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The budding cannabis industry has sparked one of the most dynamic and dramatically evolving areas of law over the last several decades. Within one generation, cannabis has shifted from a vilified substance targeted in the War on Drugs to the driver of state-regulated, billion-dollar markets that provide local communities with steady tax streams. Children who sat through D.A.R.E. classes are now adults with the ability to legally consume cannabis, in some capacity, in nearly 75% of the states. However, cannabis legalization has not been uniform across the country and the current status of cannabis laws and regulations vary greatly from state to state. So, pull that tie dye shirt out of the back of your closet, grab your hacky sack and let’s take a closer look at some interesting developments in cannabis legalization efforts, the current status of cannabis laws, and the future prospects for this burgeoning market in the nine states that Segal McCambridge calls home.
Across the United States, a patchwork of state-level regulations has arisen to regulate the legal cannabis market. In fact, medical marijuana is currently legal in 37 states and recreational use of cannabis is legal in 21 States, as well as Washington D.C. and Guam. State-level cannabis legalization and regulation efforts have originated in the legislature, but more commonly through voter initiatives. In the 2020 elections alone, voters in five states approved all marijuana initiatives on the ballot and endorsed new markets in Arizona, Mississippi, Montana, New Jersey, and South Dakota. The 2022 midterms saw voters in Maryland and Missouri legalize the recreational use of marijuana. Further, a referendum in Oklahoma on recreational marijuana will be the subject of a special election in March 2023 and recreational sales will become legal in Maryland on July 1, 2023. By the end of this year, it is probable that 24 of the 50 states will have laws on the books regulating the recreational use of cannabis.
However, cannabis remains illegal at the federal level, which understandably creates a litany of problems for the cannabis industry. One of these issues is the lack of continuity across the markets that comprise the overall cannabis industry. The laws enacted by the various states are wide-ranging, inconsistent from state-to-state, and easy to inadvertently run afoul of.
Within the states that have legalized recreational cannabis use, there are divergent regulations as to how that marijuana can be cultivated and purchased. Some states allow residents to grow their own cannabis at home, but the number of plants an individual is permitted to grow varies within these states. Other states allow cannabis to be obtained only from licensed dispensaries, but even among such states, the amount that can be legally purchased and/or possessed at one time varies. Further, the regulations regarding THC potency in products are as varied between the legalized states as the regulations enacted to collect taxes from this growing market. Not surprisingly, the process to obtain a license is not uniform across the legalized states either. Accordingly, assisting an applicant seeking a cannabis license requires expertise and specific knowledge of that market.
If there is any consistency from state to state, it is that violating any state’s cannabis provisions, whether intentional or not, will lead to severe penalties that may include forfeiture of cannabis business licenses, fines, or even jail time. For these reasons, when advising a cannabis client, it is critical that you take into account all of the nuances of that particular market.
If all of this talk about laws and regulations is harshing your vibe, you may find yourself reaching for some cannabis to take the edge off. However, before you dust off that Grateful Dead album and throw some pizza rolls in the air fryer, it is important to know if partaking is legal where you are.
The lack of consistency across cannabis legalization efforts is remarkable, even just within the nine states that Segal McCambridge calls home. Not only does this inconsistency make it difficult for businesses to operate, but the patchwork of laws can also lead to residents of one legalized state accidentally violating laws when visiting a neighboring legalized state, who may not be as chill as that regional tourist thought.
Great Lakes neighbors Illinois and Michigan are illustrative of this issue. Since January 2020, it has been legal for Illinois residents over 21 to possess 30 grams of cannabis flower and 5 grams of concentrated cannabis; however, adults who are not Illinois residents can only possess half those amounts while in the state. Conversely, in Michigan, where recreational cannabis has been legal since 2018, both residents and non-residents alike who are over 21 may possess up to 2.5 ounces of cannabis flower and 15 grams of concentrate. In Michigan, individuals are permitted to grow up to 12 plants in a household, but this should not be attempted in Illinois where recreational users are forced to purchase their product from licensed dispensaries and growing 12 plants at home can result in a felony conviction, punishable by up to three years in prison and a $25,000 fine (medical users in Illinois can grow up to 5 plants with a doctor’s prescription).
New Jersey and New York legalized recreational cannabis in 2020 and 2021, respectively. Legalization of recreational marijuana was met with much fanfare in New York City, in particular, where the state and city laws make cannabis pioneers like California and Colorado seem downright conservative. While most states prohibit the consumption of marijuana in public, New York permits cannabis consumption almost everywhere it’s legal to consume tobacco. These laws have not been without controversy. Since the endorsement of recreational cannabis, the pungent smell of marijuana has been notoriously pervasive throughout the five boroughs. Some city dwellers decry this olfactory assault, yet others welcome the sweet scent of sativa as an appreciated reprieve from the Big Apple’s occasionally odious stench.
Legalization of recreational cannabis in New Jersey and New York has also been met with acclaim from businesses in the industry, with lofty predictions of a modern-day gold rush. Some industry insiders project that New Jersey’s recreational marijuana sales will ramp up from $625 million to $775 million in 2022 to more than $2 billion a year by 2025 or 2026. Similarly, New York’s adult-use retailers are projected to generate $1 billion to $1.2 billion in sales this year, eventually growing to $2.2 billion to $2.7 billion by 2026.
