2022 State of the Shrub

This year has been the “soon” year. Chuck Schumer has for years now said that federal cannabis legislation will come “soon”, and he really stepped up using that word this year. It seemed like every other day, Schumer was on his pulpit saying “soon”. But, sooner than later, the community understood that “soon” may as well be “Never” because the senate has still yet to put a vote on any legalization legislation. The can continues to get kicked down the road with promises that are never met year after year.  

At the same time the pollsters are publishing polls that indicate increasing support for legalization continues.  “Among key findings, the poll revealed high support for legalization across the political spectrum. When people identifying as Democrats (33.4%), Republicans (25.4%), independents (24.0%), “no political affiliation” (12.5%) and other (4.8%) were asked if they were more likely to support pro-legalization candidates, 61% said they were.”^[i] Yet, the people who hold the power in the Republican Party, absolutely refuse to play nice. And the democrats clearly have no idea how to play dirty. So, it has been many years of promises from one side and a brick wall from the other.

That does not mean, however, that cannabis did not progress federally. In fact, the explosion of states writing their own laws led to various entities challenging the Dormant Commerce Clause in court. Large multi-state operators (MSOs) recently won access to the state medical cannabis industry in court in Maine.^[ii] States like New Jersey and Oregon are gearing up for interstate sales, considering the Dormant Commerce Clause is a successful cudgel in the courts (or congress legalizes-yeah right).

Then, there is the big daddy lawsuit put forth by a group of MSOs that addresses the 280e issue. 280e is a tax provision that forbids businesses engaged in illegal federal activity from taking normal tax deductions. The MSOs are lobbying congress to amend this so that they are eligible for the deductions. They are also preparing a lawsuit to challenge 280e in court.^[iii]

The Biden Administration finally got around to making concrete moves in the cannasphere this year. He signed a bill into law that made it easier for universities to research the medical attributes of cannabis.^[iv]He also put out a press release announcing three things: that he would be pardoning “all prior federal offenses of simple possession of marijuana”, he is “urging all governors to do the same”, and he is “asking the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.”^[v]  

The pardons aren’t really that big of a deal, because he only pardoned 6500 people. The problem with this is that most cannabis arrests occur at the state level. But, as we will see later, he also asked governors to pardon their cannabis-tagged citizens. The most interesting thing from The President’s press release is that he is reviewing the possibility to re- or deschedule cannabis from the Schedule 1 classification. 

Some governors did step up to the call for pardons, however. In particular, Oregon Governor Kate Brown pardoned 45,000 people. Illinois Governor JB Pritzker was early to the pardon game, having pardoned more than 500,000 people in his state. Some states included expungement of cannabis records as part of their legalization initiatives and have also pardoned their eligible citizens. Massachusetts and Rhode Island are a couple of examples of this.

The states have continued to be actively writing their own laws in legislature.  Like Minnesota, in particular. The democrats took the senate last November, and it is clear that legalization is a major goal for the incoming administration. It is sad that we are praising the loss of a Republican Senate to open access to business in Minnesota, but the signals that legalization is on the horizon are clear. This will be a wedge issue, unfortunately. The stalwart obstructionism of the anti-business republican party will continue to be effective until the community can figure out how to break through the great big red wall in middle America. 

That being said, there are clear breaches of the Red Wall. Oklahoma voted to legalize medical cannabis in 2018. Today it has one of the most robust medical cannabis systems in the country. They have 374,000 registered patients, or roughly 10% of the state population. They also have 2600 dispensaries, which is insane for a small state like Oklahoma^[vi]. Additionally, Governor Kevin Stitt approved a March vote for their legalization initiative that missed the November ballot because the signatures weren’t counted in time.

In fact, four of the five November state initiatives that made the ballot this year were all red states: Missouri, North- and South Dakota, and Arkansas.  The fifth was Maryland. The Dakotas and Arkansas voted “no”, but Missouri and Maryland said “yes”.  Missouri is moving so fast that it is now legal recreationally there, and they expect to have recreational dispensaries open by February 2023. Maryland will legalize by July 2023. 

