When talking about the fastest-growing industries in North America, marijuana is often near or at the top of the list. According to recently released data from cannabis research firm ArcView, in partnership with BDS Analytics, the legal weed industry in North America is projected to grow by a whopping 28% per year through 2021. If accurate, the legal pot industry could be generating nearly $25 billion in sales by 2021.
It's an industry where favorability has shifted dramatically over a relatively short period of time, too. In 1995, national pollster Gallup found that only a quarter of its survey respondents favored the idea of legalizing marijuana. However, by October 2017, favorability hit an all-time high of 64%. Rapidly growing sales and improving favorability are big reasons marijuana stocks have soared.
The marijuana industry's ceiling is limited by its Schedule I classification
But in the U.S., there's still a pretty firm ceiling on the cannabis industry's potential. That's because the federal government maintains a Schedule I classification on marijuana, meaning it's entirely illegal, highly prone to abuse, and not recognized as having any medical benefits. That, of course, hasn't stopped 29 states from legalizing medicinal weed since 1996, or nine states from giving the green light to recreational marijuana since 2012.
The best hope the marijuana industry has of changing the minds of lawmakers on Capitol Hill who've dug in their heels on cannabis is to push for legalizations at the state level. In 26 states, this process is made easier by the initiative and referendum (I&R) process. In effect, support from a state's residents for an issue can often get that issue put on the ballot for vote during November elections.
However, in the other 24 states, it means any form of cannabis legalization would have to be enacted entirely by a state's legislature. If a state's body of elected officials has a conservative view of cannabis, there's a very good chance it won't be legalized, even if residents in a state have a positive view of marijuana. As a reminder, even though Republicans' views toward cannabis have softened in recent years, the GOP still has a markedly negative view on marijuana relative to Democrats.
Surprise! These states might legalize medical marijuana in 2018
This year, three surprising states (i.e., states that usually lean Republican) that don't have the I&R process are attempting to become the 30th, 31st, and 32nd states to legalize medical marijuana.
Arguably the biggest surprise could be the GOP stronghold of Kentucky. House Bill 166, which is primarily sponsored by Rep. John Sims (D-Flemingsburg), would create a pathway in Kentucky for the creation of a legal medical cannabis industry. Medical patients with select ailments would be required to first get a prescription from their doctor, which would then be filled at a state-regulated dispensary. It's estimated that 100,000 to 150,000 Kentuckians could benefit, with the bill creating state jobs and helping to fight the opioid crisis.
There are two interesting points worth noting in HB 166. First, smoking cannabis won't be an option. The bill outlines that there will be nine other legal ways to ingest cannabis.
Secondly, Kentucky cities or counties will have a local-option vote available to decide whether or not to allow dispensaries. This is similar to what happened in Colorado when recreational pot was legalized. Interestingly, around three-quarters of jurisdictions chose not to allow recreational weed sales, making for a Swiss-cheese-like legalization in the Rocky Mountain State. It's possible something similar could happen in Kentucky, if the measure is approved by its state legislature.
Tennessee, another strongly conservative state, could surprise everyone by passing medical marijuana legislation in its state legislature. In January, Rep. Jeremy Faison (R-Cosby) and Sen. Steve Dickerson (R-Nashville) introduced a bill, the Medical Cannabis Only Act of 2018, designed to legalize medical marijuana for more than a dozen conditions. As with Kentucky, smoking cannabis wouldn't be allowed, nor would recreational pot. Instead, medical patients who receive a prescription from their doctor -- who would have to obtain a license from the state -- would be allowed to purchase oil-based manufactured products, such as pills or lotions.
In total, an estimated 65,000 Tennesseeans are expected to benefit from the legislation, including those with cancer, hepatitis C, Parkinson's disease, and Crohn's disease. Qualifying patients would be required to get a registration card with the state. This card would contain a chip reader that would prevent patients from purchasing more oil-based cannabis products than their monthly quota permits.
Similar to Kentucky, the bill also allows local government to hold referendums to decide whether or not to allow medical marijuana dispensaries.
A little more than a week ago, the House Criminal Justice Subcommittee approved the measure by a 4-3 vote, clearing one of many expected hurdles in the months to come.
Last, but not least, Virginia looks to be on the verge of passing medical marijuana legislation within the coming weeks. In early February, the battleground state that often features progressive lawmakers in its northern counties and conservative lawmakers to in its southern districts voted overwhelmingly in its House and Senate to move forward with medical cannabis legislation. What's "overwhelming?" How about a 40-0 vote in the Senate for approval!
The Senate bill (SB 726) and House bill (HB 1251) were identical in nature when they were voted on and passed, meaning simple procedural steps were needed to reconcile the bills and bring them to a legislative vote. In late February, Virginia's House and Senate passed the reconciled measure and sent the bill to Gov. Ralph Northam's (D-VA) desk. For his part, Northam has already thrown his support behind a bill that allows doctors to decide when medical cannabis is appropriate for patients.
Under the terms of the bill, doctors could use their discretion to prescribe cannabidiol oil (cannabidiol is the non-psychoactive component of cannabis) or THC-A (tetrahydrocannabinolic acid) oil to patients.
In other words, Virginia looks as if it'll be the 30th state to have legalized medicinal marijuana in some capacity very soon.