2020 Election Watch for the Cannabis Industry

This election cycle brings a number of important decisions to the voters regarding cannabis legalization in the United States. Not only are there several states debating various levels of cannabis legalization this November, there are some critical races over seats that will have ramifications for the industry.

State Legalization Initiatives

There were approximately a dozen states with medical or adult-use cannabis legalization efforts in the works at the beginning of 2020. Unfortunately, with the COVID-19 pandemic, the vigorous signature gathering efforts from marijuana advocacy groups were stunted and more than half were unable to get their ballot initiatives qualified for this election. As of now, only five states are ready to decide on cannabis legalization in the next few weeks.

Advocates in Nebraska had collected enough signatures to also have their initiative appear on the state’s ballot, but Lancaster County Sheriff Terry Wagner filed a challenge, citing the state’s single subject rule for ballot initiatives as the reasoning. After a lengthy legal battle, a judge ruled against the initiative and it will no longer appear on the ballot in this cycle.

Arizona Adult-Use Initiative

Smart and Safe Arizona submitted more than 420,000 signatures on July 1, qualifying an adult-use legalization measure for the 2020 ballot.

This wasn’t without challenges as it became a legal battle in August presented by Arizonans for Responsible Drug Policy. The group claimed that the initiative’s 100-word summary misled people into signing the petition to let the voters decide on the issue due to the definition of “marijuana” and their suggestion on how it would affect impaired driving in the state. Maricopa County Superior Court Judge James Smith rejected the group’s claims.

Montana Adult-Use Initiative

Montana’s Secretary of State gave the all-clear for the adult-use cannabis legalization measure to go to voters on August 14th. This was after the New Approach Montana group was able to collect more than 130,000 signatures, enough to place two adult-use measures on the ballot.

This was a great achievement, in the midst of the COVID-19 pandemic. Social distancing requirements made collecting enough signatures across the expansive state very difficult. Adding to the undertaking, a court ruled in late April that the campaign could not use electronic signatures.

But the group was successful, “We overcame the odds by running the most innovative signature drive ever seen in Montana,” the campaign stated. “Now, we are focused on building support with voters from across the state.”

On the ballot are two complementary initiatives. Statutory Initiative 190 establishes a system to regulate and tax cannabis for adult use. Constitutional Initiative 118 authorizes Montana to set the legal age for consumption to 21.

Dave Lewis, retired Montana state legislator and budget director for three Montana governors, said that these issues could be a boon to a state budget that’s been hit hard by economic shutdowns this year.

“COVID has done a number to the state’s projected tax revenue for 2020 and 2021; it’s been devastating,” Lewis said. “Adding nearly $50 million dollars a year to the state budget with legal adult use marijuana isn’t just a bonus. This projected revenue has already become vital to the future budget of this state, and veterans’ services like all other services need tax revenues to continue.”

New Jersey Adult-Use Initiative

With the 2019 legislative effort to legalize adult-use cannabis stalling in the New Jersey Senate stalling, lawmakers were pushed to take the issue to the voters for 2020. This initiative is a constitutional amendment that will broadly legalize adult-use cannabis in New Jersey. It also authorizes a tax and regulatory system.

“It allows certain taxations for sales tax and a local tax, but doesn’t give a lot of detail on how the regulatory process works,” Bill Caruso, an attorney with Archer & Greiner and a member of New Jersey United for Marijuana Reform and NJ CAN 2020 stated. “That’ll be sorted out later.”

NJ CAN 2020, a campaign advocating for the state’s adult-use legalization ballot initiative, has two main objectives. The first, to ensure the ballot measure is successful. Then, work with industry leaders and businesses in conjunction with the New Jersey Legislature to create an adult-use marketplace and regulatory infrastructure.

NJ CAN 2020 includes members of New Jersey United for Marijuana Reform, which comprises the ACLU of New Jersey, Doctors for Cannabis Regulation, Latino Action Network, American Trade Association for Cannabis and Hemp, Law Enforcement Action Partnership, and the NAACP New Jersey State Conference, as well as others.

Another change for the state, the New Jersey Treasury Division of Taxation announced that as of July 1, 2020, sales tax on medical marijuana is reduced to 4% from the previous 6.625% sales tax rate. This is the first of three scheduled tax reductions designed to eliminate the sales tax on medical cannabis sales in New Jersey. The reduced 4% sales tax rate will apply through June 30, 2021. Then it will be reduced to 2% until June 30, 2022, when it will be eliminated entirely on July 1, 2022.

