Despite projections of its potential as a nearly $60 billion industry, cannabis is still stuck between a rock and hard place, with federal and state regulations often at odds and obstacles still in the way of entrepreneurs.
Hoping for cannabis to be legalized at the federal level in the U.S.? The chances are, pardon the expression, a little hazy.
The federal stance on marijuana legalization has been a taboo topic for at least the past decade. Supporters and advocates are fighting to prove its medicinal and recreational benefits while also trying to remove it from the U.S.’s list of dangerous substances.
Currently, medicinal marijuana is legal in 37 states, including Alabama, Florida, and Oklahoma. Recreational marijuana is legal in 18 states, including Arizona, California, Connecticut, and New York. Most recently, Rhode Island legalized recreational cannabis in May 2022.
As a result, numerous cannabis businesses were established in those states. It’s a billion-dollar industry with the potential to reach $57 billion by 2030. But they’re in a tough spot because they have to work between the state and federal legal legislation on marijuana.
So, marijuana business owners often have to document and record each gram of weed and sales activity to the government to stay in business. It’s not an easy endeavor, and there is a lot of bookkeeping and inventory involved.
That’s why, proponents say, it’s more important now than ever for the federal government to make the move to legalize.
Their hope lies, in part, on the Marijuana Opportunity and Reinvestment Expungement (MORE) Act, a bill proposed in 2020 by the House of Representatives to decriminalize marijuana. This would allow people to possess cannabis without any penalties. In addition, there is a clause within the legislation to make it easier for marijuana businesses to receive loans.
The bill passed the House again in April 2022, after previously passing in December 2020. Now it’s in front of the Senate for their vote.
So, does this mean that we’re getting closer to marijuana legalization? We advise clients to proceed with caution, because while the MORE Act passing the House is a good sign, its future in the Senate is a little foggy.
Senate Majority Leader Chuck Schumer is drafting his own marijuana legalization bill, which he initially intended to present by the end of March. As often happens in government, that date got pushed back. He recently promised to introduce it before the August recess. So, it’s a wait and see what happens with that.
Even with all these actions in motion, cannabis businesses and consumers will likely have to wait even longer before there is any definitive word on legalization at the federal level. For the time being, current and prospective cannabis business owners should plan to continue conducting operations safely and legally under the current guidelines while also pushing for legalization.
While the bills in front of legislators may or may not ultimately include loan opportunities, TAP Financial Partners is offering options right now. Our ecosystem has a network of advisors and experts that can assist any cannabis business with its financial needs, including capital, loans, or personalized advice. Contact us to learn more.
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