Article by Brad Auerbach, Forbes
We have discussed in this column the explosive growth of the cannabis market, fueled by technology, a receptive market and legislative developments. But there is growing murkiness from the Administration about throttling this growth.
But first, some perspective. The cannabis industry now rivals the retail market for frozen pizza and ice cream. As reported by Eli McVey, with revenue of at least $4 billion, sales of legal recreational and medical marijuana in 2016 topped those of Viagra and Cialis, paid music streaming services, tequila and Girl Scout Cookies. Sales of legal cannabis will likely increase by 28%-35%, pushing revenue to more than $5.1 billion.
Nonetheless, word comes from Washington of reports that Attorney General Jeff Sessions is looking to crack down on the medical marijuana businesses. Experts in the business had some pithy responses.
Emily Gordon, In-House Counsel at Simplifya: “Sessions continues to push marijuana policy stances that are not only at odds with the opinions of the majority of Americans – a recent national poll showed that 73% of Americans oppose Federal interference in state marijuana regulation – but which contradict data on the positive impacts legalization has had in states across the country. If nothing else, this latest attack may spur a renewed push among marijuana businesses to continue to be good citizens and neighbors in their communities, and to make sure their operations are in full compliance with all state and local laws, which can only help to take away any legitimacy that could be possibly be given to this attack and any future attacks Sessions may make.”
Bryan Meltzer, Partner at Feuerstein Kulick LLP: “Attorney General Sessions’ letter to Congress is a reaction to the extension of the Rohrabacher-Farr Amendment and is consistent with his prior hostile position on legal medical marijuana. If anything, the letter indicates that while the DOJ disagrees with the amendment, it will respect the will of Congress. And given the broad bi-partisan congressional support and overwhelming public support for state-regulated medical marijuana, it is much more likely that Congress will continue to move forward on this issue, including by fixing the tax and banking issues that currently plague the industry, rather than moving backward by appeasing Sessions’ request.”
I have long been intrigued with the dichotomy between the states that are decriminalizing cannabis and the Federal control of the banking system. Cannabis businesses are essentially frozen out of the banking system, making theirs an all cash business. For instance, when Colorado or California cannabis businesses show up at the IRS with literal wheelbarrows of cash to pay their taxes, it may be the complaints of overwhelmed clerks that trigger alignment of state and Federal laws.