2018 Was a Huge Year for Cannabis

31 Dec 2018 Was a Huge Year for Cannabis

By any measure, cannabis had a banner year in 2018.

We had a blast celebrating all of the big wins for cannabis on this blog this past year. Looking back, it was a monumental year for cannabis reform, both in the United States but also internationally. At this point, it feels like there is no realistic scenario in which prohibition carries the day: Federal legalization of marijuana, at least in the United States, feels like a fait accompli. Below are the ten biggest developments in cannabis law and policy over the past twelve months.

1. California commenced its adult use marketplace.

California is the fifth largest economy in the world. It was the first U.S. state to pass a medical marijuana ballot initiative, back in 1996, and given the interim developments in states like Colorado, Oregon and Washington, adult-use legalization in the Golden State has been a long time coming. There are still a ton of unknowns about California’s cannabis regulations (it also passed a hemp law), but the size, scope and influence of this program on other states—and even other countries—will be staggering. Our Los Angeles and San Francisco cannabis business lawyers will continue to report on these exciting and complex developments every step of the way.

2. Canada legalized marijuana federally.

Canada did it right. Instead of mucking around with local referenda, Canada took charge of the matter by legalizing cannabis nationwide through its federal legislature. This approach should result in more coherent, organized policy on everything from banking to taxation to supply chain structure. The Canadian government is also taking progressive steps that are not feasible in the U.S., like earmarking funds for hospitals and universities to study the effects of legalization. All of this has resulted in an early competitive advantage for Canada, which is well deserved.

3. The U.S. legalized hemp.

This happened just last week, and it was about damn time. Hemp is a cultivar of the cannabis plant that doesn’t get anyone high. Instead, it has a vast array of industrial uses, from textiles to paper to building materials. It also may be used to source cannabidiol (CBD), which now has federally approved medical applications. The U.S. hemp industry generated $820 million in nationwide sales in 2017, and that was well before the recent federal action. By 2022, that number is expected to approach $2 billion.

4. The midterms: Michigan, Utah and Missouri forged ahead.

In the 2018 midterm elections, Michigan voters decisively voted to legalize adult use marijuana statewide, with a 56% approval rate. Michigan is the first midwestern state to fully end prohibition, demonstrating that the will to legalize is not confined to “liberal” western or New England states. In Utah and Missouri, the approval of medical marijuana programs was also big news. In fact, it would have been nearly unthinkable for either state to have taken such action just a few years ago. Given these and other developments, we expect more state dominoes to fall in 2019.

5. State legislatures began looking carefully at legalization.

This is an under-reported but very important development. Historically, state legislatures have lacked the political courage to tackle marijuana legalization (medical or otherwise). Instead, everything was done in “direct democracy” states via ballot initiatives. In January, Vermont broke this barrier, becoming the first state to legalize marijuana use through the legislature. That approach should result in a more orderly roll-out, and give legislators a chance enact policy proactively (i.e., do their jobs), rather reactively (which, in the cannabis context, often means re-writing ballot provisions down the line). Look for the New York, New Jersey, Illinois, Connecticut, Minnesota and New Mexico legislatures to each take a hard look at legalization in 2019.

6. The international community began looking carefully at legalization.

In August, we covered the United Nations’ movement to take a closer look at cannabis prohibition under international law, and the World Health Organization’s (“WHO”) recommendation that CBD no longer be controlled. These developments continued in December, with the WHO declaring that it will make a formal recommendation on the international legal status of cannabis (and not just CBD), next month. Sensible drug policy at the international level will make actions taken in Canada, the U.S. and elsewhere even easier. We are very excited about this overdue development.

7. Civil rights were in focus.

With the never-ending stream of cannabis industry developments, it can be easy to forget that cannabis is also a civil rights issue. In 2018, the federal government cast an inadvertent spotlight on cannabis and civil rights, due to the regressive actions of Jeff Sessions and others. Those actions gave increased momentum to marijuana civil rights legislation, from sweeping federal proposals like Corey Booker’s Marijuana Justice Act, to social equity programs at the state and municipal levels. In 2019, expect discussion around cannabis racial and social equity to continue to amplify, particularly at the federal level.

8. Sessions (and Sessions) got the boot.

When the definitive story of cannabis legalization is finally written, the tenure of Jeff Sessions as U.S. Attorney General will likely go down as the death rattle of prohibition. A footnote to Sessions’ failures will be those of similarly minded legislators, including Pete Sessions, who single-handedly blocked countless marijuana reform efforts until he was ousted from Congress last month. In 2019, discussion around enforcing federal prohibition will be a non-starter for the first time in 50 years. The only question now is how legalization happens.

9. The industry got so much bigger.

Legal marijuana was a $10.4 billion industry in the U.S. in 2018. Looking at the U.S. and Canada combined, investors poured another $10 billion into North American cannabis, or twice the amount invested over the past three years combined. Reflecting this trend, our cannabis business lawyers in Seattle, Portland, San Francisco and Los Angeles were up to their ears in investment deals and new client requests over the past 12 months– more so than at any period going back to 2010. We don’t expect things to slow one bit in 2019.

10. President Trump voiced support for ending marijuana prohibition.

President Trump says a lot of things. He says so many things that his comment of “really” supporting a marijuana bill didn’t make a lot of waves, but he did become the first sitting president to embrace legislation to end federal prohibition. The bill endorsed by Trump is knowns as the STATES Act, and it amends the federal Controlled Substances Act to exempt state-legal marijuana from its parade of horribles. Trump is just one of many prominent national politicians to embrace the end of prohibition. Let’s hope it finally happens in 2019 or 2020.