33 to 40 states and the District have legalized the use of marijuana for medicinal and/or recreational use by either formally or informally de‐criminalizing its use. However, marijuana remains a Schedule 1 drug under the Federal Controlled Substances Act (21 U.S.C. Sections 801 through 812), leaving federal law in conflict with the laws of over half of the states. As a result, market participants in legal marijuana businesses face risks due to the industry’s unique legal status within the United States. We examine the risks and challenges deemed by the marijuana industry as the top risks facing the industry’s continued future growth and its sustainability. In addition to general risks inherent in a nascent industry, a legal marijuana business faces additional risks, such as risks in its banking and finance activity, placement of insurance, payment of taxes, and managing its supply chain. These legal businesses also face true legal risk from the possibility of being shut down by the federal government and seizure of assets and product under the CSA. This paper also examines whether the marijuana industry would benefit from a futures market to mitigate price risk.
California voters passed Proposition 215 in 1996, making the Golden State the first in the union to allow for the medical use of marijuana. Since then, 33 to 40 more states, the District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands have enacted similar laws.
As of June 25, 2019, 14 states and territories have approved adult-use marijuana. As of Jan. 22, 2018, the Vermont legislature passed adult-use legalization legislation and the governor signed the bill. The measure does not set up a regulatory system for sales or production. See the text of the measure below.
A total of 33 states, District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands have approved comprehensive, publicly available medical marijuana/cannabis programs. (See Table 1 below for more info.) Approved efforts in 13 states allow use of “low THC, high cannabidiol (CBD)” products for medical reasons in limited situations or as a legal defense. See on PDF below for more information about those programs. Low-THC programs are not counted as comprehensive medical marijuana programs. NCSL uses criteria similar to other organizations tracking this issue to determine if a program is “comprehensive”:
1. Protection from criminal penalties for using marijuana for a medical purpose.
2. Access to marijuana through home cultivation, dispensaries or some other system that is likely to be implemented.
3. It allows a variety of strains or products, including those with more than “low THC.”
4. It allows either smoking or vaporization of some kind of marijuana products, plant material or extract.
5. Is not a limited trial program. (South Dakota and Nebraska have limited, trial programs that are not open to the public.)
Marijuana now has its own legitimate industry. State prohibitions have been falling like dominoes, making way for marijuana businesses and entrepreneurs to reap huge profits in a fresh field. However, while these pioneers know a lot about their product, they often lack the marketing knowledge necessary to expand their customer base. Branding is crucial in any business, but especially in the marijuana business. A new consumer base wants to try marijuana for the first time, and companies that stand out amid the sea of ubiquitous “High Times” ads will get their attention. A strong brand has the perfect opportunity to build trust and gain loyal customers. But building a marijuana brand requires more than just doing something different. It carries challenges other industries don’t have to worry about. Digital platforms (specifically advertisers) are reluctant to work with marijuana because of legal uncertainty and social stigma. Many of these platforms operate at a national level, and any media dollars exchanged are typically regulated nationally. Social acceptance of the industry is still not completely widespread, either — many platforms fear backlash from current or future clients.
