Since our last Cannabis Outlook Article published in February 2021, the Cannabis industry has undergone dramatic changes. In 2022, Rhode Island, Maryland and Missouri all voted to approve the recreational use of cannabis. Recreational use of Cannabis by adults is now legal in 23 states/US Territories.
While Cannabis is expected to continue to expand into new markets, with projected US sales to reach $70-$100 billion over the next decade, legal cannabis sales declined in some mature markets resulting in decreased prices and decreased tax revenue. Even though 2022 was a mixed bag for the cannabis industry, there was some positive news. The Biden administration took steps to pardon federal offenses for simple marijuana possession and directed the review of cannabis’ classification under federal criminal law. In addition, Congress, in perhaps a signal of Congress’s intent to legalize Cannabis at some future point, passed the Medical Marijuana and Cannabidiol Research Act, which permitted medical research on cannabis. This Act was the first standalone marijuana-related bill approved by the United States Congress.
So where does all of this leave the Cannabis industry for 2023? Experts believe cannabis will continue to expand into new states. Industry experts anticipate legislative efforts to approve cannabis in the following states in 2023:
After missing a statewide ballot last November, Ohio is expected to have a new ballot initiative in November of 2023 that if approved, will authorize recreational cannabis for adult use.
Minnesota is expected to approve one of several bills that when passed, would enable adults 21 and older to purchase up to two ounces of cannabis and to cultivate up to eight plants, four of which can be mature. The same bills would authorize possession of two ounces in public and up to five pounds in a private dwelling.
Even though Hawaii passed medical cannabis in 2000, Hawaii still has not authorized adult use cannabis. That is expected to change in 2023. Once passed, Hawaii would permit adults 21 years and older to purchase up to four ounces of cannabis within a 15-day period. Adults would also be able to cultivate up to 10 plants.
The New Hampshire House voted to approve a bill that would legalize marijuana, without any regulations on cannabis. Another bill passed by the legislature would remove marijuana from the state’s controlled substance list and remove criminal code provisions that provide criminal penalties for marijuana-related offenses.
The governor of Pennsylvania has proposed the legalization of marijuana as part of the 2023-2024 budget request. The proposal would impose a 20 percent (20%) tax on the wholesale price of marijuana sold through a newly created regulated scheme that would govern the production and sale of cannabis.
Delaware House lawmakers again approved the legalization of cannabis. The legislation eliminated penalties for use and possession. The Delaware House is now close to having enough votes to override a governor veto of the legislation.
Kentucky Governor Andy Beshear signed Senate Bill 47 into law on March 31, making Kentucky the 38th state to legalize medical cannabis. The law enables patients with certain ailments, including cancer, severe pain, epilepsy, multiple sclerosis, PTSD or any other medical condition which is approved by the Kentucky Center for Cannabis, to obtain marijuana. Though smoking will remain prohibited, patients can obtain raw cannabis. Home cultivation will not be permitted. Patients will be allowed to possess a 30-day supply in their residence and a 10-day supply on their person. The law and regulations implementing Kentucky’s medical marijuana program will not be finalized until July 1, 2024, with the main provisions of the law taking effect on January 1, 2025.
Cannabis remains a Schedule 1 drug under the Controlled Substances Act, meaning it is viewed as having a high potential for abuse. There are no currently accepted medical uses in treatment in the US, and a lack of accepted safety for use under medical supervision. Congress has perhaps signaled its willingness to revisit this status by the passage of the aforementioned Medical Marijuana and Cannabidiol Research Act.
What does this mean for commercial lenders? The cannabis industry, a burgeoning multi-billion-dollar industry, is growing at unprecedented rates. The cannabis legal landscape is complicated and comes with uncertainty. Lenders must properly structure their deals, carefully analyze their collateral position and thoroughly document cannabis related loans.
Geraci Law Firm has the expertise in assisting lenders with loans to cannabis related entities. Contact us today for more information.