Navigating the Regulatory Map of Cannabis

The United States cannabis market is, in a word, complicated. As opportunity expands and legislation eases, the states are divided on how to move forward. Some still resist the industry as a legal entity, others accept it conditionally, and a few are breaking down barriers left and right. Changes in federal law could open up the possibility of more cohesion, but the currently fragmented market adoption means vendors, retailers, patients and consumers have to navigate tricky legislation.

The global marketplace is hardly more straightforward. In North Korea, where there are no enforced laws against the sale or consumption of marijuana, the product is widely seen as an alternative to cigarettes and little more than a soothing activity for manual laborers after a long day’s work. In Amsterdam, marijuana is not legal but widely sold in coffee shops due to lack of enforcement. Meanwhile, in Uruguay, where marijuana was legalized December 2013, legislation is still holding up the country’s ability to profit and successfully host legal sales. It seems that the U.S., led by first-moving states, may be in a position to set a new standard for efficiency. But first, we need to get there.

Although there are staunch advocates, most in positions of power provide conditional support. There are those U.S. states that have legalized marijuana, those that have legalized for medicinal purposes only, and those that have decriminalized marijuana in any form. This legislative non-harmonization is a major challenge that the industry needs to address, and investors should be mindful of current laws when considering the current and future growth potential of any small business, as legislation further limits demographic reach. Regulatory confusion and contradiction mean that certain businesses will be limited to state-wide growth.

As the industry progresses, vendors, consumers and medical professionals have much to gain by navigating a complicated web of legislature. Those in the industry now trust in the long-term sustainability of the business and accept the growing pains of an industry that just over half of Americans support. According to a recent article in Salon, certain states are unlikely to ever legalize for any reason. For instance, in Idaho 64 percent of citizens are opposed to any form of legalization; and in Alabama, some are saying medical marijuana is dead. Such resistance should be considered as short-term obstacles as the market expands, but it will hardly stop long-term growth.

President Obama recently admitted to VICE News that things need to change. “Locking somebody up for 20 years is probably not the best strategy, and that is something we have to rethink as a society as a whole,” he said, explaining that the criminalization of marijuana has had a costly impact on both states and individuals who suffer extreme penalties for use.

A widely discussed and overdue reclassification of marijuana from a Schedule I to Schedule II drug, as identified by the U.S. Department of Justice would be a game-changer for states that are actively embracing legalization or decriminalization. And due to successes in Colorado and Washington taking the form of everything from increased tax income to an explosion of small business start-ups, there seems substantial incentive for the U.S. as a whole to adopt marijuana-friendly laws. Those investing in the state businesses of today may be investing in the U.S. market leaders of tomorrow, but the short-term instability of the market must be taken into account.

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