By Jessica Rabe
Recreational marijuana legalization continues to garner serious political momentum on two major fronts. Here’s why:
#1 – New Jersey Governor Phil Murphy has been trying to legalize recreational marijuana since last year, and has reportedly finally reached an agreement on the details with his Democratic legislative leaders. Here are the details:
- Recreational marijuana would be taxed by weight at $42 an ounce, not by percentage of dollar spent. That’s a big step forward, as the governor and legislature’s biggest disagreement was on how to tax the drug.
- There would be a five-member marijuana regulatory commission, with Governor Murphy appointing three people and the legislature two. The commission would be tasked with approving licenses for dispensaries and other policies.
- They haven’t agreed on everything, including the number of licenses to distribute and how many public places can allow people to consume the drug.
- That said, according to the state senator who has been the “architect” of the bill to legalize retail cannabis, Nicholas Scutari: “The most important aspect of it is we don’t necessarily have all the votes lined up yet.”
- Even still, they have public support: A recent Monmouth University poll shows 62% of New Jersey residents support legalizing retail cannabis versus just 32% who oppose. Two major reasons behind that support: it would increase tax revenue and beat New York to the chase.
Why this matters:
- New Jersey could be the second state to legalize recreational marijuana through its state legislature after Vermont, and it could be the 11th state to legalize the drug for adult-use.
- We suspect it would also encourage New York to speed up its efforts to legalize retail cannabis as both try to glean the most economic benefits from sales. They will eventually be in competition with each other. Both states legalizing retail cannabis is important given their large populations.
- That could put further pressure on Congress to pass a bill currently circulating that would protect banks from legal troubles by serving marijuana-related businesses as it’s still federally illegal. It would also create more momentum to decriminalize marijuana and eventually legalize it nationally.
- On a final point, taxing retail cannabis by weight is different from states that have already legalized recreational marijuana sales. Other states tax the drug by using a percentage of dollars spent. In all these, the price of recreational cannabis declines after the initial hype when sales first commence, and tax revenues can fall short of expectations as a result. To state senator Scutari’s thinking: “Weight by volume is probably the way to the future in terms of how cannabis is going to be taxed.” This should be an interesting experiment as more states legalize recreational marijuana and see which tax structure is best. We’ve been vocal about how high tax rates in states like California have allowed the black market to remain relevant.
#2 – As we’ve been noting for a while, marijuana will play an important role in the 2020 presidential election, and Democratic presidential hopefuls are starting to voice their support:
- Senator Cory Booker has already introduced the Marijuana Justice Act, which would remove marijuana from the federal list of illegal drugs. The “measure also addresses withholding federal funds for the construction of jails and prisons from states whose pot laws are shown to disproportionately incarcerate minorities; expunging federal convictions for cannabis use; and mandating sentencing hearings for prisoners now serving time for pot offenses.”
- Senator Kamala Harris recently said this on “The Breakfast Club” morning radio show in NYC: “Let me just make this statement very clearly: I believe we need to legalize marijuana.”
- Senator Elizabeth Warren sponsored the STATES Act, which would help protect states with legal marijuana markets from federal intervention.
- To see other Democratic presidential candidates’ positions on the topic, here’s a list with their views and voting records on app.com.
Our take: If a Democratic presidential hopeful wants to drive millennials to the polls, they have to support marijuana legalization. Despite young adults’ general dislike for President Trump, how aggressive these candidates are on the marijuana front could be the difference of who wins their party’s nomination. It would also give young adults more of a reason to vote in 2020 other than not liking Trump. Remember, millennials will soon surpass Baby Boomers as the largest generation in the American electorate according to Pew Research.
Politicians also have support from most Americans. Sixty-six percent, or two in three Americans support legalizing marijuana, a new record since Gallup first asked the question in 1969. Of course, the majority of Democrats (75%) and Independents (71%) are in favor, but same with even Republicans (53%). Republican support of marijuana legalization first passed 50% in 2017 at 51%, and grew from there last year.
A Democratic candidate winning the presidency in 2020 would also fast track federal legalization or decriminalization at the very least. This would obviously give a huge boost to the industry’s growth and total addressable market, and most importantly allow banks to serve legal marijuana-related businesses without being worried about getting in trouble with the Feds. That would benefit marijuana businesses tremendously: it would keep them safer and they could finally take advantage of tax breaks, credit cards, loans and other services with a secure bank relationship that non-marijuana businesses enjoy.