There were four other states that failed to get an initiative to the ballot box; Florida, Idaho, Wyoming, and Nebraska. Ohio legislators played games with their electorate, but the campaign was too fast for them. While the state government was successful in keeping the initiative off of the November ballot, the voters of Ohio won in court and will get their chance to vote in November of 2023.^[vii]

Another interesting development that happened this year was in Mitch McConnell’s Kentucky. Their Democratic governor signed an executive order allowing eligible citizens to access medical cannabis in other states and bring it home.^[viii] They will also begin to regulate Delta 8 THC which is an interesting development.^[ix] Some states already have laws regulating, restricting, or outright banning Delta 8 THC.^[x]

The Big Red Wall is beginning to show some weakness as we move into 2023. Missouri will begin selling recreational cannabis by February. Ohio and Oklahoma will be voting on Recreational cannabis next year. New Hampshire has announced bipartisan legislation that will need to get through a Republican senate there^[xi]. And Kansas is preparing to write legislation to allow medical cannabis for their residents.^[xii]

So, here we are at the end of 2022. 21 legal recreational/medical and 38 medical-only states (as well as the District of Columbia, Guam, and US Virgin Islands). As 2022 cedes to 2023, the table is set for another year of incremental gains both politically and legally. The Dormant Commerce Clause will be doing a lot of flexing as businesses desperately look for new markets to get into. Then there is the possibility of re-or descheduling by the current administration. And of course, there is always the small chance that the republican party will come around and introduce legislation in Congress. A boy can dream.

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^[i] Hasse, Javier. Apr 18, 2022. “A Decade Into Legal Cannabis, Americans See Legalization As A Net Positive For Economy And Society” https://www.forbes.com/sites/javierhasse/2022/04/18/a-decade-into-legal-cannabis-americans-see-legalization-as-a-net-positive-for-economy-and-society/?sh=7deaa8362e42

^[ii]Perkins, Cole and Hannah Barker Mullin.  “First Circuit Court Strikes Down Maine Residency Requirement Under Dormant Commerce Clause” August 22, 2022 https://www.jdsupra.com/legalnews/first-circuit-strikes-down-maine-3002239/

^[iii] The US Federal Government Could be Sued over the Barriers Cannabis Companies Face. May 30, 2022.https://businessofcannabis.com/2022/05/30/the-us-federal-government-could-be-sued-over-the-barriers-cannabis-companies-face/

^[iv] Wadman, Meredith. New US Law Promises light Marijuana Research. Dec 2, 2022. https://www.science.org/content/article/new-u-s-law-promises-light-marijuana-research

^[v] Statement from President Biden on Marijuana Reform. Oct, 6, 2022 https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/06/statement-from-president-biden-on-marijuana-reform/

^[vi] Oklahoma Medical Marijuana Authority. Dec 7^th 2022. https://oklahoma.gov/omma/about/licensing-and-tax-data.html

^[vii] Associtated Press, May 2,2022. “Ohio Legal Pot Backers Sue Over Disputed Petition Deadline” https://apnews.com/article/ohio-lawsuits-marijuana-legalization-recreational-81499bf88437209a44f3fdeeef3e2577

^[viii] Kentuky GOevernors Office November 15, 2022. https://governor.ky.gov/attachments/20221115_Executive-Order_2022-798_Medical-Cannabis.pdf

^[ix] Kentucky Governors office. November 15,2022. Executive order. https://governor.ky.gov/attachments/20221115_Executive-Order_2022-790_Delta-8.pdf

^[x] https://cbdoracle.com/news/policy/delta-8-thc-legal/

^[xi] https://www.nhpr.org/nh-news/2022-12-13/top-statehouse-republican-and-democrat-to-introduce-marijuana-legalization-bill

^[xii] https://www.kcur.org/politics-elections-and-government/2022-12-12/kansas-lawmakers-plan-to-introduce-medical-marijuana-legislation-at-start-of-session