ACT Resources News Update – Jan. 2020:
Happy New Year! We hope you’re as excited as we are at ACT Resources to kick off 2020, a year that should be full of growth and new opportunities for the cannabis industry. If 2019 was any indicator, we could be seeing some big legislative gains at both the state and federal levels. And if the state of Illinois is any indicator, there is still significant demand in untapped markets – the cannabis industry has plenty of room to grow in 2020 and beyond. Our first news update of the new year will help you set your sights on success, whether you’re working to grow an established cannabis business or you’re launching your new company in the space.
Illinois begins adult-use cannabis sales
On January 1, the state of Illinois began sales of adult-use cannabis, which was legalized last year through the state legislature. Illinois legal cannabis industry is off to an overwhelming start, eclipsing $3 million in sales on day one and actually running out of product by day six. Clearly, there is immense demand in The Prairie State.
Illinois’s legalization effort was notable for its inclusion of social justice provisions, intended to dispel some of the harm caused by the War on Drugs. However, the only dispensaries permitted to sell adult-use cannabis initially are those that were awarded medical dispensary licenses years ago. That means there has been some consternation as to how effective Illinois’s social justice aims will be; still, it was the first law to bake social justice into the language, so Illinois could serve as a litmus test for those preoccupied with ameliorating the harm of the War on Drugs and creating a diverse and equitable cannabis industry elsewhere.
Kansas governor expresses tepid support for medical cannabis legalization
Kansas could legalize medical marijuana in the near future if its legislature chooses to legalize cannabis. Governor Laura Kelly said earlier this month that if a medical cannabis bill passed the legislature, she would likely sign it. She added that she always supported medical cannabis and sees an opportunity to do so in tandem with expanding access to Medicaid in her state. However, Kelly also added she does not think Kansas is “ready to go there” when it comes to cannabis legalization.
Kansas remains in the minority of states that have no medical marijuana program, adult-use cannabis program, nor decriminalization measures. Cannabis remains fully illegal in the Jayhawk state, along side Idaho, Wyoming, South Dakota, Tennessee, Louisiana, Alabama, Wisconsin, and South Carolina. Several other states maintain that cannabis is fully illegal but have instituted decriminalization measures to reduce penalties to a civil charge rather than a criminal one.
New Jersey to vote on adult-use cannabis legalization in 2020
New Jersey’s legislature failed in a last ditch effort to pass legal cannabis legislation during Governor Phil Murphy’s lame duck session last year. The last minute attempt, which was pulled before the bill could even be voted on, followed the withdrawal of the legislation in May after advocates had long hoped for a victory in the state Assembly and Senate. Although the state legislature did not legalize adult-use cannabis, it did put the matter in voters’ hands – the Garden State will vote on whether to legalize adult-use cannabis as a ballot referendum in November 2020.
New Jersey has had a medical marijuana program since 2010, when outgoing Governor Jon Corzine signed the Compassionate Use Medical Marijuana Act into law. By 2017, the program served less than 12,000 patients through six medical cannabis dispensaries. In 2018, however, New Jersey expanded the medical cannabis program by adding more dispensaries (known as alternative treatment centers) and expanding the state’s expungement process.
Will New Jersey’s voters build on the state’s progress toward legalization? Poll suggest they might. Roughly 60% of respondents to polls in New Jersey express support for legalizing adult-use cannabis. If they turn out in November, New Jersey could soon be implementing a legal cannabis program of its own.
Colorado continues to set records for cannabis sales and tax revenue
The first state to legalize adult-use cannabis is reaping the rewards, both in terms of massive economic activity and tax revenue. In 2019, the state’s industry surpassed $1.5 billion in sales revenue, bringing the lifetime total of sales since legalization in 2014 to more than $7.5 billion. Colorado’s cannabis industry has contributed more than $1 billion in tax revenue to the state’s treasury in that time, which has been allocated to the state’s school system, affordable housing, youth drug and alcohol prevention efforts, law enforcement, and recreation programs.
S. Department of Agriculture (USDA) approves three states’ industrial hemp programs
New Jersey, Ohio, and Louisiana became the first three states to receive federal approval for their industrial hemp farming regulations. States were permitted to craft their own regulations with USDA approval when industrial hemp was legalized by the signing of the 2018 Farm Bill. Industrial hemp is a variety of Cannabis sativa that contains less than 0.3% THC under federal law. It is used in the making of Cannabidiol (CBD) products, but also serves a wide variety of purposes, from the creation of textiles to the manufacturing of biofuels.
The CBD industry is, by itself, projected to be worth $16 billion by 2025, making industrial hemp a hot commodity. That doesn’t include the other potential uses for the crop, which contribute to a projection of a total market value of $20 billion by 2025.
While New Jersey, Ohio, and Louisiana were the first states to receive federal endorsement, industrial hemp is already cultivated elsewhere, such as Kentucky and Pennsylvania. According to Vote Hemp, hemp farmers cultivated more than 500,000 acres of industrial hemp across 34 states last year, a huge leap from the 112,000 acres grown in 2018.
While 2019 held a lot of surprises and new challenges to overcome, 2020 is poised to be yet another big year for the cannabis industry. With several states ready to legalize cannabis in one form or another, and those that have already legalized reaping the rewards, it’s clear the industry has a lot of room left to grow. The federal legalization of hemp is moving along now with the first federal endorsements of state programs, and it has already contributed to a massive boom in nationwide hemp cultivation. How do you plan on capitalizing on the industry’s growth this year? Doing so undoubtedly requires an experienced and knowledgeable accounting partner, so if you need professional advice in the cannabis industry don’t wait – ACT today!