It seems that every election that happens is “the most important election of our lifetimes”, and this year’s midterm races were no exception. With many voters laser-focused on the contentious issues of abortion access, inflation, election integrity, and crime and safety, cannabis took a back seat in the minds of many political pundits. That said, with five cannabis statewide legalization propositions on the ballot, and a host of local propositions, November 8th, 2022 proved to be hugely impactful for the cannabis reform movement.
While cannabis reform saw mixed results this election, it’s important to note that public appetite for cannabis reform at the national level has never been higher. A 2021 Pew Research poll shows that 91% of Americans support at least medical legalization, while 60% support full legalization. This bodes well for legal cannabis markets, as BDSA Consumer Insights data show that ~75% of those in adult-use markets claim to be cannabis consumers or open to cannabis consumption. Attitudes towards other significant reforms are also warming, with a recent poll from The Morning Consult and Politico showing that 84% of Democrats, 74% of independents and 58% of Republicans supporting removing cannabis from Schedule 1 status.
There is a lot to unpack after this year’s midterms, and our team at BDSA is here to walk you through how our predictions on legalization proposals shaped up, as well as the highs and lows of the midterm results overall.
How Did BDSA’s Expectations Stack Up to the Results?
In our most recent Cannabis Market Forecast Update, published in September 2022, we laid out our predictions for when new markets will legalize adult-use and when sales will begin. Some calls are easy, and some a little tougher. Here’s how our cannabis market forecast compares with the reality of Election Night 2022 results:
- Arkansas – Called It – Arkansas’ Issue 4, which would have legalized cannabis for those over 21 and mandated the states Alcoholic Beverage Control Division to develop a regulatory scheme for legal sales, failed to pass by 6%. We did not predict passage of Arkansas’ Issue 4 and current forecasts do not include adult-use sales through 2026, the last year in our current model.
- Maryland – Called It – Question 4, Maryland’s Marijuana Legalization Amendment, passed with almost 67% support. With the passage of this Amendment, adults will be allowed to grow and possess cannabis beginning July 1, 2023, but lawmakers will need some time to cement adult-use retail regulations—likely beginning that discussion in January 2023. We forecast adult-use sales to begin in Maryland in 2024, reaching $215m for the year.
- Missouri – Called It – Missouri’s Amendment 3, the Marijuana Legalization Initiative, passed with ~53% of voters approving the Amendment. BDSA’s cannabis forecast shows adult-use sales beginning in Missouri sometime in 2023, amounting to $277m in year one. Missouri’s medical program, which saw its first sales in Q4 2020, reached $210m in 2021 as patients swelled to more than 2.5% of the state’s population. Regulators are expected to move expeditiously to get things up and running in the Show Me state. Under the plan laid out by the state’s Department of Health and Senior Services, the initiative will become effective on December 7, 2022, and sales may start as soon as February 2023.
- North Dakota – Miss – Voters in North Dakota rejected Statutory Measure 2 by a ~10% margin, though some votes were still uncounted as of this writing. This measure faced an uphill battle but, with ever-increasing support for legalized cannabis across the country, we held out a little hope for North Dakota. BDSA’s most recent forecast models a slow start to adult-use sales beginning in 2024.
- South Dakota – Miss– Measure 27 was defeated by a margin on ~6% Tuesday night, two years after voters there set a milestone by legalizing both adult-use and medical cannabis in the same election. Constitutional Amendment A passed with 54% of the vote but was nixed by the state’s Supreme Court in November 2021. For BDSA, South Dakota was another unfortunate miss—with our forecast showing adult-use sales starting in 2024. Of note, South Dakota saw significantly lower turnout this year that in 2020, as well as more highly organized opposition leading up to the election.
While cannabis advocates saw three ballot proposals fail to pass, there are several other bright spots from this year’s midterms. This cycle may not represent a sea change as we saw in 2020, but the wins from Tuesday are nothing to scoff at.
Two more cannabis markets will have adult-use access.
With the passage of legalization in Missouri and Maryland, an additional 9.2 million adults will have access to legal cannabis. This also means that just shy of half of all Americans now live in an adult-use legal state, a massive shift from 10 years ago when only Colorado and Washington were legal. Furthermore, cannabis passed convincingly in deep-red Missouri, which also elected GOP candidates for a Senate seat and six of their eight Congressional districts. It is also important to recognize that Missouri and Maryland are by far the biggest states, by both population and industry presence, to have legalization on the ballot this year.
Conservative Voters may be More Open to Federal Cannabis Reform
It shouldn’t be news to anyone that there are cannabis friendly Republicans out there, but recent polling data show signs that conservative voters are more open to cannabis reform than some may have thought. A survey conducted by the National Cannabis Roundtable in September 2022 showed that 76% of Republicans support Federal non-interference with the cannabis industry. Even more impactful is the fact that 65% of Republicans surveyed claimed that they would approve of a measure protecting banks that work with legal cannabis businesses, good news for those of us still hoping for progress on the SAFE Banking Act.
Decriminalization Measures Won Big Across the Country
The opening of new markets always gets plenty of attention after an election, but it’s important to not gloss over the small wins we see at the local level every year. At the time of writing, five cities in Texas (Denton, Elgin, Harker Heights, Killeen, and San Marcos) voted to decriminalize cannabis possession to some degree, a welcome piece of good news after the Texas State Senate shot down a statewide decriminalization proposal in 2019. Decriminalization measures also cruised to victory in five Ohio cities, with Kent, Laurelville, Shawnee, Rushville, and Corning passing measures to liberalize possession. Decriminalization is important not only because it makes our justice system more equitable, but also because it normalizes cannabis among consumers and non-consumers alike.
While there were plenty of silver linings to this year’s results, we can’t sign off without recognizing some of the disappointments and troubling signs ahead for legal cannabis.
Three Legalization Ballot Measures failed, the First Time That the Nays have Outweighed the Yeas
The addition of adult-use sales to the medical-only markets of Maryland and Missouri represents huge growth opportunities, but the enthusiasm from those wins was tempered by failure in three other states, the first time that more states shot down legalization than approved it. Cannabis legalization is never a sure thing, as we saw in 2014 when Florida voters sank an Amendment to legalize medical use, and 2015 when Ohio voted down an adult-use measure. It may have been ambitious to expect legalization to pass in Arkansas and the Dakotas, but the losses were disheartening, especially given that South Dakota passed the much more ambitious Amendment A in 2020, only for this year’s more modest proposal to get ~10% less support.
Divided Government Seems Likely, So Federal Legalization is Probably Out of the Picture
Results are still being finalized at the time of writing, but Republicans appear to be on track to retake control of the house and possibly the Senate, pending the result of the Georgia runoff election. While it’s unlikely that the House will make movement towards full legalization or rescheduling of cannabis, many regulatory experts and analysts expect there to be action on marginal reforms, with the SAFE Banking Act having the highest chance of any existing bill of passing in the next two years.
That said, federal reform is only one avenue for progress, and more states will undoubtedly push forward to legalize on their own. One state that is likely on the fast track towards adult-use is Pennsylvania, where Democrats gained control of the legislature and elected Josh Shapiro as Governor, the former Attorney General under Gov. Wolfe who has echoed many of the outgoing executives’ statements in support of legalization.
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