Mississippi Dueling Medical-Use Initiatives

Mississippians for Compassionate Care, the group that created Medical Marijuana 2020, was successful in getting Initiative 65 on the ballot for Mississippi voters. In a move that will undoubtedly create voter confusion, state legislators have also added a competing measure with Alternative 65A. Voters have the chance to decide between these two routes or to not legalize medicinal marijuana at all.

Alternative 65A contrasts with Initiative 65 in several ways. One major point of difference is in limiting smoking cannabis to the terminally ill. It also doesn’t specify limitations on possession, qualifying conditions, taxes, which agency oversees industry, nor a deadline for said agency to issue medical cannabis cards. More differences between each measure are detailed here.

Medical Marijuana 2020 exceeded the required 86,185 signatures required to appear on the ballot, ultimately gathering 105,686 certified signatures. The signatures were gathered from Mississippi’s four congressional districts, and qualified for the ballot in January, according to Jamie Grantham, the campaign’s communication director. Grantham says if Initiative 65 is passed, it will provide “a robust program” that the Mississippi Department of Health will regulate.

South Dakota Adult-Use and Medical-Use Initiatives

South Dakota is aiming for something no other state has achieved: legalizing both medicinal and adult-use cannabis at the same time. 

New Approach South Dakota, the organization behind South Dakota’s medical cannabis measure, and South Dakotans for Better Marijuana Laws, the group bringing the adult-use constitutional amendment, partnered after both of their ballot initiatives qualified to be on the ballot for 2020.

“We just saw no reason to do them separately,” said Drey Samuelson of South Dakotans for Better Marijuana Laws. “There are a lot of efficiencies in doing them both at the same time.” Synergy is the key; with the way Amendment A (adult-use constitutional amendment) is worded, its passage will guarantee the enactment of Measure 26 (medical cannabis ballot measure).

The aim of Measure 26 is to: 

• Cap licensing fees for medical cannabis establishments at $5,000 (adjusted annually for inflation)
• Implement a sliding scale for patient application and renewal fees based on household income
• Require South Dakota’s Department of Health (DoH) to issue rules within 120 days of the effective date of the act

Amendment 2 will:

• Give South Dakota’s Department of Health until April 1, 2022 to enact rules and regulations around the licensing and oversight of the state’s cannabis industry
• Propose a 15% excise tax on cannabis sales to consumers

Neither of these ballot measures proposes a cap on cannabis licenses nor do they create a mandate for a minimum number of licenses. These two functions are left to the discretion of the Department of Health.

“I think voters are enthusiastic about both initiatives,” says Matthew Schweich, deputy director of MPP. “We’ve got a great group of people in South Dakota that have been working for a number of years to get medical passed, and they haven’t gotten anything out of the legislature. So, we’re excited to work with them and bring this issue straight to the people.”

Efforts in Other States

Several other states had their efforts thwarted by COVID-19 or other obstacles. Still, these states have a head start in efforts in future elections. 

• Arkansas – Adult-Use Campaign Pushed to 2022
• Idaho – Medical-Use Campaign Suspended
• Missouri – Adult-Use Campaign Pushed to 2022
• Nebraska – Adult-Use Campaign Suspended
• North Dakota – Campaign Pushed to 2022
• Oklahoma – Adult-Use Campaign Suspended

Other Key Races to Watch

Beyond the measures for adult-use and medical-use cannabis legalization, there are also some important seats up for grabs that will play an important role in cannabis legislation for various states. Key races include:

• Colorado Senate Seat – Former Gov. John Hickenlooper (D) seeks reelection against incumbent Cory Gardener (R). Gardener advocates for the SAFE Banking Act while Hickenlooper is pushing for federal decriminalization and states’ permission to legalize.
• Minnesota Senate Seat – both incumbent Sen. Tina Smith (D) and challenger Jason Lewis (R) both have outlined pro-cannabis positions.
• South Carolina Senate Seat – Jaime Harrison (D) seems likely to defeat incumbent Sen. Lindsey Graham (R), helping to advance a Democratic majority in the Senate, helping to propel federal decriminalization of marijuana. Harrison is a supporter of cannabis legalization.
• Texas District 17 House Seat – Pete Sessions (R) and Rick Kennedy (D) seek to win the seat of retiring representative Bill Flores (R). Sessions is a strong opponent of any cannabis legalization efforts.