What's being voted on
This is the biggest year we've ever witnessed for the marijuana industry, with residents in nine states voting on various recreational and medical marijuana initiatives and amendments. One such pivotal state on Election Day is Arizona.
Arizonans are heading to the polls today to decide whether or not Proposition 205, known officially as the Regulation and Taxation of Marijuana Act, will allow adults ages 21 and up to purchase marijuana legally within the state. If approved, a regulatory agency known as the Department of Marijuana Licenses and Control would be created to govern the cannabis industry, with consumers on the hook for a 15% tax at the retail level. Tax revenue generated by the sale of recreational marijuana would be deposited in Arizona's Marijuana Fund, with distributions made to the Department of Marijuana Licenses and Control, as well as the school district, charter schools, and the Arizona Department of Health Services.
Arizona legalized medical marijuana in 2010.
What the polling suggests
Of the five states set to vote on a recreational marijuana initiative today, Arizona could be the one most in danger of seeing its measure fail to garner the required majority vote to pass.
On one hand, the Arizona Republic/Morrison/Cronkite News poll from October found that 50% supported Prop 205, 42% opposed it, and 8% remained undecided, with a 4% margin for error. On the other hand, a September poll from Phoenix-based Data Orbital showed that only 45% favored the measure, while 44% opposed it. Inclusive of the margin of error for both studies, this is essentially too close to call.
What's at stake
Should the measure pass in what's traditionally been a Republican-voting state (Republican-led states typically vote against progressive marijuana initiatives), the Arizona Joint Legislative Budget Committee has estimated that recreational marijuana would raise about $123 million annually in tax revenue. A little more than $55 million would be dedicated to full-day kindergarten programs and general funding to K-12 schools, annually.
Even though Arizona's expected $123 million annual haul only represents about an eighth of what California would bring in annually from recreational marijuana if its measure is approved, a victory in a traditionally Republican state would be a major win for the cannabis industry. It would exemplify just how far the public's opinion of marijuana has come in a relatively short period of time. After garnering just 25% national support in the mid-1990s, the latest Gallup poll found that 60% of Americans would like to see marijuana legalized nationwide.
It would also allow lawmakers on Capitol Hill to have another point of reference when examining whether or not cannabis can be successfully regulated. The more points of reference lawmakers have, presumably the more likely they could be to legalize the drug nationally at some point in the future.
Conversely, an approval or rejection in Arizona is going to do very little for investors. Despite what could represent a 30% annual growth rate for the pot industry through 2020 per ArcView Market Research, investors have few publicly traded options that trade on reputable exchanges to choose from. Most marijuana companies are also losing money and facing a massive uphill battle as a result of cannabis remaining a schedule 1 substance at the federal level. Today could be a game changer for Arizonans, but it's hardly a needle mover for investors.