Florida and Pennsylvania both legalized medical marijuana in 2016, with Missouri following shortly behind in 2018. At the recent midterm elections, Missourians headed to the polls and passed “Amendment 3,” which amended the Missouri constitution to legalize and regulate recreational marijuana cultivation and sales. Adults in Missouri have been able to legally possess marijuana for recreational purposes since December 8, 2022, but sales at state-approved dispensaries will not begin until February, at the earliest, according to the state’s Department of Health and Senior Services.
While the legalization and regulation of recreational cannabis was not on the ballot in Pennsylvania in 2022, the results of that election will have major implications for marijuana reform in the state. Specifically, Pennsylvania Democrats won control of the House and recently elected Democratic Governor, Josh Shapiro, supports legalization. Conversely, the Republican nominee for Governor, Doug Mastriano, who has retained his position as State Senator, does not support legalization. Yet, there are several Republican Senators in office, including Mike Regan and Dan Laughlin, who have pushed for legalization. Following the 2022 election, it is the hope of cannabis advocates that the newly Democratic House can partner with Governor Shapiro to push for legalization in the 2023 session and persuade detractors in the Senate to not stand in the way of a reform that political polls show is broadly supported by the state’s voters.
Florida also appears to be trending towards legalization of recreational cannabis use. A bill to legalize and regulate adult recreational cannabis use was introduced to the legislature in early 2022, but this bill died in subcommittee. Later, cannabis advocates sought to place “The Florida Marijuana Legalization Initiative” on the ballot for the 2022 midterms, but on June 17, 2021, the Florida Supreme Court ruled 5-2 that the measure’s ballot language was misleading and therefore could not appear on the ballot. Despite these setbacks, another constitutional amendment petition has been launched in an attempt to put adult-use cannabis legalization directly to Florida voters in 2024 and the general consensus from industry insiders and laypeople alike within Florida is that recreational cannabis legalization is on the horizon, whether through legislative action or as a result of a ballot initiative in the 2024 election.
Those of us in Indiana and Texas are best advised to heed Nancy Reagan’s advice and “just say no.” In Indiana, the legislative branch has been evaluating the prospects of legalizing cannabis for about four years, but recent testimony in a legislative study committee was conflicting and did not indicate that Indiana has moved any closer to legalization. In fact, in 2022 alone, over a dozen cannabis-related bills were introduced in the legislative session, but none advanced out of committee. Further, Governor Holcomb has repeatedly said that he will wait for federal law to change before supporting legalization. At this time, those in Indiana who are interested in indica may want to consider a weekend trip to a neighboring state.
In Texas, medical marijuana has technically been legal since 2013. Under the Compassionate Use Program, patients can get low-THC cannabis if the patient has one of the required medical conditions and a registered physician prescribes it. This program defines “low-THC” as cannabis product that contains no more than 0.5% THC and medical use is limited to swallowing – not smoking – the prescribed dose of low-THC[1]. While Texas’ Compassionate Use Program is quite restrictive, the sands appear to slowly be shifting in the Lone Star State. According to a poll by UT Tyler and The Dallas Morning News, 51% of Texans want legal recreational cannabis use and 67% support medical marijuana. An even more recent poll conducted by the University of Texas/Texas Politics Project reports that 55% of Texans believe cannabis possession should be legal for any purpose either in any amount or small amounts.
As with other states, the recent election had a significant effect on cannabis legalization in Texas. Five Texas cities decriminalized possession of marijuana in the 2022 election, but in Harker Heights, the City Council voted to repeal the decriminalization initiative just weeks after it was approved. Since then, Texas activists have turned in more than enough signatures to put a local measure on the May 2023 ballot to overturn lawmakers’ repeal of a voter-approved marijuana decriminalization initiative. Similarly, San Antonio, the second largest Texas city by population, could get the chance to locally decriminalize marijuana in May 2023 after activists announced in October that they were launching a signature drive for ballot placement.
In the 2022 race for Texas Agriculture Commissioner, access to marijuana was a key issue. Democratic challenger, Susan Hays, supported the full legalization of recreational cannabis use, but was ultimately unsuccessful in her campaign. Republican incumbent, Sid Miller, defeated Ms. Hays, but even he agrees that the state’s medical marijuana laws should be expanded. Texas lawmakers are expected to consider changing the current marijuana laws when the Legislature meets early this year, but there are no major changes to Texas law anticipated within the immediate future.
The landscape of cannabis legislation in the United States is ever-changing, and while it appears that the nation is trending towards broader legalization, there is never certainty in this area of law. However, one thing is clear: the realm of cannabis law will continue to be an evolving and dynamic area of study that will require skillful attorneys to help shape future laws and competent counselors to assist individuals who are interested in exploring these new frontiers.
Notably absent from this state-by-state review of cannabis laws is the federal position on cannabis legalization. Cannabis is still prohibited at the federal level. The interplay between state legalization and federal prohibition has inspired raucous debate between constitutional scholars and couch-locked slackers alike, and will surely continue to do so for the foreseeable future. In the next blog, the federal government position on cannabis will be explored, including the affects this position has on the legalized industry.
[1] Despite this provision, Texas is generally not considered to have legalized medical cannabis use, with some advocates arguing that you have a better shot at getting drunk from O'Douls than feeling the effects of 0.5% THC cannabis products. As a point of reference, sales in Illinois are taxed based on how much THC the marijuana contains: cannabis with more than 35% THC will be taxed at 25% while cannabis with less THC will be taxed at 10%.
