Marijuana had an incredible 2016, and the hope for pro-legalization enthusiasts is that momentum will continue to carry into 2017 and beyond.
As it currently stands, just 21 years after California became the first state to legalize cannabis for medical purposes, 28 states have now legalized medicinal pot, while residents in eight states have voted in favor of legalizing recreational, adult-use weed. In fact, in the November elections eight out of nine cannabis initiatives/amendments passed, with the lone failure being Arizona, which saw its recreational marijuana initiative fail by just 2%.
The two main drivers behind the marijuana movement continue to be the changing perception of the drug among the public, and the desire of governments at the local and state level to generate new channels of tax revenue.
Since the mid-1990s, the number of respondents in Gallup's national poll who'd like to see cannabis legalized nationally has more than doubled. In 1995, favorability stood at just 25%, but by 2016 it had risen to 60%, an all-time high.
The green behind the green, or should I say money behind the industry, is another reason why state-level governments have been so willing to put marijuana initiatives on the ballot. The passage of Prop 64 in California could add $1 billion or more in annual tax and licensing revenue to the state, while Colorado wound up racking up $135 million in tax and licensing revenue in 2015 on $996.2 million in sales. Through the first 10 months of 2016, Colorado had already topped $1.1 billion in legal pot sales, so expect its tax and license revenue to have risen in 2016.
A number of disadvantages keep the pot industry from budding
Yet, a number of challenges continue to plague the pot industry. For example, two inherent disadvantages caused by the federal government's schedule 1 status of cannabis have kept a lid on the expansion and profit potential of marijuana businesses.
For starters, most cannabis businesses have little or no access to basic banking services, such as a checking account or line of credit. Even though most states that have legalized medical and/or recreational pot have built in workarounds for financial institutions, the simple fact that these financial institutions ultimately answer to the federal government makes engaging in business with marijuana companies inherently risky.
The other major disadvantage comes around tax time. Unlike normal businesses that have the luxury of deducting certain expenses on their taxes, businesses that sell a federally illegal substance like marijuana are barred from taking deductions on their taxes. This leaves weed businesses to pay tax on their gross profits instead of net profits.
Another major issue that probably doesn't get enough press is the issue of employment. A lot of employers around the country test their employees for drug use, and they condition employment around the idea that their employees pass these drug tests. Marijuana is often one of the many substances employers test for, and there's nothing to protect individuals from being fired for pot use, even in states that have legalized the substance.
However, this last point could soon change.
Oregon introduces a cutting-edge cannabis bill
As The Oregonian recently reported, a bill (known as Senate Bill 301) was introduced in Oregon's Senate on Jan. 9 that would potentially protect pot users from being fired from their jobs for using marijuana off-duty. While the bill doesn't specifically use the word "cannabis" in its context, the introduction of the bill can presumably have only one purpose: to protect legal cannabis users within the state from being terminated by employers.
The presented bill reads (emphasis added to match that of the bill's context):
"It is an unlawful employment practice for any employer to require, as a condition of employment, that any employee or prospective employee refrain from using [lawful tobacco products] a substance that is lawful to use under the laws of this state during nonworking hours; except when the restriction relates to:
- A bona fide occupational [requirement] qualification; or
- The performance of work while impaired."
In other words, certain professions and union-represented professions could still be allowed to terminate or pass over applicants on the grounds that they're using marijuana. A good example here would be the trucking industry, where it's been shown that marijuana use can lead to some degree of impairment while driving. However, many industries and jobs would seemingly be protected if Senate Bill 301 were to pass.
Right now, Oregon is an at-will employment state, meaning employers can terminate employees for any reason not specifically protected by law. If Senate Bill 301 becomes law, Oregon could wind up setting a standard for other states to follow, and it may get a large monkey off the shoulders of the cannabis industry.
Don't count your chickens before they hatch
But, before you get too excited about this development, understand that Oregon could still be a ways off from implementing a job-saving pot bill. The next step in the process is a judicial review of the bill. If it were to pass spec there, it would come back for a Senate vote, then a House vote, and finally be signed into law by the state's governor. Even a progressive state like Oregon could have difficulty and pushback from businesses in getting such a groundbreaking measure passed.
Similar to the federal government, which wants more safety and benefits-versus-risks data on marijuana before it'll consider rescheduling the substance, Oregon's legislature is probably going to need a very well-defined group of industries that would be excluded or included by this bill. There would also need to be a clear way for employers to determine what qualifies as "impaired" and what level of THC content (the psychoactive component of cannabis) could get someone fired from their job. The intricacies of this bill could drag out for months, or even longer.
Long story short, if you're a pro-legalization enthusiast or an interested investor in marijuana, the introduction of SB 301 is a positive development. However, it's not worth counting your chickens before they hatch, because there are still a number of nuances about this bill left to be hashed out.