While the War on Drugs didn’t start propaganda against cannabis and other drugs, the movement ran full steam ahead from the 1970s onward. The cannabis community started striking back effectively in 1996, with California passing the first state medical cannabis law. Oregon and Washington State completed a West Coast sweep of medical states in 1998 and cannabis law reformers have been making progress ever since.
The next watershed year for cannabis was 2012 when Colorado and Washington led the way by legalizing and regulating cannabis for all adults, with Oregon and Alaska following suit in 2014. Now, there are 36 states with medicinal-use laws on the books. Now, 18 states and our nation’s capital have legalized cannabis and there’s been progress in Congress, with the United States House introducing a federal legalization bill twice.
The progress from afar certainly leaves many of us feeling hopeful, but there are still concerns about an overtaxed and overregulated system that shuts out those traditionally harmed by the drug war movement and prices small businesses out of the regulated system. This could potentially lead to more and more people turning to the illicit market.
As a cannabis business consultant in Colorado, I watched this happen firsthand while assisting business owners’ transition into the overregulated system since Colorado passed Amendment 64. Small business owners have struggled with meeting regulations while big corporations dominate more and more of the market each and every day. An industry once forced into prohibition is now being forced out of prohibition. Mom and pop stores and small farmers are experiencing burdensome regulations and high barriers to entry, despite being the very people who built the industry.
Amendment 64 separated the existing medical marijuana system from the burgeoning recreational industry business structure. This separation made it so that actors had the same business duplicated in their facilities. You couldn’t sell medical cannabis at the same register as recreational. This doubled nearly every business expense: licensing, needed capital and employees.
Further, regulators didn’t build this system for mergers and acquisitions, which typically thrive in overregulation and should be expected. As I traveled the state consulting with business owners, I saw firsthand far too many dispensaries that were just trying to overcome all of the rules and regulations. Even though some business owners helped change local regulations, they often would be victimized by big corporate stores moving in. It was heartbreaking seeing original cannabis pioneers and hardworking mom and pop shops forced out of the market.
Do over-taxation and overregulation create a true legal market or does it push too many back into an illegal underground market? Are we collaborating and sharing our knowledge to create a stable system that will thrive with the prospect of potential full decriminalization or even legalization? We still have time to establish an industry with appropriate barriers to entry, allowing for fair competition.
As leaders in this industry, we need to encourage states and local governments to establish regulations and consult real experts who have been in the trenches throughout the years. We should avoid an industry dominated by those who don’t understand how the industry itself works. The cannabis industry, with the interplay between federal, state and local laws, is not like any other business. It is extremely difficult to survive, let alone thrive.
We need to create safe and equitable laws and allocate proper funds to these regulatory programs so they can work effectively for small businesses, the true engines of our local economies. The cannabis industry is worth the investment, as we all have seen the amount of revenue cannabis commerce brings to states with a legal market. Let’s all work hard to ensure that we rebuild the communities that have been harmed the most. It is also imperative that we address the needs of small farmers and mom and pops so that license fees, taxes and burdensome regulations lead to big corporations boxing out small businesses.
Regulators and policymakers should convene with those who have years of experience in the industry — and as cannabis leaders, we need to share our expertise, our knowledge gained over time, with the intent of positively shaping the industry.