It's only the second week of January, and it has already been a wild year in the cannabis industry. First, legal sales of recreational marijuana started in California, and then Jeff Sessions rescinded the Cole Memorandum. What next? Here are seven stories to follow in 2018.
California–all eyes will remain on California to see how the state and its local jurisdictions regulate and tax recreational marijuana. While several state agencies will impose regulations on various aspects of cultivating, transporting, selling and taxing marijuana, local jurisdictions are empowered to impose their own sets of regulations and even ban weed within their borders. 2018 promises to be a turbulent year in marijuana regulation in the Golden State.
The Feds—oy. The Feds. While Jeff Sessions' rescission of the Cole Amendment blew up the internet for a couple of days, it is clear that the industry intends to, as the British say, keep calm and carry on. In discussions with clients and others involved in cannabis, the prevailing view seems to be that Sessions' announcement will create a pause in investment and mergers and acquisitions activity, but that pause will not last long. Sessions' announcement may cause Congress to take action on marijuana sooner than it might have. Already, there is talk of extending the Rohrbacher-Blumenthal Amendment to recreational marijuana as well as medical marijuana. There is also talk of bipartisan support for federal legalization, but so far it is just talk, and I think it will remain talk during 2018.
Canada–all predictions are that recreational marijuana will be legalized by July 2018, making Canada, along with Uruguay, the only countries in which rec MJ is totally legal. Look for Canada to go through the same regulatory fits and starts as California and every other jurisdiction that has legalized weed. More important is that Canada is becoming the money center for the marijuana industry with companies rushing to list on the TSX (Tornoto Stock Exchange) to raise capital. Watch for this trend to grow in 2018.
The Rest of the World–medical marijuana is legal in over 25 countries. This number will increase in 2018, and more countries may seek to legalize recreational marijuana. Look for increased M&A activity on a global scale and, eyeing Canada's success, look for more stock exchanges around the world to list marijuana companies.
Medical Marijuana–with widespread legalization of medical marijuana comes more research. Look for medical marijuana research to explode on a global basis. One of the leaders in medical marijuana research is Israel, whose Ministry of Agriculture now accepts medical grade marijuana as a regular farming sector in the country. Also look for increased research in Europe as companies establish research facilities in Denmark, Portugal and Germany.
Encroachment–by other industries as tobacco, alcohol and pharmaceuticals look to establish a position in marijuana. In the fall of 2017, major alcohol brand owner Constellation Brands spent almost C$250 million for a stake in Canopy Growth, the largest licensed producer of marijuana in Canada ( https://mjbizdaily.com/constellations-purchase-canopy-stake-transformative-portends-investments/). Analysts expect this trend to continue.
Banking–will legalization of recreational marijuana in California finally push the Fed to issue definitive binding guidelines to allow US banks to bank weed? Maybe, but I am not optimistic 2018 will be the year. Rather, states will continue to push the envelope and seek innovative alternatives to the federal banking system aided by technology companies. Also, more local banks may seek to bank the industry as they see others doing so with some success.
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