As soon as you walk into a marijuana dispensary – whether it be a recreational or medical one – more often than not you are greeted by a jubilant, friendly, welcoming (and possibly stoned) employee. Known officially within the industry as “budtenders,” these individuals maintain the massive responsibility of having to know, well, pretty much everything there is to know about marijuana. Budtenders are the people who will (hopefully) be able to recommend the best marijuana strains for your personal tastes, and even for your medical necessities. They act in a lot of ways like a bartender (duh..), recommending various weed types and letting you sample (smell) some of the herb that’s available. Considering how each and every marijuana strain is a little different (and frankly sometimes there are just too many to keep up with), the role of budtender is actually critically important insofar that it keeps customers and patients from becoming too overwhelmed by the number of choices that are available. It is the budtender’s job to keep up with all the latest strains in stock – as well as their prices – and relay this ‘reefer rendezvous’ over to you, the customer. If you already know a lot about various ganja strains, concentrates, edibles, marijuana oils, and their effects, you may be well on your way to becoming a qualified budtender. And believe us – the U.S. industry is going to be jonesing for some top-notch budtenders as the market continues to gather steam in the years to come. How to get a job as a marijuana budtender Realistically, the ability to land a decent budtender job at a reputable dispensary will probably depend on the connections you have in the industry. In other words, who you know. It sounds unfair, but the simple fact of the matter is that cannabis is a very new marketplace, and there are simply no established “prerequisites” for securing a career in the industry. There are numerous schools and online marijuana certification programs that are designed to beef up your resume, but these are very expensive, and may or may not help to actually increase your chances of getting a job. Your best bet is to visit some dispensaries in-person, talk to managers, and basically just show everyone that you know your stuff when it comes to marijuana. Also, there are fantastic free and open networking collective (420 business collectives) in many major urban areas throughout the U.S., so it would definitely be advised to hit some of these up in an effort to start making quality industry connections.
Americans have been changing their minds about marijuana. In 1969, only 12% supported legalizing cannabis use; today, that figure is well over 60%. Support has trended steeply upward since 2000, reaching a majority for the first time in 2013, one year after Colorado and Washington voters approved ballot initiatives legalizing the sale of cannabis for use by any adult (as opposed to sale only with a medical recommendation). Support isn't growing only among Democrats and independents: In 2017, for the first time, a slim majority of Republicans supported legalizing marijuana. Despite these shifts, cannabis continues to be illegal at the federal level, and the arguments about that have not changed much in recent years. The case typically offered in favor of some kind of national legalization is that marijuana is relatively low-risk and, for many users, a source of harmless pleasure. Proponents of legalization further argue that illicit drug markets pose greater risks than do their legal, regulated counterparts, and that law-enforcement actions meant to curtail the production, sale, possession, or use of marijuana have racially disparate effects even when they're not subjectively racially motivated. Meanwhile, a common case against nationwide legalization is that it could greatly increase the prevalence of Cannabis Use Disorder and the use of cannabis by minors, especially if marijuana were to be commercialized on terms similar to alcohol. ("Regulate cannabis like wine" is among the slogans of the legalization movement, and most of the state-level legalization measures so far are variations on the alcoholic-beverage control system.) Others argue that we simply don't know enough about marijuana's potential risks to justify legalizing it nationwide. All these arguments, however, miss two crucial points. First, as a practical matter, cannabis prohibition is no longer enforceable. The black market is too large to successfully repress. The choice we now face is not whether to make cannabis available, but whether its production and use should be legal and overt or illegal and at least somewhat covert. Second, because cannabis is compact and therefore easy to smuggle, a state-by-state solution is unworkable in the long run. States with tighter restrictions or higher taxes on marijuana will be flooded with products from states with looser restrictions and lower taxes. The serious question is not whether to legalize cannabis, but how. Of course, if cannabis were in fact "natural, harmless, and non-addictive," as some proponents of legalization describe it, we would not need to worry much about protecting people from it. But it is increasingly clear that this is not the case, and a national strategy for regulation seems more likely to protect public health than a state-by-state process. While the fact that cannabis can indeed be harmful might seem to bolster the case for continued prohibition, the prospects for reversing current trends — of putting the genie back in the bottle by effectively re-prohibiting cannabis — are remote, for operational reasons as well as political ones. John Kenneth Galbraith once said that politics consists in choosing between the disastrous and the unpalatable. The case of cannabis, an illicit market with sales of almost $50 billion per year, and half a million annual arrests, is fairly disastrous and unlikely to get better. The unpalatable solution is clear: Congress should proceed at once to legalize the sale of cannabis — at least in states that choose to make it legal under state law — for recreational as well as "medical" use.