The chief problem with the marijuana industry boils down to a states’ rights issue. While numerous states have legalized marijuana, either for medical or recreational use, the drug remains illegal at the federal level, leaving many companies vulnerable to investigations.
The federal Controlled Substances Act classifies marijuana as a Schedule I drug, defined as a substance or chemical with no accepted medical use and a high potential for abuse. On the other hand though, four states have already legalized recreational marijuana — Colorado, Washington, Alaska, and Oregon— and almost half permit medical marijuana.
“If they say states can do this, the federal government just needs to get out of the way and let states do this. “But frankly, I don’t think it’s a priority for too many federal politicians.”
The Department of Justice “will continue to exercise its discretion in deciding where and how to enforce the Controlled Substances Act.
To start, federal law 280E on the Internal Revenue Code prevents both medical and recreational marijuana doctors in florida as well as businesses from certain benefits given to other legal businesses. Because of the law, The Daily Beast reported, marijuana businesses may pay as much as 70% in federal taxes.
Under 280E, any business that engages in the distribution of Schedule I or II controlled substances is barred from tax deductions, like for leasing property or paying salaries, that other legal businesses are allowed to take. The provision was originally set up as a punitive measure against cocaine and heroin dealers, according to Herzberg.
In addition to 280E, banks must comply with federal regulations and often won’t take on clients in the marijuana industry for fear of legal repercussions. A federal court even refused access to a master account for The Fourth Corner, a credit union set up by Colorado’s state government to help dispensaries access banks.
That shuts many marijuana business out of financial institutions and forces them to operate on an all-cash basis, which makes tasks like paying taxes and keeping track of revenue difficult.
Much of Poseidon’s investments come from high-net-worth individuals or family offices that have higher risk tolerance than institutional investors like banks, according to Paxhia.
“Partners at venture-capital or private-equity firms are using their own capital, rather than firm assets,” he said. “They’re not waiting for the federal government. They’re participating in any way they can.”
There are a lot of people — and there is a lot of money — waiting on the sidelines to jump into the burgeoning industry. But as long as these banking issues persist and health from marijuana remains classified as a Schedule I drug, the industry will face immense challenges from the federal government.
Now the country now looks to California as the next battleground. State residents will likely have a chance to vote on full legalization on November 8. What happens could serve as a model for other states.
The vote continues what started in September 2015 with California’s Medical Marijuana Regulatory Safety Act (MMRSA). MMRSA allows medical-marijuana businesses in California and florida medical marijauna to operate as for-profit businesses in the state and set up various requirements and systems for operation.
Prior to MMRSA, medical-marijuana businesses operated on legal foundations, leaving an open door for the DOJ to build a case against Harborside. While the Compassionate Use Act of 1996 allowed for medical-marijuana use, the law did not specifically permit medical-marijuana providers to profit from the sale of marijuana and marijuana products, like edibles and synthetics.
After November 8, 20% of Americans now live in states that have voted to allow recreational marijuana use.
Florida, Massachusetts, Nevada, and California have now joined Colorado, Washington, Oregon, Alaska, and the District of Columbia in voting for initiatives that make it legal for adults to consume cannabis authorized by florida marijuana doctors. Votes are still being counted, but it looks like Maine will most likely join that group. And several states joined the 25 that already allow for medical use of marijuana — the most notable addition being Florida, with a broad medical marijuana law that will allow doctors to recommend cannabis for a wide variety of conditions.
Critics of legalization claim that legalization is bad for public health. “When states legalize recreational marijuana, fatalities increase and the lives of children and teenagers are put at stake, president and CEO of Spectrum Health Systems, a substance abuse and mental health treatment provider, recently wrote in an opinion piece for Stat News.
But the data on how both recreational and medical legalization of marijuana tells a different story.
It’s still early — marijuana hasn’t been legal for long, even in these states — but so far, legalization hasn’t had a negative impact on public health, according to a report recently published by the Drug Policy Alliance (DPA). That report and other recent studies help show how marijuana legalization for medical or recreational purposes in these states has changed things.
