Review of 2018 Election Results

November 12, 2018

Colorado

Governor: The Colorado Governor appoints the head of the Marijuana Enforcement Division (MED) and its parent agency the Department of Revenue. In addition, the Governor has final say on bills passed by the Legislature. Jared Polis has been elected Governor of Colorado. Governor-Elect Polis was one of the few elected leaders who endorsed marijuana legalization in Colorado back in 2012. He has consistently indicated his support of the cannabis industry, and previously announced that he would support state bills to allow publicly traded companies to own cannabis businesses and he also supports social use clubs. Several members of McAllister Garfield hosted or sponsored events for Governor-elect Polis and the Firm is enthusiastic about this development.

State Legislature: The Democrats have taken the majority in the Colorado State Senate which means that the Democrats will be in control of the State House, the State Senate, and the Governor’s office. McAllister Garfield expects several important bills to be considered by the Colorado Legislature in 2019, including allowing publicly traded companies to own marijuana licenses, allowing social consumption, the sunset review of both the medical and adult use cannabis laws that will likely result in significant harmonization of the rules for both systems, and other possible bills such as allowing delivery. McAllister Garfield is available to discuss with client how we can assist you in influencing these bills in the 2019 session. Please contact us if you would like to discuss this.

Colorado Attorney General: The Colorado Attorney’s Office advises the Marijuana Enforcement Division and is a key office in the regulation of cannabis in Colorado. Democrat Phil Weiser successfully defeated Republican George Brauchler in the tight race for Colorado Attorney General. Sean McAllister hosted a fundraiser for Weiser at his home and Weiser made clear he intends to treat the industry fairly, just like any other industry. Weiser is a big proponent of entrepreneurship and should bring that focus to his work on cannabis.

Colorado Secretary of State: The Secretary of State’s office certifies signatures for ballot initiatives seeking to get on the ballot and manages the election process. Democrat Jena Griswold defeated incumbent Secretary of State Wayne Williams to become the new Colorado Secretary of State. Secretary-Elect Griswold may be the first elected official who has experience working in the licensed cannabis industry. Sean McAllister hosted a fundraiser for Griswold and it is clear she will be a friend of the industry to the extent she can be while in office.

Amendment X, which takes Colorado’s definition of hemp out of the state constitution, firmly passed with 60% of the vote. This change will allow the Colorado Legislature to increase the .3% THC limit on hemp to keep Colorado hemp businesses competitive nationwide. McAllister Garfield urged a yes vote on this and is confident the Legislature will not limit the industry in the coming years. The hemp industry is booming nationwide and McAllister Garfield represent numerous well known pioneers in the hemp industry, along with several start-ups. With the possible passage of the federal Farm Bill in the near future, which will fully legalize industrial hemp and its derivatives like CBD under federal law, the future of the hemp industry looks strong both in Colorado and nationwide.

California

Gavin Newsom won the Governor’s race receiving nearly 60% of the vote. Newsome has been a strong proponent of the cannabis industry and his election is a positive development.

Los Angeles voters rejected a public bank measure. The measure was designed assist cannabis businesses access financial services, and provide financing for affordable housing initiatives.

Over 90 cities and counties across California voted on various measures to change the way that marijuana is taxed, licensed and regulated in local city and county jurisdictions. One example, voters in Malibu, California, approved cannabis delivery services and imposing a new tax on gross receipts for non-medical marijuana sales. Read more from Marijuana Moment here.

Click here to see 2018 California Election Results

U.S. House of Representatives

Democrats have won the majority in the U.S. House of Representatives. The new Democratic leadership will now have control over appointing committee chairmanships in the House. Republican committee chairs have largely refused to hold hearings for cannabis bills despite the likelihood of the bills passing. For example, Congressman Pete Sessions, the current Republican chair of the House Rules Committee, lost his reelection bid. Congressman Sessions had prevented many cannabis bills from getting a hearing.

There were some losses for cannabis advocates, including Republicans Dana Rohrabacher of California and Carlos Curbelo of Florida, who lost their bids for re-election. Despite these losses, dozens of new members of Congress have been elected who support at least medical marijuana. It is clear the next Congress will be much more favorable toward cannabis. For example, Democrat Jason Crow defeated Congressman Mike Coffman in Colorado’s 6th Congressional District. Sean McAllister hosted a fundraiser for Congressman-Elect Crow and it is clear that he is well educated on the issues facing our industry. The new Democratic majority will hopefully breathe new life into bills to fix banking, 280e, and potentially legalize cannabis and hemp nationwide.

While no one can guarantee progress at the federal level, the prospects for bills such as the States Act, which would take cannabis out of the Controlled Substances Act if it is legal at the state level, have a real chance of passing Congress in the next few years. President Trump has indicated he will sign such a bill. Sean McAllister serves on the Board of Directors of the National Cannabis Industry Association and keeps a close watch on federal legislation. If you have questions about the chances for reform in the coming year, please contact Sean.

New Medical and Retail Cannabis States

Michigan passed a measure, Proposition 1, to legalize, regulate, and tax recreational marijuana. Additionally, the new law legalizes adult marijuana possession, marijuana home grows up to 12 plants, directs excise tax money to local governments, K-12 schools, and road maintenance and legalizes hemp cultivation, processing, distribution and sales. Local jurisdictions have the power to opt out of issuing licenses.

The new retail license types include: retailer, safety license for analytical labs, transporter, processor, microbusiness, and 3 classes of cultivation licenses. Current medical marijuana licensees will get the first opportunity to apply for the retail marijuana licenses. The Michigan Legislature and Department of Licensing and Regulatory Affairs will determine when retail sales begin. The proposition requires the department to accept license applications within 12 months of the measure going into effect.

Missouri passed Amendment 2, a medical marijuana initiative that will be preserved within the state constitution. Under the measure, there should be at least 61 cultivation licenses available, 82 extraction licenses, and 192 dispensary licenses. The state has until June 2019 to create rules for the program and license applications will be available in August 2019.

North Dakota, a measure to legalize adult use cannabis, failed in part because the initiative was drafted by grassroots activists and did not include the provision of a regulatory structure for taxing and regulating cannabis.

Utah passed Proposition 2, a medical marijuana initiative. The measure allows up to 15 cultivation licenses. Dispensary licenses are determined by a formula based on local population size. Salt Lake County, for example, can have 8 dispensary licenses. Dispensaries can sell, during a 14-day period, either 2 ounces of unprocessed marijuana or up to 10 grams of THC or CBD, to an individual with a medical card. Medical marijuana and medical marijuana devices are exempt from sales tax.

After this election, 33 states now have legal medical and/or adult use cannabis. The momentum continues to increase, and the victories keep adding up.

US Attorney General Jeff Sessions Fired

Following the election, President Trump fired Jeff Sessions as the United States Attorney General. Sessions is a vocal critic of cannabis reform. President Trump is apparently considering former New Jersey Governor Chris Christie to replace Sessions. Christie has also been a vocal critic of cannabis reform, pledging during his 2016 presidential campaign that he would shut Colorado’s program down. While the departure of AG Sessions is a positive development, we need to cautiously monitor who his replacement will be.

While the future is uncertain, the cannabis movement had another big election cycle. We are grateful to you and everyone in the industry that invested their time and money into supporting pro-cannabis candidates. Now it is critical for us all to pressure our elected leaders to be bold on cannabis reform.