Is 2020 really going to be “a defining year for the cannabis industry”?

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Marijuana plants growing on stacks of coins isolated on white background. Marijuana growing business concept.

Us-1231-1364894-frontThe question in the title of this post is promoted by this CNN Business piece which asserts in its headline “2020 could be a defining year for the cannabis industry.”   I find myself a bit skeptical because it seems someone says every January that this year is going to be a defining one for marijuana reform.  But I do think there are reasons to see 2020 as an especially big year in this space, and here is part of the article:

2019 was a momentous year for the cannabis industry: Hemp-derived CBD had a heyday, Illinois made history, California got sticky, vapes were flung into flux, and North American cannabis companies received some harsh wake-up calls.

2020 is gearing up to be an even more critical year. There’s a well-worn saying in the cannabis business that the emerging industry is so fast-moving that it lives in dog years. 2020 is barely a week old, and cannabis is already making headlines after Illinois kicked off the new year with recreational sales. Other states are inching closer to legalization this year — with several mulling how best to ensure social equity. Also in 2020, there’s the FDA could chill the CBD craze, and a move from Congress could change the game entirely….

Illinois will remain in focus, after it made history last year with the first legislatively-enacted recreational cannabis program. Critical aspects of its program include social equity and social justice measures created to help people and communities most harmed by the War on Drugs. “Underserved groups are holding the industry accountable,” said Gia Morón, president for Women Grow, a company founded to further the presence of women in the cannabis industry. “And our legislators are recognizing that [social, gender and minority concerns] are a part of this now.”

New York and New Jersey have been flirting with legalization but have held off to navigate some logistics related to aspects that include social equity. The governors of New York, New Jersey, Connecticut and Pennsylvania convened this past fall for a summit on coordinating cannabis and vaping policies. New Jersey is putting a recreational cannabis measure before voters in November, and Gov. Andrew Cuomo vowed Wednesday that New York would legalize cannabis this year….

CBD products have been all the rage, but they may be on shaky ground. CBD oils, creams, foods and beverages have seen an explosion in availability following the passage of the 2018 Farm Bill, which legalized hemp but left plenty of discretion to the US Food and Drug Administration, which regulates pharmaceutical drugs, most food items, additives and dietary supplements.

The FDA is reviewing CBD and has yet to issue formal guidance, although the agency has issued warning letters to CBD makers that make unsubstantiated health claims. Class action lawsuits have been filed against several CBD companies, including two of the largest, Charlotte’s Web and CV Sciences, alleging they engaged in misleading or deceptive marketing practices, Stat News reported.

Cannabis insiders are closely awaiting the fate of industry-friendly bills such as the STATES Act, which would recognize cannabis programs at the state level, and the SAFE Banking Act, which would allow for banks to more easily serve cannabis companies. Those and other bills likely won’t pass in full…

In addition to the promise of new markets, the evolution of established cannabis programs could also play a significant role in the cannabis business landscape. In California, the world’s largest cannabis industry has developed in fits and starts. Regulators are taking aim at an entrenched illicit market as businesses decry tax increases and local control measures that limit distribution….

Canada’s “Cannabis 2.0” roll-out of derivative products — such as edibles, vapes and beverages — is in its beginning stages. The Canadian publicly traded licensed producers that have been beset by missed and slow market development have bet heavily on these new product forms….

The capital constraints are expected to continue into the first leg of 2020 as some initial bets don’t pan out for some companies, said Andrew Freedman, Colorado’s former cannabis czar who now runs Freedman & Koski, a firm that consults with municipalities and states navigating legalization. Some companies’ low points could create opportunities for other firms and investors that waited out the first cycle, Freedman said. “In 2020, I see that everybody will understand the economics of cannabis a little bit better,” he said.

I am with Andrew Freedman in thinking that the realities of marijuana reform and the industry will, at best, become just “a little bit” clearer during 2020. In the end, I think what will matter most is who wins the White House and control of Congress in this big election year. If the status quo holds after the votes are counted, I do not expect to see federal reform anytime soon. But if new leadership takes over the White House or the Senate, then 2021 will become real interesting.

https://lawprofessors.typepad.com/marijuana_law/2020/01/is-2020-really-going-to-be-a-defining-year-for-the-cannabis-industry.html

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