Growth Opportunities As New States States Open For Legal Cannabis

Key Takeaways

• Maryland and Missouri both passed initiatives to legalize recreational marijuana in November.
• Many states, including Oklahoma, Ohio, Hawaii, and Minnesota, could put recreational use to vote in 2023.
• Colorado has shown that legalizing marijuana increases tax revenue but also brings with it new challenges.

Five states recently put recreational marijuana use on the November ballot. While it didn’t pass in each state, it did in some and is on the ballot in more states in 2023. Here is a look at the new marijuana laws in Maryland and Missouri and how the legalization trend is gaining momentum in states nationwide.

Recreational marijuana

Five states put the issue of decriminalizing marijuana to their voters during midterm voting on November 8, 2022, with two, Maryland and Missouri, voting yes. North Dakota, South Dakota, and Arkansas all voted no, with South Dakota having the narrowest margin of no to yes votes. In addition, Colorado had a ballot initiative to decriminalize and regulate certain psychedelics, which passed with 53.6% of the vote.

Maryland’s new marijuana laws

Maryland’s voters approved the 2022 Maryland Question 4 referendum with 67.2% of votes in favor of legalization. The state had already legalized medical marijuana use in 2014. However, the law has no provision for the licensing of dispensaries, and the 102 licensed dispensaries for medical marijuana are to continue operations as normal. To date, plans are not known for the licensing and implementation of recreational use dispensaries.

Maryland’s legal marijuana laws are set to take effect on July 1, 2023. The new laws allow adults 21 years or older to legally possess a maximum of 1.5 ounces of cannabis, 12 grams of cannabis concentrate, and cultivate a maximum of two plants. Anyone possessing between 1.5 and 2.5 ounces of cannabis or 20 grams of concentrate may be punished by a civil fine of a maximum of $250 or community service. It also creates a Cannabis Business Assistance Fund to help small, women-owned, and minority-owned businesses who wish to enter the cannabis industry.

The state has already decriminalized marijuana by de-emphasizing criminal prosecution of an adult in possession of a small amount of cannabis. The law extends the current action until July 1, 2023. However, anyone who possesses more than is legally allowed by law will be subject to prosecution under the existing criminal penalties after legalization becomes law.

Missouri’s new marijuana laws

Missouri state residents also voted yes on recreational marijuana through Amendment 3, a proposal for amending the Missouri Constitution. The state had previously allowed medical marijuana and decriminalized personal use of the drug. Amendment 3 corrected issues with the current medical marijuana laws, such as allowing more health professionals to certify people into medical marijuana programs, and added protections to keep medical marijuana users from losing their job or custody of their children. It also formalized how adults can use marijuana without fear of legal repercussions.

The new laws became active on December 8, 2022, and made it legal for adults 21 years of age or older to be in possession of and use marijuana. Adults are allowed to possess a maximum of three ounces of dried, unprocessed marijuana, or its equivalent, and registered adults can cultivate a maximum of six flowering cannabis plants, six non-flowering, and six clones.

Retail licenses for dispensaries will be approved by February 2023, enabling said dispensaries to sell to the general public, and a 6% sales tax will be imposed on each sale. The resulting tax revenue is divided between providing veterans health care, expunging non-violent marijuana offenses, and funding the state’s public defender system. Local governments can add an additional 3% tax on sales to be used for their own needs.

The amendment includes employment protections for some medical marijuana users and reaffirms an employer’s right to terminate an employee for being impaired or possessing cannabis while on the job. It’s also illegal to drive while under the influence of marijuana.

Trending legalization of marijuana

For decades, marijuana has been a Schedule I substance at the federal level. That meant it had no legal or reasonable justification for its use outside drug studies. That changed when Colorado and Washington legalized its use in 2012, with the federal government taking a hands-off approach to prosecuting anyone involved in the state’s marijuana industry.

Alaska and Oregon were the next to allow for recreational marijuana in 2014, and a few states enacted legislation to allow the use of medical marijuana. A total of 21 states, Washington, D.C., and Guam have legalized the use of recreational marijuana. Each year, more states put the question of legal marijuana to their residents to let them take the initiative of making the plant legal for recreational use.

States have found that legalizing marijuana results in increased tax revenues that are sorely needed to pay debts and boost budgets. Police in legalized states can now engage in other drug enforcement activities that are more harmful to local communities. But it is not all good news. In Colorado, some studies show traffic deaths involving drivers who tested positive for marijuana have doubled since its legalization. Additionally, emergency room visits related to marijuana increased by 54% from 2013 to 2017.

In Colorado, schools have benefited from hundreds of millions in taxes collected from marijuana sales=. A total of $2.2 billion in tax revenue has been collected since Colorado began legal sales in 2014. States purposefully put a high sales tax on legal sales, but most buyers have little in the way of complaints with paying the tax as a trade-off for easy access and the removal of the threat of legal punishment for using the plant.

The federal government is, in theory, moving towards unscheduling marijuana and thus decriminalizing its possession and use. However, the federal government moves slowly, and there is no timetable for its legalization.

States that could be voting next

Oklahoma is preparing to put the question of legal marijuana to voters in March 2023. The measure was supposed to appear on the November 2022 ballot, but various problems prevented it from being there. Ohio is also gearing up to put the question up for a vote in 2023, and Minnesota may pass legislation legalizing marijuana without a state constitutional amendment. Hawaii may also be preparing to vote for the legalization of marijuana as well. Meanwhile, citizen-led ballot initiatives could get the question on the ballot in Wyoming, Idaho, Florida, and Nebraska.

Bottom Line

As more research is done on marijuana, it has become clear to many that this drug should not be in the same class as other more dangerous drugs. Starting with Colorado, over the years, many states have seen that allowing recreational use has many more benefits than drawbacks. The question that remains is whether or not the Federal government will take action. Until they do, most investors continue to see this market as a vice, akin to alcohol or tobacco.

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