In case you hadn't noticed, cannabis sales are soaring around the world. According to the State of the Legal Cannabis Markets report from Arcview Market Research and BDS Analytics, worldwide legal weed revenue more than tripled between 2014 and 2018 to $10.9 billion, and this is really just the tip of the iceberg.
Yet the United States, the most lucrative market for marijuana in the world, remains a hostile place for cannabis, at least at the federal level. Despite growing support among the public to legalize cannabis on a national level, lawmakers have stood pat on their Schedule I classification of pot. This ensures it remains entirely illegal at the federal level.
A number of states aim to legalize adult-use cannabis in 2020
However, this hasn't stopped individual states from legalizing cannabis in some capacity over the past 23 years. Beginning with California in 1996, a grand total of 33 states have legalized medical marijuana. Of these 33 states, 11 have passed legislation allowing for the legal consumption and/or sale of recreational weed. And this could be just the beginning.
In 2020, a major election year, there are six states currently trying to get a recreational marijuana initiative or amendment onto their ballots. Understandably, these initiatives or amendments are in the review or signature-gathering stage at the moment, which offers no assurances that they'll eventually make it onto a ballot for vote in November 2020. Nevertheless, the wheels have been put into motion to potentially legalize adult-use weed in the following six states (listed in alphabetical order).
Arguably the most logical state to try to pass a recreational marijuana bill in 2020 is Arizona. The Grand Canyon State tried to pass a recreational marijuana initiative in 2016, with voters narrowly disapproving of the measure. However, we've historically seen second attempts at legalization pass. This is what previously happened in both California and Oregon, and is expected to happen in Arizona in 2020.
For instance, the Arizona Marijuana Legalization Initiative would legalize cannabis for consumption and purchase to anyone aged 18 and over. Taxes collected on legal cannabis would be used to fund schools, as well as help bolster the financing of state healthcare programs. Similar to Illinois' recreational pot bill, it would also aim to provide relief to persons previously convicted of marijuana offenses.
Legalizing recreational weed in Arizona would be a nice boost for multistate operator (MSO) Harvest Health & Recreation (OTC:HRVSF). Harvest Health isn't exactly the best-known dispensary operator in the country, but on a pro forma basis (i.e., if all of its pending acquisitions close) it has more retail store licenses than any other MSO. Harvest Health currently has 10 stores in Arizona, giving it a notable presence in what could be a cannabis battleground state next year.
In Arkansas, there are no fewer than three initiated constitutional amendments in the signature gathering stage that would, effectively, tackle recreational cannabis and/or perceived social injustices caused by incarceration from marijuana-related convictions. Both the Arkansas Marijuana Legalization Initiative and Arkansas Recreational Marijuana Initiative would legalize adult-use pot for those 21 and over.
Unlike Arizona, Arkansas will likely be a longer shot to green-light recreational weed. Even though support has been growing nationally for adult-use marijuana, Arkansans had to wait well over two years after approving a medical cannabis measure in November 2016 before medical weed sales commenced. This is also a state that tends to lean toward Republican lawmakers -- Republicans are less likely to support the legalization of marijuana. This makes all three constitutional amendments a bit of a long shot for the time being.
Similar to Arkansas, the Sunshine State has a number of initiated constitutional amendments that are in the signature gathering stage to either amend the state's medical marijuana program or legalize recreational cannabis.
For example, the Florida Marijuana Legalization Initiative would green-light the possession of up to 1 ounce of cannabis by residents aged 21 and up. There would also be a home-grow option allowing for up to six plants per household, with no more than three flowering at once. These plants would also need to be in an enclosed and locked space, and could not be sold.
Florida has already been wildly successful with its medical marijuana program, so recreational legalization would have to be considered a boon for an MSO like Trulieve Cannabis (OTC:TCNNF). Even with a small presence in California, Massachusetts, and Connecticut, Trulieve has focused nearly all of its attention on the Florida market. Trulieve has opened 39 stores in the Sunshine State to date, and is one of the very few pot stocks in North America that's already profitable on a recurring basis.
Yet another initiated constitutional amendment comes to us from Missouri. Currently in the signature gathering phase, the Missouri Marijuana Legalization and Expungement Initiative would alter the state's constitution to no longer make it illegal to use, grow, or sell cannabis at the commercial level. It would also throw out previous convictions for non-violent marijuana offenses, similar to what Illinois did. Interestingly, this bill would also prohibit the taxation of physician-recommended medical marijuana.
Like Arkansas, the one complication here is that Missourians only legalized medical marijuana by vote one year ago, and the product only became available in licensed dispensaries in recent months. With little lead time to build up the appropriate sales infrastructure, it's unclear what sort of support a recreational legalization measure would generate in the Show-Me State.
5. New Jersey
The Garden State actually looked to be well on its way to legalizing recreational marijuana at the legislative level earlier this year, but efforts to wave the green flag eventually fell apart before reaching the finish line.
Whereas Gov. Phil Murphy, a Democrat, and his state's legislature, were in agreement over their want to legalize adult-use cannabis, there had long been a difference of opinion over the appropriate tax rate. Once the tax rate debate looked to be resolved, certain lawmakers insisted on the measure including an expungement of previous convictions for cannabis offenses. This didn't sit well with some of New Jersey's more moderate lawmakers, and the measure wound up stalling.
The New Jersey Marijuana Legalization Amendment is a legislatively referred constitutional amendment to legalize recreational weed. It can find its way onto the ballot through a 60% vote from both chambers of state's legislature during a single session, or a majority vote in both chambers during two successive sessions. Like Arizona, New Jersey looks to have a pretty good chance to legalize adult-use cannabis in 2020.
6. South Dakota
Last, but not least, the South Dakota Marijuana and Hemp Initiative is an initiated constitutional amendment that's currently gathering signatures. If passed, the measure would legalize the possession, use, transport, and sale of adult-use cannabis for persons aged 21 and up. South Dakota's Department of Revenue would be responsible for issuing all licenses for cultivation, testing, distribution, and retail, with a 15% tax rate applied to legal weed sales. This tax revenue would first go to cover costs associated with cannabis industry governance, with the reminder headed to state schools and the General Fund.
It's worth pointing out that South Dakota is the only one of these six states that hasn't passed medical marijuana legislation, so this initiative would also require the state's legislature to establish medical cannabis laws, as well as pass laws concerning the cultivation, processing, and sale of hemp.
Considering that South Dakota has no existing marijuana infrastructure in place, jumping from everything being illicit to a green light for all might be a bit much to ask.