the Democrats thanks to Pennsylvania, where Lt. Gov. John Fetterman – an avowed legalization supporter – beat Republican challenger Mehmet Oz.
Fetterman declared victory shortly before 1 a.m. ET Wednesday.
The picture was murkier elsewhere. In Georgia, where Democratic Sen. Raphael Warnock and challenger Herschel Walker were stalemated, a top state election official said early Wednesday a runoff election was a near-certainty.
In cannabis-friendly Nevada, Republican challenger Adam Laxalt, a former secretary of state involved in industry licensing, was leading Sen. Catherine Cortez Masto.
Next door in Arizona, where the industry also has a strong footprint, Democratic Sen. Mark Kelly was ahead of Republican challenger Blake Masters.
With Fetterman elected, Republicans would need to win two of the three for Democrats to lose control of the Senate.
With no party close to the 60-vote threshold required to advance contentious legislation, that means the fate of federal reform, including banking and taxes as well as the rescheduling process President Joe Biden launched in October, remains uncertain.
But with adult-use cannabis now a winning policy in at least 21 states – a decade after Colorado and Washington became the first two – advocates and cannabis-industry boosters declared the 2022 election a win regardless.
“This was yet another historic election year for the cannabis policy reform movement,” said Brian Vicente, founding partner of Denver-based Vicente Sederberg, a prominent marijuana law firm.
“The new business opportunities, job creation and tax revenue that accompany these news laws could not come at a better time, as states work to make up ground lost to the ongoing coronavirus pandemic,” he added.
“This past decade, the movement to end cannabis prohibition has made historic strides forward every couple years – 2022 was no exception.”
Maryland
As widely expected, Maryland became the 20th state to approve adult-use marijuana legalization, though the law allowing adults to possess 1.5 ounces of cannabis goes into effect first, on July 1, 2023.
Retail sales aren’t likely to begin until 2024 or 2025.
Nevertheless, the state heartily embraced legalization. Almost two-thirds of Maryland voters approved the measure.
Maryland’s measure also featured social equity provisions not seen in other states also voting on marijuana legalization in this election.
“The passage of Question 4 is a huge victory for criminal justice reform and racial justice in Maryland,” said Olivia Naugle, senior policy analyst at the Marijuana Policy Project, which endorsed the measure.
She vowed to lobby state lawmakers between now and when the law takes effect to “ensure that the implementation of legalization is centered around equity.”
The decisive victory in Maryland seems sure to also echo loudly in nearby Washington DC.
Federal lawmakers – unless they commute from Delaware or Pennsylvania – now live and work in areas that have fully legalized adult-use cannabis.
Missouri
Tuesday ended with a nail-biter for legalization advocates and the cannabis industry in Missouri, but major news outlets eventually declared the adult-use ballot initiative a winner.
“This enormous step forward for criminal justice reform will result in hundreds of thousands of Missourians having their records cleared, at no cost to them, for an activity that is now legal,” said John Payne, the campaign director for Legal Mo 22.
“Missouri will see millions in new revenue pour in each year for veterans’ health care, drug treatment and our severely underfunded public defender’s office.”
“Today’s vote immediately puts an end to nearly 20,000 arrests each year for minor marijuana violations, freeing up vital law enforcement resources to fight serious and violent crime,” he added.
Payne and other national advocates who supported the measure and celebrated the victory will have to win over critics, including the state Democratic Party, which declined to endorse the initiative.
The state chapter of the NAACP opposed the measure.
Both said the amendment was too industry-friendly and failed to include social equity provisions.
A late spending surge might have helped supporters, who reported raising $7.7 million – including $1.4 million in the final month of the campaign.
And the measure does automatically expunge some past cannabis-related offenses.
Industry-funded push fails in Arkansas
Detractors will point out that legalization won in “only” two out of five states in this election. And the marijuana industry might be reassessing electoral strategy after an expensive gamble in Arkansas failed.
Despite raising a record $13.3 million in campaign contributions – nearly all of it from existing medical marijuana license holders, several of which contributed millions – a controversial industry-friendly legalization measure in Arkansas lost, with 56.2% of voters opposed, as of results Wednesday.
Issue No. 4 was deliberately written to appeal to conservative voters in the deep-red Bible Belt state.
But even dedicating a funding stream to police failed to appease influential conservative voices such as Republican U.S. Sen. Tom Cotton and Gov.-elect Sarah Huckabee Sanders, both of whom opposed the measure and linked legal cannabis to rising crime.
The measure’s preferential treatment to existing license holders – including the state’s eight existing licensed medical marijuana cultivators – also earned opposition from erstwhile legalization advocates.
North, South Dakota fall short
With 94% of precincts reporting, North Dakota’s Statutory Measure 2 was trailing, with 55% of voters opposed and 45% in favor.
And in a reversal from 2020, when state voters approved a measure that would have legalized an industry that was later tossed out after a court challenge – voters in South Dakota rejected a measure that would have legalized home grow and personal possession.
That measure, Initiated Measure 27, was losing 54% to 46% with 66.2% of precincts reporting.
Bipartisan showing
However, the win in Missouri, coupled with city-level wins for decriminalization measures in Texas, confirmed for industry advocates what they already knew: Legalization remains a bipartisan winner.
“Tonight we see once again that voters in both red and blue America agree that it’s time to enact sensible cannabis laws that replace prohibition with regulations that protect public health and safety while fostering a vibrant small business sector that can create jobs and new tax revenue for their communities,” said Aaron Smith, executive director of the National Cannabis Industry Association.
“It’s disappointing to see the current results in Arkansas and the Dakotas, but it’s also a reminder that we still have a lot of work to do before marijuana prohibition is a relic of the past and that our industry needs to make investment in these state-level reforms a priority.”
Source: https://mjbizdaily.com/us-marijuana-election-wins-maryland-missouri-but-losses-elsewhere/