What's being voted on
Today is a big day for the marijuana industry, with residents in five states voting on whether or not to legalize recreational cannabis. One of those states is Maine, with voters deciding on Question 1, or the Maine Marijuana Legalization Measure as it's officially known.
Question 1 would legalize recreational marijuana for adults ages 21 and up, place limits on the number of retail licenses that would be issued, and institute a 10% tax at the retail level on consumers. If approved, the Maine Office of Fiscal and Program Review has suggested that 98% of tax revenue generated would wind up in the state's General Fund, with the remaining 2% being distributed to cities and towns. Initially, approving Question 1 should add $2.8 million in marijuana tax revenue in fiscal 2017-2018, with an increase expected to $10.7 million in annual tax revenue collection in subsequent years.
What the polling suggests
Based on the recent polling data, Maine has a pretty good chance of passing its recreational marijuana initiative. In October, a poll conducted by The Survey Center of the University of New Hampshire found that 50% favored approving Question 1, 41% opposed it, and 9% were undecided. The results of this poll were somewhat tighter than the September survey from the Portland Herald Press/Maine Sunday Telegram, where 53% favored the measure and 38% opposed it.
If Mainers were to approve Question 1, the transition to an environment where recreational marijuana is legal should be smooth because medical cannabis has been legal in the state since 2013.
What's at stake
Maine's projection of $10.7 million in tax revenue from recreational marijuana is minuscule next to the $1 billion in potential tax revenue that could be generated from California's vote on Prop 64. Nonetheless, a passage of Question 1 would be a nice win for the pot industry, which is being forced to expand solely at the state level. If recreational marijuana wins approval in the five states that are voting on it today, it would more than double the number of states that have legalized recreational pot.
An approval in Maine would also provide another example for lawmakers on Capitol Hill to determine whether or not the "marijuana experiment" is working. Thus far, Colorado and Washington have been examples of success stories, but more approvals are needed to demonstrate to lawmakers that cannabis can be successfully regulated.
Of course, even if Maine were to join a handful of other states in the green column, it doesn't mean that investors will be participating in the fun. Despite the pot industry's exceptionally fast growth rate, most marijuana investment opportunities are penny stocks that trade on over-the-counter exchanges.
Though listing standards have improved over the years, getting accurate financial data on OTC penny stocks is difficult, at best. In addition, most publicly traded marijuana companies are currently losing money. With the deck still stacked against the pot industry – minimal access to banks and no ability to take normalized business deductions – investors would be better off monitoring the industry from the sidelines.