The cannabis industry is preparing for a potential disaster in the form of federal legalization. Some firms are planning to move out of the U.S., while others plan to fight back and put their lobbying power into action.
The federal legalization 2021 reddit is a disaster for cannabis firms. A number of companies have seen their stocks plummet on the news that Canada will legalize marijuana in July, 2020.
What happens when those hard boundaries vanish? That is the major issue for small companies in these compartmentalized marketplaces.
“I believe we will see a race to the bottom if the [Schumer] bill is passed with the current language that really doesn’t give the states the authority they need to keep their markets intact,” said Jeremy Unruh, vice president of regulatory and public affairs at PharmaCann, a multistate operator with facilities in New York, Illinois, Ohio, and Massachusetts.
Large-scale growers, according to Unruh, will migrate to states with low energy costs, laxer labor and environmental regulations, cheaper taxes and levies, and favorable outdoor growing conditions. Then they’ll sell the rest of the nation their low-cost, mass-produced cannabis.
“You will see a significant movement of economic possibilities from areas like Colorado and Washington to places like Mississippi, Georgia, and New Mexico, which have weaker labor requirements and environmental regulations,” Unruh said.
The elimination of state boundaries will also alter where money comes from and who it goes to for dispensary owners, manufacturers, and delivery firms. Some jurisdictions impose residency restrictions for financing, licensing, or both, effectively prohibiting out-of-state money or requiring it to be invested in locally held companies. Others have restricted licenses to equity applicants, with the goal of providing possibilities in the marijuana business to people who have been subjected to disproportionate criminal punishment.
In order to preserve a mom and pop type market, Washington state, for example, imposes residence restrictions and licensing limits. If borders are lowered and residence restrictions are eliminated, Ian Karl Eisenberg, the founder of Seattle-based dispensary chain Uncle Ike’s Pot Shop, believes Washington companies would be unable to compete for market share.
“Some individuals want to keep [the state’s] sector small, organic, and mom and pop. That’s great, but it’s not reality,” Eisenberg said. “There won’t be any major players here when we open up,” he says. Big guys from other cities — God forbid, Portland — will come in and just buy us up.”
However, under the dormant commerce clause, which is an implicit constitutional ban on states adopting laws that discriminate against imported goods, regulations like these may be regarded as restricting or burdensome to interstate trade.
“Once the dormant commerce clause is activated, social justice initiatives will be vulnerable,” said Vanderbilt Law School professor Robert Mikos. Parts of existing state restrictions, such as residence requirements or labeling regulations, may be struck down, according to Mikos, on the grounds that they impede interstate trade.
“That’s something that has slipped under the radar because it’s not in the language of [Schumer’s cannabis bill] or any other federal proposal,” Mikos said at a Perkins Coie panel earlier this month.
The more act 2021 vote date is a disaster for cannabis companies. Some firms are predicting that the legalization of recreational marijuana will result in more regulation on the industry.
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