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As more states vote on recreational cannabis laws in the 2020 elections, Colorado’s cannabis industry is still trying to measure the impact.
Given budget cuts and lost revenue during the coronavirus pandemic, the additional cash flow from taxing a regulated cannabis industry is attractive to many states and communities. Colorado continues to generate large legal-pot tax revenues, with monthly pharmacy sales breaking records more than once this summer.
But according to a report that estimates Texas could bring in $ 550 million annually if marijuana were legalized and taxed much like Colorado (and a tweet from Governor Jared Polis jokingly telling Texas not to do so with it Colorado can continue to benefit from tourism and pot dollars) it is becoming increasingly likely that Colorado’s pot industry will only face more competition in the future.
Texas probably won’t legalize recreational cannabis for the next year, but recreational cannabis is now legal in eleven states and Washington, DC. Four more states will vote on recreational cannabis legalization on November 3rd: Arizona, New Jersey, Montana, and South Dakota Voters in Mississippi and South Dakota will also vote on the use of medical marijuana.
With cannabis still illegal nationwide, “interstate trade is not allowed and these kinds of bubbles arise,” said Morgan Fox, director of media relations for the National Cannabis Industry Association. However, Fox adds that as states legalize cannabis more, the industry will gain more credibility at the national level, which will help financially strengthen cannabis companies.
“The cannabis industry has become much more legitimate in both the public and public eyes [and of] Officials and government agencies, ”he says.
According to Truman Bradley, director of the Marijuana Industry Group, a Colorado-based trade association, the momentum in Congress could pick up as more states go green, and this could help Colorado’s cannabis business owners in the long term.
“It’s a thing that maybe only a dozen states had legalized in the past few years. It was more difficult to have these conversations [about cannabis laws] at the national level. But with every new state going online, that state’s national officials suddenly have a vested interest in protecting small business owners from that state, “says Bradley.” And so every state that comes online has the ability to really help Colorado business owners. ”
Bradley hopes that as the momentum of cannabis legalization increases from state to state, changes will be made to federal policy, including an update to the Internal Revenue Code Section 280E that prohibits state-licensed cannabis companies from deducting business expenses from their tax payments. He also hopes banks will be allowed to work with cannabis companies – a thing close to Colorado Congressman Ed Perlmutter, who has been telling bill for half a decade to protect relationships between banks and the cannabis industry.
Fox and Bradley both believe cannabis companies operating in multiple states will move forward as the plant becomes legalized elsewhere. Colorado has a fair share of operators from multiple states, in part because other states are more willing to license cannabis to companies with proven track record and regulatory compliance, Bradley adds.
“In my opinion, a big part of the ‘secret sauce’ is the ability to execute – the ability to bring in a good harvest and run a tight, compliant team. And the companies that have been doing this successfully for nearly a decade are perfectly positioned to be good operators in other states, “he says.
One state that will vote on recreational cannabis use this year, Arizona, borders Colorado, while Montana is also not far away on the map.
It is unclear how or if Colorado’s cannabis industry would be affected by neighboring states legalizing cannabis. Fox says it’s too early to predict because cannabis industries and regulations can differ dramatically between states. And if either state allows adult cannabis, it will be some time before customers in that state can buy cannabis when new laws are implemented.
“I think we won’t see much of an impact for at least a couple of years until the states that make the laws can implement regulated systems. And even then, it can take a while for stores to open. There could also be problems with local control, with cities and towns on the border or elsewhere deciding to turn down regulated cannabis companies, ”he says.
Arizona, Montana, and New Jersey all have medical marijuana industries and pharmacies established, but South Dakota and Mississippi would both essentially be starting from scratch.
Bradley believes that even if border checkpoints lose regular customers outside of the state, tourists will experience Colorado’s outdoor nature and buy weeds during their visits. “What I’m going to say is that Colorado is a tourist destination – not just people who fly in, but people who come in. And I don’t see any change,” he predicts.
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Clara Geoghegan is a graduate of the University of Colorado Boulder where she studied anthropology with an emphasis on public health. She worked at Radio 1190’s News Underground and freelanced for Denverite. She is now the cannabis intern at Westword.