So much for the coastal elites thinking they will show Middle America the way to get things done.
Illinois is that the 11th state within the nation to legalize adult-use marijuana, now that Gov. J.B. Pritzker has signed a recreational bill into law.
The governor’s historic bill signing came shortly after NY and New Jersey both did not legalize potential billion-dollar commercial recreational programs. What lessons were learned by the cannabis industry, and the way are business strategies shifting? Why did those states fail, while Illinois succeeded in approving recreational marijuana via a legislative move?
Industry watchers see cannabis businesses generally maintaining their interest within the densely populated Northeast U.S., perhaps by trying to enter the growing medical cannabis markets. Meanwhile, NY and New Jersey marijuana businesses hope to still build support for eventual adult-use legalization.
Here are five points that summarize the situation:
1. Why NY and New Jersey did not legalize adult use.
New Jersey Gov. Phil Murphy and state Sen. Steve Sweeney struggled from a private standpoint — and over tax rates. “Cannabis was an innocent bystander” therein tangle, said New Jersey cannabis attorney Bridget Hill-Zayat of the Hoban Law Group.
In NY, one among the sticking points was who would control the tax revenues and tax allocation. “It always comes right down to an equivalent thing — taxes,” said attorney Rob DiPisa, co-chair of the cannabis law group at Cole Schotz, pertaining to both New Jersey and NY.
In New Jersey, state Sen. Ron Rice, a Democrat from Newark, also led the charge against legalization, contending that it might benefit white, rich investors but do little for African Americans. Social equity and minority participation were also huge issues in NY . to deal with those issues, the state’s medical marijuana industry in March pledged to make a $25 million fund to assist support minority- and women-owned enterprises.
Meanwhile, many also questioned Gov. Andrew Cuomo’s commitment to legalizing adult-use, et al. noted he instead focused on a successful climate bill.
2. What’s next in New Jersey and New York?
In New Jersey, the conversation is all a few ballot initiatives in 2020 to legalize adult-use cannabis, a measure many believe will pass. But the initiative would wish to be put forth by the Legislature as a constitutional amendment instead of as a replacement law.
Scott Rudder, president of the New Jersey CannaBusiness Association, believes that might be a nasty idea, partially because it’s harder to amend the state constitution if program changes were needed than to vary a law. Hill-Zayat agrees, saying a possible problem is that a ballot initiative would fail to incorporate detailed instructions about administering the program.
However, New Jersey features a year-round Legislature, she noted, so legalization could come up again — especially since the pressure is building from other recreational marijuana states, like Massachusetts and Illinois.
New York has no process for a citizen ballot initiative, and therefore the Legislature would wish a majority choose two successive sessions to put a constitutional amendment on the ballot. Karen O’Keefe, director of state policies for the Marijuana Policy Project, said it’s not out of the question for the NY Legislature to undertake again.
“The popular wisdom is that it might be extremely challenging to pass legalization in an election year in NY,” O’Keefe wrote in an email to Marijuana Business Daily. “That said, there’ll be a budget next year, so (by being a part of the budget) the Legislature could avoid the up-or-down vote on legalization alone. My guess is there’s a but 50/50 chance of passage next year.”
3. How did Illinois achieve legalizing adult-use?
O’Keefe noted that the Illinois bill sponsors worked for years to realize support, including holding town halls around the state to make sure all views were taken into consideration. Then, she said, Gov. Pritzker’s administration invited various interests to “play a lively role in crafting the ultimate product.”
Jeremy Unruh, director of regulatory and public affairs for Illinois-based PharmaCann — which is also an MMJ license holder in NY — wrote in an email to MJBizDaily that the key takeaway from Illinois is that passing adult-use legalization isn’t a game. “Given the fragile dynamics of the legislative process, any major comprehensive policy, like adult-use cannabis, can only pass when all stakeholders are empowered,” he wrote.
4. New Jersey bolsters its MMJ program, but NY expansion uncertain.
While businesses eyeing adult-use marijuana opportunities are disappointed, medical marijuana is moving forward in New Jersey “and that’s excellent news,” Rudder said.
For example, the governor had announced an enormous expansion in medical marijuana licensing, saying the state would issue up to 108 dispensaries, cultivation and processing licenses across the state but ultimately awarded just 24, still a serious expansion but an enormous disappointment to potential applicants who were looking forward to an especially robust licensing round, DiPisa said.
New Jersey lawmakers separately passed a measure that might increase the number of growers to as many as 28 and eliminate a 6.625 percent rate on MMJ products in 2022. Currently, there are six cultivators operational and another six that are licensed.
Jeff Brown, spokesman for the state health department, would say only that an amended request for applications is going to be posted on Dominion Day which “we will spell everything out.”
In NY, lawmakers failed during a last-ditch effort to expand the state’s medical-marijuana program. Adam Goers, president of the NY Medical Cannabis Industry Association, wrote in an email to MJBizDaily that the association will work with the state health department to form regulatory improvements to the medical cannabis industry and check out to create support for marijuana statewide.
“We’re disappointed adult-use cannabis and medical marijuana didn’t pass,” Goers added, “but we’re getting to work with allies old and now moving forward to form sure real cannabis reform happens in NY .”
5. Business strategies pivot.
DiPisa describes the recent events in New Jersey and NY as a “complete roller coaster for everybody .” But, in Hill-Zayat’s opinion, the trouble by some to organize for adult use, to scout potential properties and to cultivate relationships with local officials isn’t wasted. Rather, it’s groundwork which will are available handy when New Jersey and NY do legalize adult use.
While some potential applicants may hand over on the East Coast, Hill-Zayat predicts most will still “hover over” the region, due to its dense population. Some businesses hedged their bets by seeking MMJ licenses near borders, like Pennsylvania/New Jersey, or New Jersey/New York.
Rudder said recently that he sees businesses pivoting strategy from adult-use back to medical cannabis, knowing that existing MMJ operators may get priority when recreational MJ does come around.