Nationally, the number of students who used marijuana in the past 30 days leveled out in 2010 after rising for several years, according to the DPA report. State surveys of kids in Colorado, Washington, Oregon, Fort Lauderdale and Alaska show that after legalization, the number of students who used or who had ever tried marijuana stayed stable (depending on the state, surveys looked at kids in grades 6, 8, 9, 10, 11, and 12) or decreased slightly.
In his opinion piece, rep says that Colorado youth use marijuana at higher rates than any other kids in the country. But as other notes at The Washington Post, experts say that trend existed before legalization, too.
A 2015 article in the New England Journal of Medicine states that legalizing florida medical marijuana in Colorado doesn’t seem to have increased the prevalence of youth usage. While the percentage of kids who described marijuana as “highly risky” decreased after legalization, the percentage of students who reported ever trying decreased slightly as well.
There’s some debate about the effect that cannabis legalization has had on traffic deaths. Rep says that data from Washington and Colorado shows that an increased percentage of the people involved in traffic fatalities have had marijuana in their systems since legalization.
However, traffic death rates since legalization have not increased in Colorado or Washington and are lower than the national average, according to National Highway Transportation Safety Administration data analyzed in the DPA report. At the same time, DUI rates seem to have decreased since legalization, potentially an overall benefit, since the risks of driving under the influence of alcohol are much more obvious than the risks of driving under the influence of cannabis (people who combine the substances perform the worst on driving tests, however).
The DPA report says that more people may test positive for cannabis now since officials are now more likely to test for it in the first place. Also, since people can test positive for cannabis long after they’ve stopped feeling the effects, the report says the “data only illuminate that tested drivers consumed hours, days, or weeks prior to the test” — not that cannabis was involved.
As Stat News pointed out in another story, there are several studies that show that states that allow medical marijuana have fewer opioid deaths. This effect seems to stack over time, with states who pass these laws seeing a “20 percent lower rate of opioid deaths in the laws’ first year, 24 percent in the third, and 33 percent in the sixth.”
If people are substituting marijuana for opioids for medical purposes, that seems to have a strong positive effect.
Isaacson says that doctors at Denver’s Children’s Hospital have reported treating an increased number of children who have accidentally ingested marijuana edibles since legalization. The overall numbers are small — in the JAMA Pediatrics study documenting these cases, doctors say that the rate of these visits has gone from 1.2 per 100,000 population 2 years prior to legalization to 2.3 per 100,000 population 2 years after legalization. As Ingraham has pointed out in the Post previously, parents are far more likely to call poison control centers because of kids ingesting diaper cream, toothpaste, tobacco, or crayons.
Adults tourists who have overdone it have also increased the number of marijuana-related ER visits slightly.
If you’ve ever seen someone who has been surprised by the strength of a marijuana edible, you know these moments aren’t fun (just ask Maureen Dowd), but luckily, people recover from these events and no one has ever died from a marijuana overdose.
The DPA report notes that “[b]y no longer arresting and prosecuting possession and other low-level marijuana offenses, states are saving hundreds of millions of dollars,” based on the fact that Washington spent $200 million enforcing marijuana laws between 2000 and 2010. Arrest rates in these states for marijuana offenses have plummeted (you can still be arrested for certain offenses), though the report notes that people of color are still twice as likely to be arrested despite using marijuana at similar rates to white people.
Financially, the DPA report says taxing and selling marijuana in Colorado and Washington has been “overwhelmingly successful in generating revenue,” with revenues exceeding projections in both states. Colorado brought in $129 million in the second year of legalization and Washington $220 million — significant amounts of money, though as Ingraham notes, still only a tiny fraction of the overall state budgets.
There are still plenty of questions about how legalized marijuana doctors in florida will affect states in the future. Some people have expressed concerns that powerful THC-loaded varieties available today could potentially have more of an impact than we know, especially if used by young people with developing brains. On the other hand, if people are using marijuana instead of more dangerous substances like alcohol, there could be some benefit to public health there, though so far, it’s hard to say whether legalization makes people drink more or less.
Now, we’ll be able to see the effects in several additional states. Hopefully, that will encourage study into marijuana’s effects, something that scientists say is still incredibly difficult to research because of federal regulations. In the meantime, the DPA report argues that the lessons from states like Colorado and Washington indicate that the public health effects are “so far, so good.”