Long road ahead
Irecall more than 30 years ago, when I was U.S. attorney for the District of Connecticut, writing an opinion piece on the war on drugs and the need to be vigilant in fighting it — a war that included marijuana as one of its targets. Now, here we are in 2022 and cannabis is legal in Connecticut for both medical and recreational usage. Times change, and we need to change with them. The new law that took effect last year making Connecticut the 18th state to legalize recreational cannabis was the end of a lengthy process and the beginning of another one. Following the long march toward legalization, for which many had passionately advocated for and against for many years, we must now carefully construct the appropriate apparatus needed to regulate this brand new area of commerce for the state.
Not only is this a brand new business model, but unlike areas such as liquor regulations, there is little to no common law around the cannabis industry. This will create challenges for any new business looking to operate in this new arena. Beyond that, a number of other questions exist.
The most significant challenge the lack of common law creates is uncertainty, which will be one of the most difficult challenges entrepreneurs entering this new industry will face.
Some states that have legalized the use and sale of recreational cannabis have issued lengthy regulations seeking to address many of the issues surrounding regulation. Implementation of an entirely new industry is complicated by the fact that the business model upon which the industry is based — the use and sale of cannabis — remains prohibited at the federal level. While the regulations are a step in the right direction, they leave much to interpretation, which will need to be addressed by the court system through the development of common law.
It goes without saying that implementation of any new area of regulation is a difficult task. The
devil is, indeed, in the details.
Cannabis legalization began as a relatively simple discussion of whether, and to what extent, the government should legalize and regulate a particular substance. I say “relatively” in the sense that the various positions, and the evidence and arguments to support those positions, was confined in scope and familiar to many of the participants.
But once the decision was made to legalize trade, the number of stakeholders — and the number of issues those stakeholders care about — increased greatly, transcending the original cannabis policy issues.
In short, there are a number of areas that any stakeholder looking to navigate through the new regulatory framework around recreational cannabis sale and cultivation will need to consider. There are five major issues:
Zoning: Cannabis dispensaries, growth facilities and distribution facilities will confront traditional zoning issues, which will be complicated by the subject matter.
Social justice issues: The legalization of cannabis always has raised social justice concerns. Implementation now brings with it interest in remedial social justice efforts. For instance, should licensing allocation, or geographic distribution be determined in part by social justice policies? Should there be restitution made to historically underrepresented communities? These questions and others will no doubt be considered by the legislative and executive branches.
Tax: A major driver of cannabis legalization was the prospect of increased tax revenue. Implementation will involve imposition of and allocation of that revenue, a process sure to be difficult.
Banking: While the federal government lags behind the states, with the exception of banking, that lag does not appear to have practical effect. Banking is a huge exception. The inability to conduct business using traditional financial transactions in banking institutions will create difficult problems.
Employment: The inevitable increase in state-legal cannabis use will (and already has) create an array of thorny employment issues, many of which will intersect with already-complicated health privacy concerns.
It’s a brave new world for what could be a lucrative new industry in Connecticut. But it’s one where there are still a number of hurdles that need clearing before it can truly launch. In short, this is a long and winding road to be traveled before cannabis becomes an accepted and integrated vehicle of commerce.