Voters in seven states will weigh in on 36 different cannabis proposals Tuesday, everything from the legalization of medical and recreational use to the definition of hemp to the tax on cannabis sales. All of these initiatives have the potential to change how cannabis is produced, sold and used. But there’s more than just those cannabis-specific questions that could change the marijuana landscape after the midterms. Newly elected officials will have the power to set or change state policies. Here’s a look at how election results could impact the industry.
Prohibition easing: In January, Vermont became the first state to pass legalization through its legislature (instead of ballot initiative). Although he vetoed the Democratic controlled legislature’s first bill, Vermont’s Republican governor reluctantly signed a second, veto-proof attempt. More and more Democrats — including those running for Senate, governor, state legislature and city council — are including cannabis legalization in their pitch to voters at both the state and federal levels. That means the more of those candidate that get elected, the better the chance that legalization legislation follows. In state legislatures today, Republicans control 65 legislative chambers, compared to 31 for the Democrats. The nonpartisan Governing magazine estimates 17 state legislatures could flip on Tuesday, including 11 that currently are held by Republicans. Flipping those bodies probably will make it easier to pass legislation further opening those states to the growing cannabis industry.
Less federal harassment: Earlier this year, Attorney General Jeff Sessions rescinded Obama-era policies discouraging enforcement of federal marijuana laws in states that had legalized cannabis. Sessions, who equated legal dispensaries with “criminal organizations,” told U.S. attorneys they were free to prosecute drug cases against state-legal cannabis use. The move created uncertainty and fear among businesses and medical cannabis users alike. Electing more cannabis friendly officials will make it politically awkward for individual prosecutors in those states to pursue users and legally-operating businesses.
Criminal justice reform: Despite cannabis usage being almost equal, African-Americans are anywhere from nearly four to six times more likely to be incarcerated for possession than whites. In four states (Mississippi, Alabama, South Dakota and Louisiana) a possession of marijuana charge can garner a mandatory, life-without-parole sentence. Politicians from Minnesota to Texas are prioritizing sentencing reform, science-based laws and complete cannabis decriminalization. In North Dakota, Measure 3 would legalize cannabis — and expunge the records of people previously convicted of those now-legal drug laws. Michigan’s recreational legalization proposal would retroactively make marijuana possession convictions “civil infractions.” Even Arizona, a state with some of the most stringent penalties, is considering decriminalizing cannabis, although there’s some question whether its ultra-conservative governor will sign any legislation.
Destigmatization: Cannabis is a Schedule 1 drug according to the Drug Enforcement Agency, which equates it with heroin, LSD and methamphetamine. But Tuesday, two dispensary proprietors in Washington State could become the first cannabis selling politicians elected to office. One pundit called it shattering the “grass ceiling.” Today, more than 60% of Americans live in a state that has some form of legal cannabis. After the election, that number could be even higher. Even a deep red state like Utah is expected to legalize medical cannabis. And some polls have recreational cannabis holding a tiny advantage in North Dakota. As the numbers climb, and as more Americans begin to use legal cannabis, the outdated stereotypes and stigmas surrounding it will disappear.
Standardization of regulations: Medical cannabis is legal in 31 states and recreational use is legal in nine. And every jurisdiction has its own rules and regulations. Tuesday, for example, voters in 17 different Wisconsin jurisdictions will be weighing in on questions including, whether cannabis should be regulated like prescription drugs, taxed, used to support education or infrastructure or regulated like alcohol. Missouri has three different, contradictory proposals to legalize medical cannabis on its ballot. It’s a dizzying mess, filled with contradictory laws and murky enforcement. As more cannabis friendly politicians are elected at the federal level, Congress may be forced to take up legalization of cannabis, or at least find ways to limit federal enforcement of existing cannabis laws. At the very least, it will be more likely to pass a coherent set of regulations around the production, distribution and use of legal cannabis.
Tax reform: Right now, because cannabis is illegal at the federal level, cannabusinesses are unable to utilize tax deductions, including for employee wages, technology, accounting and rent, that are meant to help small businesses. That means they can pay an effective tax rate of 70% to 90% of their profits. Other businesses expect an effective tax rate of roughly 30%. Tax code 280e was designed to attack illegal drug trafficking, but it’s being used by the feds to strangle state-legal businesses. U.S. Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA), co-sponsored a bill that would provide the cannabis industry with a raft of safeguards, including removing it from 280e, improving banking access and preventing federal enforcement of cannabis laws in states which have legalized it. A Nevada candidate for governor also is calling for banking access for cannabis businesses.
While Tuesday’s election is going to be consequential on many levels, for those in the cannabis industry (and those who use cannabis, it come be a real game changer.