While the global pandemic caused a slow in the growth of many industries in 2020, cannabis remains among the nation’s fastest growing industries. And this trend is expected to continue, as more states legalize both medical and recreational marijuana.
New Cannabis Markets Scheduled to Open Up
Ballot initiatives were approved by voters in several states during the 2020 election: Mississippi approved legalizing medical marijuana; Arizona, Montana and New Jersey approved legalizing recreational marijuana; and South Dakota became the first state to legalize both medical and recreational marijuana in one fell swoop.
In Arizona, early recreational licenses began being issued in January 2021, and states like Michigan and Illinois, which previously legalized recreational marijuana, have been approving business licenses in droves, fueling rapid marijuana industry growth.
As more data comes in on the economic benefits of legalizing both medical and recreational marijuana, states that have yet to pass legislation or ballot initiatives are feeling the pressure, and beginning to rethink their marijuana policies.
For example, New Jersey is predicting $1 billion in new tax revenue by 2024 as a result of legalizing recreational marijuana — a figure that looks very attractive to lawmakers in neighboring states like New York and Pennsylvania. Many of those states’ residents are likely already traveling to New Jersey to purchase medical marijuana, and by legalizing cannabis in their states, they would capture that tax revenue for things like education and infrastructure, and create jobs.
As More States Legalize Marijuana, Others Are Pressured to Follow
Similarly, marijuana is still completely illegal in Alabama and Tennessee, while in neighboring Mississippi it will soon become available for medical use. This may prompt people who might benefit from medical marijuana to seek treatment in Mississippi rather than in their home state, causing those states to lose that potential revenue. But, Alabama currently has legislation for medical marijuana pending, as do Idaho, Kentucky, Nebraska, South Carolina and Wisconsin, so we could see more movement on the medical marijuana front soon.
No Red States or Blue States: Only Green States
On the federal level, the Marijuana Opportunity Reinvestment and Expungement Act passed the House at the end of 2020, but faces a tougher road in the Senate. This bill would not legalize medical or recreational marijuana at a national level, but it would remove all federal criminal penalties for possession, distribution, and related activities, and it would make SBA loans available to cannabis-related businesses.
Additionally, there is a good chance the Biden administration will reinstate the Cole/Ogden memo, which instructs federal law enforcement not to use resources to go after individuals or businesses that are in clear compliance with their states’ cannabis laws, even if they are in violation of federal law.
Regardless of any actions that may be taken by the federal government, however, the success of the most recent wave of marijuana legalization efforts in states that are largely controlled by Republicans shows that increasingly, marijuana legalization is not a partisan issue. And that can only mean that in the coming years, we will continue to see more ballot initiatives being approved, and more bills being signed into law that will further fuel the growth of the cannabis industry. And that, of course, means more businesses that will need liability insurance, and other types of coverage.
Learn More about Cannabis Insurance
Admiral Insurance Group is a leading underwriter of product liability insurance for businesses in the cannabis industry. Learn more about Admiral’s cannabis insurance solutions.
If you are a wholesale broker in need of an insurance partner with deep expertise in the cannabis industry, contact us about becoming an appointed broker. If you are a retail insurance broker with clients such as marijuana dispensaries, cannabis product manufacturers or marijuana growers, we encourage you to connect with one of our wholesale partners.
