Le­gal mar­i­juana in­dus­try toasts year of global gains

Post Tribune (Sunday) - - News - By Gil­lian Flac­cus As­so­ci­ated Press

PORTLAND, Ore. — The last year was a 12month cham­pagne toast for the le­gal mar­i­juana in­dus­try as the global mar­ket ex­ploded and cannabis pushed its way fur­ther into the fi­nan­cial and cul­tural main­stream.

Lib­eral Cal­i­for­nia be­came the largest le­gal U.S. mar­ket­place, while con­ser­va­tive Utah and Ok­la­homa em­braced med­i­cal mar­i­juana. Canada ush­ered in broad le­gal­iza­tion, and Mex­ico’s Supreme Court set the stage for that coun­try to fol­low.

U.S. drug reg­u­la­tors ap­proved the first mar­i­jua­n­abased phar­ma­ceu­ti­cal to treat kids with a form of epilepsy, and bil­lions of in­vest­ment dol­lars poured into cannabis com­pa­nies. Even main street brands like Coca-Cola said they are con­sid­er­ing join­ing the party.

“I have been work­ing on this for decades, and this was the year that the move­ment crested,” said U.S. Rep. Earl Blu­me­nauer, an Ore­gon Demo­crat work­ing to over­turn the fed­eral ban on pot.

With buzz build­ing across the globe, the mo­men­tum will con­tinue into 2019.

Lux­em­bourg is poised to be­come the first Euro­pean coun­try to le­gal­ize recre­ational mar­i­juana, and South Africa is mov­ing in that di­rec­tion. Is­rael’s Par­lia­ment ap­proved a law al­low­ing ex­ports of med­i­cal mar­i­juana. Thai­land le­gal­ized medic­i­nal use of mar­i­juana, and other South­east­ern Asian coun­tries may fol­low South Korea’s lead in le­gal­iz­ing cannabid­iol, or CBD. It’s a non-psy­choac­tive com­pound found in mar­i­juana and hemp plants and used for treat­ment of cer­tain med­i­cal prob­lems.

“It’s not just the U.S. now. It’s spread­ing,” said Ben Cur­ren, CEO of Green Bits, a San Jose, Calif., com­pany that de­vel­ops soft­ware for mar­i­juana re­tail­ers and busi­nesses.

Cur­ren’s firm is one of many that blos­somed as the in­dus­try grew. He started the com­pany in 2014 with two friends. Now, he has 85 em­ploy­ees, and the com­pany’s soft­ware pro­cesses $2.5 bil­lion in sales trans­ac­tions a year for more than 1,000 U.S. re­tail stores and dis­pen­saries.

Green Bits raised $17 mil­lion in April, pulling in money from in­vest­ment firms in­clud­ing Snoop Dogg’s Casa Verde Cap­i­tal. Cur­ren hopes to ex­pand in­ter­na­tion­ally by 2020.

“A lot of the prob­lem is keep­ing up with growth,” he said.

Le­gal mar­i­juana was a $10.4 bil­lion in­dus­try in the U.S. in 2018 with a quar­ter­mil­lion jobs de­voted just to the han­dling of mar­i­juana plants, said Beau Whit­ney, vice pres­i­dent and se­nior econ­o­mist at New Fron­tier Data, a lead­ing cannabis mar­ket re­search and data anal­y­sis firm. There are many other jobs that don’t in­volve di­rect work with the plants, but they are harder to quan­tify, Whit­ney said.

In­vestors poured $10 bil­lion into cannabis in North Amer­ica in 2018, twice what was in­vested in the last three years com­bined, he said, and the com­bined North Amer­i­can mar­ket is ex­pected to reach more than $16 bil­lion in 2019.

“In­vestors are get­ting much savvier when it comes to this space be­cause even just a cou­ple of years ago, you’d throw money at it and hope that some­thing would stick,” he said. “But now in­vestors are much more dis­cern­ing.”

In­creas­ingly, U.S. law­mak­ers see that suc­cess and want it for their states.

Nearly two-thirds of U.S. states now have le­gal­ized some form of med­i­cal mar­i­juana.

Vot­ers in Novem­ber made Michi­gan the 10th state — and first in the Mid­west — to le­gal­ize recre­ational mar­i­juana. Gov­er­nors in New York and New Jersey are push­ing for a sim­i­lar law in their states next year, and mo­men­tum for broad le­gal­iza­tion is build­ing in Penn­syl­va­nia and Illi­nois.

“Let’s le­gal­ize the adult use of recre­ational mar­i­juana once and for all,” New York Gov. An­drew Cuomo said last week.

State law­mak­ers in Ne­braska just formed a cam­paign com­mit­tee to put a med­i­cal cannabis ini­tia­tive to vot­ers in 2020. Ne­braska shares a bor­der with Colorado, one of the first two states to le­gal­ize recre­ational mar­i­juana, and Iowa, which re­cently started a lim­ited med­i­cal mar­i­juana pro­gram.

“At­ti­tudes have been rapidly evolv­ing and chang­ing. I know that my at­ti­tude to­ward it has also changed,” said Ne­braska state Sen. Adam Mor­feld, a Demo­crat. “See­ing the med­i­cal ben­e­fits and see­ing other states im­ple­ment it has con­vinced me that it’s not the dan­ger­ous drug it’s made out to be.”

With all its suc­cess, the U.S. mar­i­juana in­dus­try con­tin­ues to be un­der­cut by a ro­bust black mar­ket and fed­eral law that treats mar­i­juana as a con­trolled sub­stance like heroin. Fi­nan­cial in­sti­tu­tions are skit­tish about cannabis busi­nesses, even in U.S. states where they are le­gal, and in­vestors un­til re­cently have been re­luc­tant to put their money be­hind pot.

Mar­i­juana busi­nesses can’t deduct their busi­ness ex­penses on their fed­eral taxes and face huge chal­lenges get­ting in­sur­ance and find­ing real es­tate for their brick-and-mor­tar op­er­a­tions.

“Un­til you have com­plete fed­eral le­gal­iza­tion, you’re go­ing to be liv­ing with that struc­ture,” said Marc Press, a New Jersey at­tor­ney who ad­vises cannabis busi­nesses.

At the start of the year, the in­dus­try was chilled when then-U.S. At­tor­ney Gen­eral Jeff Ses­sions re­scinded a pol­icy shield­ing state-li­censed med­i­cal mar­i­juana op­er­a­tors from fed­eral drug prose­cu­tions. Ul­ti­mately the move had min­i­mal im­pact be­cause fed­eral pros­e­cu­tors showed lit­tle in­ter­est in go­ing after le­gal op­er­a­tors.

Ses­sions, a staunch mar­i­juana op­po­nent, later lost his job while Pres­i­dent Don­ald Trump said he was in­clined to sup­port an effort by U.S. Sen. Cory Gard­ner, a Colorado Repub­li­can, to re­lax the fed­eral pro­hi­bi­tion.

In Novem­ber, Democrats won con­trol of the U.S. House and want to use it next year to pass leg­is­la­tion that eases fed­eral re­stric­tions on the le­gal mar­i­juana in­dus­try with­out re­mov­ing it from the con­trolled sub­stances list.

Gard­ner and Sen. El­iz­a­beth War­ren, D-Mass., have pro­posed leg­is­la­tion al­low­ing state-ap­proved com­mer­cial cannabis ac­tiv­ity un­der fed­eral law. The bill also would let states and In­dian tribes de­ter­mine how best to reg­u­late mar­i­juana com­merce within their bound­aries with­out fear of fed­eral in­ter­ven­tion.

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