On the heels of the 2020 US Presidential election, we explore how this decision will impact the US cannabis industry for the next four years. With bills waiting in Congress, promises from the nominees, and states working independently to pass legislation, we provide some insight into what can be expected in the near term.
As it stands, neither potential administration is likely to federally legalize cannabis. Senator Kamala Harris, the Democratic vice president nominee, has asserted a future Biden administration would prioritize decriminalizing cannabis, while the Trump administration has not made any promises regarding liberalizing cannabis laws.
In terms of Congress, Trump’s stance on cannabis policy isn’t clear, so a Democratic-controlled Congress may be able to ratify existing bills waiting to pass. By what we’ve seen the past four years, we can solidly predict a Republican-controlled Congress would not pass any legislation liberalizing cannabis law. Therefore, a Trump presidency and Democratic Congress could still lead to cannabis liberalization to some extent.
For example, the SAFE Act and the STATES Act would liberalize federal policy on cannabis without formally decriminalizing. If Congress is controlled by the Democrats, they would be able to turn these existing legislative efforts into law allowing cannabis businesses legitimacy in the eyes of the US government and provide access to banking.
With legitimacy and the ability to bank, we can expect larger companies will begin entering the cannabis industry. As it stands now, there’s massive risk and logistical barriers to being part of an industry that cannot use the banking system, but the SAFE Act would change this. The STATES Act gives legitimacy to states with legal cannabis, which also help remove the risks for large, national companies. However, these legitimate cannabis markets would still be bound to the state they operate in.
If the election yields a Democratic president and Congress, we can expect more than just liberalization. The MORE Act would deschedule cannabis, no longer categorizing it as a Schedule 1 substance. The bill includes a number of changes, including a pathway to trade cannabis over state lines. Currently, multi-state operators (MSOs) struggle to find consistency in their products from state to state – it’s difficult to uniformly grow cannabis when it’s being grown in different places. The states, however, may lose out on cannabis taxes, considering they currently have to regulate the entire supply chain.
The Biden campaign hasn’t outlined any specific path towards legalization, but it is more likely to happen in his term than in another Trump term. As it has been with state legalization, we expect to see incremental change in cannabis rather than bold, sweeping legislation to legalize. This industry is incremental in nature, so growth will be incremental as well. We may see some boosts in the market, whether from additional consumers entering the market or from bigger companies launching innovative products.
The next four years could see a more stable system for companies to grow the US cannabis market, or it could see federal stagnation. The results of next week's election will give us a glimpse as to what's ahead.
Last Updated: 10/26/2020