Five More States Could Legalize Recreational Marijuana On Election Day
There are nine state ballot measures regarding the legalization of marijuana that will be voted on this November. Five states will vote to legalize recreational marijuana, while the other four states are voting on legalizing medicinal marijuana.
Arizona, California, Maine, Massachusetts and Nevada are all looking to legalize recreational marijuana. Arkansas, Florida, Montana and North Dakota are proposing medical marijuana legislation. Equity research firm Cowen & Co. said that if all five recreational measures pass, If a
The biggest and most watched measure is California’s Proposition 64. Roughly 60% of the population is in favor, making its passage looks likely. “I think as of right now, people are cautiously optimistic,” said David Dinenberg, chief executive officer of KIND Financial, a leading software company for the cannabis industry.
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The California initiative would allow adults over the age of 21 to possess up to one ounce of marijuana and grow up to six plants in a secure area. There will be a 10% sales tax on adult-use marijuana sales, but no sales tax on medical marijuana. The reason this vote is being watched so closely is that the projected numbers in this market are astounding. If you thought Colorado was putting up some big pot revenue dollars, get ready because California will dwarf that state.
“My personal opinion is that it’s already a $2 billion market today and I think it could grow very rapidly to $5 billion,” said Dinenberg. California was the first state to legalize medical marijuana and has a long history of leniency towards recreational usage. The heaviest resistance to the measure has actually come from within the marijuana industry in the state, particularly growers in the north who want to protect their market share and keep outside growers from setting up shop.
Most of the numbers that have been thrown around regarding California have been estimates because without regulation, there is little hard data. This legislation aims to fix that. “It’s going to be a monster market,” said Dinenberg.
In Nevada, Question 2, aka the Marijuana Legalization Initiative, would allow adults over the age of 21 to possess up to one ounce of marijuana and be able to purchase it from a licensed retail store. Those who don’t live within 25 miles of a licensed store would be able to grow up to six plants in an enclosed locked area. There will be a 15% excise tax on wholesale marijuana sales, while retail sales will be subject to the standard sales tax. The taxes would be used for regulation and enforcement of the program with the remaining tax receipts going towards education.
According to a recent poll by the Las Vegas Review Journal, the outcome is too close to call. 47% said they would vote yes, while 46% said they would vote no. With a 3.5% margin of error, the decision could go either way. On the political side of support, Democratic politicians are mostly in favor, while Republican leaders are fighting the measure. If the measure passes, Arcview Market Research estimates that the Nevada market could grow from $121.6 million in 2016 in legal sales to $630 million by 2020.
In Massachusetts, the Regulation and Taxation of Marijuana Initiative, or Question 4, would create a system of retail stores and growing facilities. It would also allow adults 21 and older to possess and grow marijuana in limited amounts. There will be a 3.75% excise tax on retail sales, plus a 6.25% tax state sales tax and towns can impose an additional 2 percent tax. Towns can also ban marijuana sales if they choose.
Voters are warming up to the idea of passing the legislation. At one point, only 40% were in favor, but a recent poll from UBZ-UMASS Amherst pollfound that 53% of the voters will say yes. “What I’m hearing is that it’s going to pass,” said Dinenberg. “But I’m hearing that a lot of the townships may have some push back on implementation.” Arcview thinks the Massachusetts market will be even bigger than Nevada and if the measure is passed, it could be a $1.1 billion industry for the state by 2020.
Revenues from the retail sales could hit $300 million as soon as 2018, the potential first year of legal sales. Some of this assumption is based on Massachusetts becoming the hub of marijuana sales in the Northeast. At this point, none of the surrounding states are considering legalizing recreational marijuana and much of the business could come from canna-tourists.
Arizona’s Proposition 205 would allow adults over the age of 21 to possess up to one ounce of marijuana and consume it in private. Adults would also be able to grow up to six plants in an enclosed, locked space. Retail sales would be subject to a 15% excise tax and the tax receipts would be used to implement the measure. Of the additional revenue, 80% would be distributed to the school system. The Arizona Joint Legislative Budget Committee estimates that the initiative will raise more than $123 million in annual revenue for the states and give more than $55 million per year to the schools. Arizona voters are also late bloomers. Back in July, only 39% were in favor, but now a poll by Arizona Republic/Morrison/Cronkite Newsfound 50% are in favor.
Maine’s legislation is called Question 1 and like the others it will allow adults over the age of 21 to possess and grow a limited amount of marijuana. Maine voters have been consistently in favor of the legislation.
There will be a 10% sales tax on retail marijuana, but medical marijuana will not be subject to the sales tax. Maine is the smallest market of the five states looking at legalization. The legislature estimates that the first year could add $8.8 million in revenues, but hasn’t estimate cost savings from the reduction of criminal costs associated with illegal marijuana. It would also add 18 jobs for regulation of the new industry. Arcview is much more optimistic and has pegged the industry growing to $200 million by 2020.
Arkansas has two measures that are being voted on with the first one called the Arkansas Medical Cannabis Act and the other legislation called the Arkansas Medical Marijuana Amendment. Having two competing pieces of legislation could cause the vote to split and end up in defeat for legalization. Three lawsuits have been filed in an effort to knock one of the measures off of the ballot, but none have been ruled on.
Essentially, one of the measures is pro-patient, while the other is pro-business. Arkansas legislators aren’t super supportive of the idea of legalization either way. The state is known for its strict marijuana law enforcement with 5,718 arrests in 2012.
Florida will be voting on the Florida Right to Medical Marijuana Initiative or Amendment 2. Even though 77% of Floridians support the idea, the legislation needs 60% of the vote. A similar bill failed in 2014 when it fell short of the 60% needed. Still, more people voted in favor of medical marijuana than voted for the current governor. Florida currently has an extremely limited legalization of medical cannabis. Dinenberg thinks Florida will pass this time.
While there are forces fighting legalization in Florida, they don’t seem as well-organized on this go around. Arcview believes Florida’s market, if expanded, could rise to a $1.5 billion market.
Montana voters are facing the Medical Marijuana Restoration Initiative that will repair the state’s current medical marijuana program. If it passes, providers could serve more than 3 patients and it would allow providers to hire employees. State lawmakers have not been very supportive of the idea of medical marijuana and have created a burdensome program. Montana, like Arkansas, has been very strict with enforcing its marijuana laws.
North Dakota has on its ballot the North Dakota Medical Marijuana Initiative that would legalize medical marijuana for patients with qualifying conditions. The state also has a history of harsh enforcement of marijuana laws. There haven’t been any recent polls to determine how the state may vote. One poll from two years ago was inconclusive. Residents did manage to collect over 17,000 raw signatures in order to get the measure on the ballot. Some believe that the collapse of the oil fracking market may cause a softening to the idea of marijuana agribusiness.