State Of The Leaf: 2016 Washington State Cannabis Year In Review

January 11, 2017

2016 was an historic year for cannabis, not just in Washington, but across the country. The industry made news with state ballot initiatives making a winning sweep in eight out of ten states. The victories were tempered, of course, with the surprise election of Donald Trump. So what were some of the biggest stories of 2016 affecting Washington State?

Cannabis Wins Big in 2016 Election (Maybe)

Nine states had cannabis initiatives on the ballot in 2016. Five of those -- California, Maine, Massachusetts, Nevada and Arizona -- voted on legalizing adult-use cannabis. All but one (Arizona) join Washington State (and Colorado, Oregon and Alaska) with legal adult-use cannabis. Likewise, Florida, Arkansas and North Dakota passed medical marijuana measures. Notably, Montana voters brought its industry back from the dead by approving commercial cultivation and dispensaries.

After 2016’s election, 20% of Americans live in states where adult-use cannabis is legal, while 60% live in states where medical marijuana is legal. The success of the ballot measures (should) bode well for Washington State as it signals a tipping point in the industry.

Trump’s Upset Victory Puts The Industry on Edge

While the victory of state elections was a watershed moment for the industry, the exuberance was tempered by the surprise victory of Donald Trump. Trump’s campaign rhetoric (with respect to cannabis) was favorable to the industry, however, his pick for Attorney General (anti-cannabis crusader Sen. Jeff Sessions) sent shockwaves thru the industry. Sessions famously quipped, “Good people don’t smoke marijuana.” The industry is justifiably concerned that Sessions could dismiss Obama’s Justice Department memos that permit state-legal programs to continue without interference from the feds.

Trump’s own statements, however, have been in support of medical marijuana and allowing states to chart their own course for adult-use. What did Trump say on the campaign trail? Trump stated emphatically that he supports medical marijuana and expressed lukewarm support for allowing the states to chart their own course on adult-use. He told the Washington Post: “Marijuana is such a big thing. I think medical should happen — right? Don’t we agree? I think so. And then I really believe we should leave it up to the states.” Previously, on C-SPAN, Trump said, “If they vote for it, they vote for it…But I think, medical marijuana, 100%.”

While Trump has sent mixed messages between his rhetoric and his pick for attorney general, no doubt, 2017 should be an interesting year to see how his administration’s formal policy plays out.

Washington State Consolidated Recreational and Adult-Use Markets

On July 1, Washington formalized consolidation of recreational and clinical cannabis markets. Both industries now fall under the same regulatory bodies, and there is little distinction between the two markets. The move was aimed to better regulate the clinical cannabis market, which had little regulation in place.

While more regulation was arguably needed for clinical cannabis, many patients (and advocates) have been concerned that merging the two industries won’t bode well for medical. However, the jury is still out. And, Governor Inslee has stated publicly that the State remains committed to evolving clinical cannabis in a manner that’s favorable to patients. Nonetheless, the clinical side of the industry has struggled since the changes took effect.

Washington’s Neighbor to the North -- Canada -- Positions Itself to Legalize Nationwide

Canada is moving forward to implementing Prime Minister Justin Trudeau’s commitment to fully legalizing cannabis this year. The prime minister’s appointed task force put forth 80 recommendations on how the country can move forward on legalization.

Estimates put Canada’s adult-use cannabis market at 3.8 million consumers with gross revenue at US$4.5B ($6B Canadian dollars) by 2021. A more aggressive estimate puts the figure at $22.6B.

The DEA Denied a Petition to Reschedule Cannabis (Again)

Last April, to the delight of many Americans, the Drug Enforcement Administration (DEA) announced it would reconsider rescheduling cannabis off of Schedule I (which is traditionally reserved for what they consider the most “dangerous” -- drugs like Heroin and LSD -- that have “no accepted medical use”). Hopes were dashed, however, when the DEA announced there would be no change.

Likewise, the DEA raised concerns when they announced isolated compounds (like CBD) would have their own code, but would continue (for now) to be Schedule I drugs. However, others have argued that by segregating compounds, it will be easier to at least reschedule CBD.

In a move welcomed by the scientific community, the DEA announced it would end the Fed's monopoly on the production of research grade cannabis by opening up production (for research purposes) to more entities (like universities).

Redmond Corporate Giant, Microsoft, Enters the Cannabis Industry

Native sun and Redmond-based software behemoth, Microsoft, announced it would be entering the cannabis sector. True, mainstream companies have been quietly operating in the industry for years, this was the first company of Microsoft’s stature to publicly acknowledge their interest in entering the industry in a big way. While not a Washington-based company, Fortune 500 company Scotts Miracle-Gro also elevated its visibility in the industry. The company announced its intention to invest $500 million in the sector, while making some notable acquisitions.

While the entry of “big business” to the industry will certainly continue to destigmatize cannabis, many are concerned that smaller companies and entrepreneurs could get pushed out (or at least the industry will experience a major culture shift).

Clearly, 2016 was an interesting year. But, 2017 will prove to be even more interesting! It will either be great (or perilous). Let's hope President Trump's vision for "making America great again" includes keeping cannabis great!


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