Cannabusiness Advisory

The cannabis market in America has expanded and continues to grow with each election cycle. State lawmakers and their respective voters continue to propose and pursue the passage of ballot referendums, constitutional amendments, and new legislation that seek to legalize the recreational use of cannabis and establish a framework for the adult-use commercial market and the regulatory oversight thereof. The November 8^th midterm elections are no exception, as five states seek to legalize recreational cannabis.

The following states seek to join the nineteen (19) states that have previously legalized recreational cannabis.

Arkansas

• Action: Ballot Referendum. Lawmakers in Arkansas passed a constitutional amendment to permit the addition of this initiative to the ballot. The state Supreme Court upheld the constitutional amendment and ordered the initiative to legalize recreational cannabis to be added to the ballot for November 2022.
• Opposition
  • Faces a legal challenge claiming the title of the ballot initiative is misleading. Many state officials are arguing that this legal challenge should be resolved before adding it to the ballot, which remove it from this year’s ballot.
  • The legal challenges have delayed the secretary of state’s ability to certify the signatures received supporting the ballot referendum. The initiative cannot be added to the ballot without the certification of the signatures.
• Notable Business Terms
  • Launching the market through existing medical marijuana providers.
  • New licenses will be awarded for dispensing and cultivation by July 5, 2023.
  • All recreational sales of cannabis would be subject to a 10% retail tax in addition to any applicable state and/or local tax.

Maryland

• Action: Ballot Referendum. Lawmakers in Maryland passed a constitutional amendment placing the question of whether to legalize recreational cannabis on the ballot for voters to weigh in on.
• Opposition: No strong opposition exists, and the ballot initiative is expected to pass in November.
• Notable Business Terms: No notable business terms yet. If passed, the legislature must create a regulatory body and regulations to govern recreational cannabis commercial activity.

Missouri

• Action: Ballot Referendum. Lawmakers in Missouri passed a constitutional amendment placing the question of whether to legalize recreational cannabis on the ballot for voters to weigh in on.
• Opposition: The ballot measure is subject to a legal challenge claiming that it would change sections of the Missouri Constitution in violation of single-subject rules and that the organizers did not gather enough signatures to make the November ballot. The Cole County Circuit Court will rule on the matter on September 13, 2022.
• Notable Business Terms
  • Launching the market through the conversion of existing medical marijuana providers permits both medical and adult-use commercial activity.
  • All recreational sales of cannabis would be subject to a 6% retail tax and an optional 3% local tax.
  • A license lottery will take place within 300 days of the effective date of the legislation.

North Dakota

• Action: Ballot Referendum. Proponents of legalizing the recreational use and sale of cannabis provided the election officials the signatures to support this measure in mid-August.
• Opposition: No strong opposition exists, and the ballot initiative is expected to pass in November.
• Notable Business Terms
  • Licensing to begin according to a competitive lottery process immediately after the effective date.
  • Applicants will be limited to one manufacturing license and up to four (4) dispensary licenses.

Oklahoma

• Action: Ballot Referendum. Proponents of legalizing the recreational use and sale of cannabis provided the election officials the signatures to support this measure in mid-August.
• Opposition: As of mid-August, the signatures submitted to the secretary of state were in the process of being verified, but there is no evidence hinting that the certification will not be provided in time for the initiative to make it on the November ballot.
• Notable Business Terms
  • Oklahoma would expand the scope of the Medical Marijuana Authority to include regulatory oversight of the new adult-use market.
  • All recreational sales of cannabis would be subject to a 15% retail sales tax.
  • The local government can regulate adult-use commercial activity but cannot prohibit it.

Most cannabis policy experts are optimistic that each of the above legislative actions will pass. However, the path to approval is not devoid of obstacles. Last year, South Dakota and Mississippi voters approved ballot referendums to legalize recreational cannabis, only to have each state’s high court overturn the ballot measure after approval. Further, as noted above, many of these actions face staunch opposition from legislators and legal challenges in court that could delay or derail the proponents’ efforts.

As additional states pass measures legalizing medical and recreational cannabis commercialization, the anachronistic stigma surrounding cannabis fades and new opportunities for enterprising entrepreneurs arise. Yet another exciting day to work in the cannabis industry!