The day was going to come, and why not the week California legalized cannabis sales to all adults? The January 4th news that Attorney General Jeff Sessions plans to rescind the Cole Memo calls the question for President Trump and Congressional Republicans: Are they truly the party of economic growth and opportunity? With most Democrats certain to support renewal of the Rohrabacher-Blumenauer Amendment that makes binding law out of the Cole Memo’s non-binding policy statement, it’s as simple as that.
The Attorney General really can’t do much to act on his anti-cannabis instincts except rattle his saber, but that alone could have a chilling effect on investors and businesses. That could in turn imperil the $40-billion positive economic impact and 414,000 cannabis-related jobs the legal cannabis industry will generate by 2021, as projected in the Cannabis Intelligence Briefing report BDS Analytics in partnership with Arcview Market Research published this week.
The Rohrabacher-Blumenauer Amendment, banning the Justice Department spending money on prosecutions of cannabis businesses in medical-legal states, is the operative law, not the Cole Memo which is an internal policy statement of the Justice Department. That said, the amendment is at risk every time Congress debates a continuing budget resolution as it is now doing, and its application in states that have medical and adult-use programs remains unclear. That’s a large loophole that AG Sessions and some ambitious US Attorneys may aim for with a few high-profile prosecutions, such as they have pursued in the past. Yet even without the protection of the R-B Amendment or Cole, it is unlikely that Sessions can turn back the clock without broad support that is not currently evident.
The bottom line is that the political map is against revoking Rohrabacher-Blumenauer. In the past four years, states with 21% of the US population (Alaska, California, Colorado, Nevada, Oregon, Washington–with voter-approved initiatives awaiting implementation in Maine, Massachusetts, and Washington, DC) have allowed all adults to use cannabis. And while none of those adult-legal states were part of the Electoral College package that put President Trump in the White House, and hence Jeff Sessions in the Justice Department, several states that were (including Arkansas, Florida, North Dakota, Ohio, Pennsylvania, and West Virginia) approved medical use laws in the past 14 months. All told, 61% of Americans now live in states with medical or adult-use cannabis legalization. These states will benefit from $21 billion in increased economic output, 221,000 cannabis-related jobs, and $1.7 billion in cannabis-specific tax revenue this year, not to mention reduced legal and incarceration costs, and shrinking illicit markets, according to Cannabis Intelligence Briefing.
Furthermore, BDS Analytics consumer surveys in four key states (California, Colorado, Washington, and Oregon) shows why the political tide has irrevocably turned against the prohibitionists. Approximately 30% of adults 21+ in those states are Consumers, meaning they have consumed cannabis in the past six months. Another ~35% are Acceptors, saying they are open to doing so. Even a significant portion of those who say they are not open to it, say they would consider it if a doctor recommended it. Similar to the Consumer+Acceptor percentage, 60% of adults 21+ agree that cannabis should be legal for medical and recreational use, and 90% agree it should be legal for recreational and/or medical purposes. This puts the attorney general’s thinking in line with only 10% of adults in the four states with the most experience with legal cannabis.
Of course, a few investors were spooked by the news, and the stocks of the Canadian licensed producers took small hits today (about in line with the relatively small “US upside” factored into prices that are much more based on the Canadian opportunity, and companies’ abilities to export cannabis everywhere BUT the US). That, undoubtedly, is the kind of chilling effect Sessions hoped to have.
But, as our Briefing “US Legal Cannabis: Driving $40 Billion Economic Output” (click here) makes clear, the economic growth engine that by 2021 will generate $21 billion in direct consumer spending, $40 billion in total economic output, 414,000 cannabis-related US jobs, and more that $4 billion in cannabis-specific and general sales-tax revenue for states, is not about to be shut down without an act of Congress.
Industry Intelligence Division