Election Day 2016 was a success for most cannabis legalization initiatives across the country. Multiple states expanded access to recreational or medicinal cannabis, representing what might be a harbinger of things to come for the nation as a whole. For the moment, however, much of the focus will be on the state of California. The voters of the Golden State – which first legalized medical cannabis in 1996 through the passage of the Medical Cannabis Regulation and Safety Act (MCRSA) – approved a sweeping measure in November called Proposition 64.
Evolution of the Black Market
Also known as the Adult Use of Marijuana Act (AUMA), Prop. 64 legalized recreational cannabis. Though the measure will take time to implement, there are nonetheless several aspects of California’s economy that will be affected over the coming months and years.
One of the most encouraging byproducts of recreational cannabis legalization is that it often leads to a decline in a given state’s black market distribution of the substance. It appears that California will be no exception.
One of the problems with Proposition 64, however, is that it may allow for too much land to be used for growth. That means that an overabundance of cannabis product – not to mention the fact that large-scale operations are ripe for theft – could provide enough of a lifeline for the black market to continue operating.
This is a major concern for people like Hezekiah Allen, who heads the California Growers Association.
With all the focus Proposition 64 has put on new operations, expanding and going big, in a lot of ways, California needs to scale down production if we’re going to keep products in state. We don’t need bigger growers; we need more, smaller growers.
Harmonization of AUMA and MCRSA
Another economic issue that has arisen since the passage of recreational cannabis in California is how to effectively and efficiently harmonize the AUMA with the MCRSA.
This includes regulations on growers – such as how much of the product they may be allowed to produce in given time periods – as well as guidelines for consumers and patients.
The process may prove problematic. Recreational cannabis presents a real threat to the future of medical cannabis in the state: Some have argued that the availability of recreational cannabis among those over 21 will decline as recreational cannabis lowers the need for doctor’s visits and bureaucratic red tape.
Changes in Federal Banking Policy
The federal ban on cannabis cultivation and use has led to major problems for cannabis proprietors when it comes to their banking options.
Many financial institutions – from banks to credit unions to credit card companies – refuse to do business with cannabis businesses, for fear of running afoul of federal law and facing harsh penalties.
California is looking to lead the way in banking reform, according to State Treasurer John Chiang, who laments that many cannabis businesses must deal entirely in cash because of their limited banking options.
We need quick action and practical solutions… California is willing to assume a leadership role nationally to effectively achieve this goal.