So far 2014 has been a landmark year for recreational marijuana legalization. After the passage of Amendment 64 in Colorado and Initiative 502 in Washington, licensed shops opened in this year in Colorado on January 1st and Washington on July 8th. Colorado’s recreational pot business was built off of a well run and well regulated medical marijuana system. Legalization of recreational use at the beginning of this year meant many businesses merely had to change their signs and tax brackets. On the other hand, Washington’s medical marijuana was built entirely from scratch, with the state’s LCB (Liquor Control Board) placed in charge of regulation.
With these recent developments many politicians in other states are looking to see how Washington and Colorado fare with their experiment into recreational use legalization. Despite recent cuts at the federal level to DEA marijuana enforcement and prosecution, marijuana still remains a Schedule I drug and still illegal under federal law. Polarization and gridlock in the House and Senate remain strong indicators that legalization of any kind at the federal level is highly unlikely. Despite positive changes in public approval for cannabis legalization, political stagnation and inaction at the federal level means a state-by-state strategy is the only viable option for increased legalization. Looming over this state-by-state strategy is the upcoming 2016 Presidential election. If President Obama is replaced with a President who chooses to enforce marijuana as a Schedule I drug, jurisdictional and constitutional chaos will be the result.
The politics of legalization are murky and muddled at best. Without further federal level assurances, big banks will continue to not accept deposits from pot shops for fear of violating federal money-laundering laws. Investors already contending with uncertain market conditions are also weary to delve into uncertain political ones. All of these factors take away from the legitimacy and all encompassing legality that this potentially lucrative cannabis investment sector needs.
Moving forward, the price of politics may remain costly to investors who see the promise in the cannabis industry. But, as they say, “the bigger the risk, the bigger the reward.” Majorities shift and public opinion may be able to sway political compromise. Alongside this, with referendums for recreational use on the floor in three different states and potential implications for 2015 and 2016 only time will tell how the political landscape will alter the recreational one.
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