Uncategorized

December 20, 2019

The Cannabis Evolution

Featured Image

Americans have a long relationship with cannabis for recreational and medical purposes. California was the first state to legalize cannabis for medicinal purposes. Since that time many other states have jumped on the wagon to create an entirely new legal industry based on medical cannabis. Additionally, recreational cannabis use is also being legalized in many states. The flood gates have opened and this industry is poised to continue expanding.

The History

In 1970, cannabis was classified as a Schedule I drug and became an illegal substance under the Federal Controlled Substances Act. As a federally controlled substance, that meant cannabis was considered to have no medically accepted use but instead was believed  to have a high potential for abuse like heroin, LSD, and ecstasy. During this period cannabis was also illegal under all state laws. Over time this trend has changed significantly.

California was the leader in legalizing cannabis for medical purposes back in 1996. Alaska, Oregon and Washington followed shortly after legalizing cannabis for medical use in 1998, followed by Maine in 1999 and Colorado, Hawaii, and Nevada in 2000.

Between 2001 and 2003 no new states legalized cannabis for either medical or recreational purposes but beginning in 2004 more states began to legalize cannabis for medical purposes.

2010 was the year the flood gates began opening for legalizing cannabis and by 2012 momentum was building to legalize cannabis for recreational as well as medical use in many states.

By 2017, 29 states legalized cannabis for medical purposes and 8 allowed recreational use of cannabis. An additional 17 states are allowing limited use of non-intoxicating cannabis extracts to treat certain medical conditions, including seizure disorders in children.

It could surprise you to learn that 98% of all Americans live in a state that has legalized some form of cannabis use. It hardly seems possible given that 21 years ago that percentage was 0%.

Although most states have legalized some form of cannabis they are all in violation of federal law. This creates some serious conflicts and consequences for states such as:

  • Finding workarounds to effectively regulate their markets, in order to avoid federal preemption suits
  • All markets risk federal prosecution and jail time; and,
  • Banks can’t safely provide services to cannabis-related businesses—even in states where those businesses are legal, forcing the market to operate in all-cash and making it difficult for states to tax and regulate cannabis businesses.

Despite the differences between federal and state laws, the cannabis market has evolved into a rapidly growing  industry. In the US cannabis is the single largest cash crop. It is estimated that this market may reach as much as $35 billion by 2020.

This is due in large part to the acceptance of the plant as a legitimate option for patients who suffer from medical problems including chronic pain and seizures.

CBD, a natural compound found in cannabis plants is non-psychoactive. Most analysts believe CBD is not just a craze but a valid medical treatment that is here to stay and that will continue to grow.

Many of the 2020 presidential election candidates have expressed their support for legalizing cannabis. Most favor decriminalizing cannabis and if legislation is passed to decriminalize cannabis on the federal level, that will set the stage for the cannabis industry to continue its phenomenal growth.

Business insights and resources

AR Collections

Top 4 Ways AR Automation Tools Can Reduce Days Sales Outstanding (DSO)

How Cloud-Based Accounting Software Helps Your Family Office Compete

What Does Sage Intacct Cost Compared To Oracle NetSuite?

Ready to optimize?