Despite an Uncertain Election Night, Cannabis Ballot Returns Left No Doubt

Despite an Uncertain Election Night, Cannabis Ballot Returns Left No Doubt

Nov 05, 2020

Client Alert

Brownstein Client Alert, November 5, 2020

While Tuesday’s General Election has left the watching public with questions about how political power dynamics will operate in D.C. next year, public sentiment nationwide has clearly coalesced around legalizing medical and recreational marijuana.

Five states placed some form of cannabis legalization to voters on Tuesday. And every single state initiative passed. As a result of the cannabis clean sweep on Tuesday, 1 in 3 Americans now live in a state with legal recreational marijuana.

In New Jersey, Public Question 1—a constitutional amendment to authorize recreational marijuana—passed by a 2 to 1 margin. The amendment not only legalized recreational marijuana, it also grants broad program oversight to the newly established Cannabis Regulatory Commission. Implementing legislation is required for legalization to go live, but legislators are expected to act quickly, with some having already proposed legislation prior to election night.

South Dakota and Mississippi both passed medical marijuana ballot initiatives, with both measures receiving almost 70% of the vote. South Dakota earned a special distinction on Tuesday, becoming the first state to ever legalize both medical and recreational marijuana at the same time—albeit through two separate ballot initiatives. The recreational marijuana initiative in South Dakota passed by a margin of 53% to 47%.

In one of the most expected outcomes of the night from a cannabis perspective, Arizona legalized recreational possession and use of cannabis by adults aged 21 and over. The initiative saw proponents massively outraise their opponents in political funds, which helped produce a 20% margin of victory.

Voters in Montana overcame what some saw as a potentially confusing pair of ballot initiatives to legalize recreational marijuana. In Montana, voters needed to approve two separate ballot questions, one of which set a legal age for recreational marijuana, and the other which provided broad authorization to the state government to implement and regulate a recreational marijuana market. Both measures passed with just under 60% support.

While industry watchers felt confident that the market for cannabis would expand as a result of Tuesday’s votes, none were certain that the measures in all five states would pass. The result is especially interesting given all that we currently know (and don’t know) about which party will control the U.S. Senate and the White House in 2021.

Momentum has been building in D.C. toward federal cannabis legislation for a number of years. But among the various proposals put forward, support has shifted over time. With clear and consistent support for legal cannabis making itself known in states of differing political profiles, lawmakers in D.C. continue to see a clear signal that the American public is ready to consider major changes to how the federal government restricts and regulates cannabis. While cannabis advocates were hopeful for a blue wave that would change the makeup of the Senate in order to carry true cannabis reform through Congress, observers are hopeful that a path still remains for cannabis legislation to address banking, taxation, research, social equity and potentially a rescheduling of cannabis altogether.

In contrast with conventional wisdom, cannabis has not been a partisan issue. Supporters and opponents alike come from differing ideological perspectives, so a path to reform paved with bipartisan legislation is not only possible, but becoming more and more likely in the coming year now that 38 states have said yes to legal cannabis.

State governments are also buoyed by this outcome. States with legal cannabis markets have seen tens of millions of dollars in monthly tax revenue receipts from legal cannabis sales. And that sort of budget stopgap is especially desirable following a nearly yearlong pandemic that has caused substantial budget shortfalls at the state and local levels alike. Indeed, New Jersey’s legalization is expected to eventually generate $300 million in annual tax revenue. This, in turn, has most pundits optimistic that New Jersey’s first move will prompt legalization throughout the northeastern United States, further accelerating the above-described trends. This development is likely to expedite efforts in New York to pass adult use of cannabis through the state budget in 2021.

No matter how you look at it, Tuesday’s results signal that many more substantial changes are in store for the cannabis industry in the years to come.

Contact one of the attorneys below to navigate issues related to cannabis policy and the election results.

This document is intended to provide you with general information regarding cannabis-related ballot initiatives. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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