Editor’s note: This is part of a series of articles based on panels and presentations during Insurance Journal’s 2020 Insuring Cannabis Summit on Nov. 19.
One election takeaway beyond the fact that cannabis initiatives went five-for-five in November, is the possible snowball effect.
Phillip Skaggs, counsel for the American Association of Insurance Services, explained: “There’s a theory called the snowball or domino or ripple effect. Essentially, the theory goes that legalization in one state has influence on neighboring states, pushing them to legalize.”
Skaggs covered recent state legalization victories, as well as predictions as to what states may be next in line, and federal laws, during Insurance Journal’s 2020 Insuring Cannabis Summit on Nov. 19
Skaggs presentation was titled “Are the Election Results a Greenlight for Cannabis?”
Thirty-six states and the District of Columbia have now approved a medical cannabis program and in 15 of these states and the District of Columbia have also legalized recreational adult use.
Skaggs said “cannabis tourism” an illicit activity are among the effects of nearby states legalizing that will be felt by their neighbors.
“This has largely trickled to cannabis tourism, where citizens from one state take their money to the newly legalized neighboring state, getting that legalized state more revenue that could have been captured in the citizen’s home state,” Skaggs said. “And then they bring that, what is considered an illicit product back home, and this in turn leads to increased law enforcement efforts in the home state, as well as other expenses that would have been partially offset if the cannabis product had been bought and taxed that non-legalized home state. Most of this now, this is highly speculative, but there is some proof that elected officials do consider this to be a factor and that policy changes in one state or region can have a real influence on neighboring states.”
Arizona, a formerly red, and now a blue state, was where one of the more closely watched legalization initiatives was on the ballot.
“Voters there approved recreational cannabis, Proposition 207, with just under 60% in favor,” Skaggs said. “This is a big change from the narrow loss in 2016, which showed only 49% in favor. We’ve already heard some rumblings of opposition or estimated delays among conservative leadership in Arizona, but we can expect the state to start accepting licensure applications this January with a full regulatory framework introduced sometime within the first half of the year.”
Mississippi, definitely a red state, was another big win for legalization proponents.
“Mississippi voters approved Proposition 65 with just over 68% in favor,” Skaggs said. “There were some concerns going into the election that the ballot questions were intentionally confusing and would fail on that basis alone. The voters apparently figured it out and specifically rejected the legislature’s companion proposal for a more restrictive market. Voters overwhelmingly approved the less restrictive proposal with more definitive start dates, eligibility factors, the capped tax rate and no cap on the number of licenses that may be issued.”
Montana voters approved two initiatives to create a recreational market for consumers 21 and over. That move is expected to bring in $70 million or more in cannabis sales this year.
“It is believed that this development will also put additional pressure on neighboring non-legal states, Idaho and Wyoming,” Skaggs said.
New Jersey, where a victory for cannabis legalization wasn’t unexpected, saw an overwhelming number of voters give their thumbs up to cannabis.
“Probably the least unanticipated result was New Jersey where voters approved recreational use via public question number one with 67% support,” Skaggs said. “The law’s effective Jan. 1, but the full regulatory scheme and sales are not expected materialize until late into 2021.”
Success in New Jersey is notable for a few reasons. The nearly seven-in-10 voters who favored the initiative, and that New Jersey is now situated to have a profound snowball effect.
“First let’s talk about the Northeast and the Mid-Atlantic states where they’re considered ripe for an escalating snowball effect following legalization in New Jersey,” Skaggs said. “Governors in the region have publicly called for coordination and cooperation in pushing forward legalization. New York Governor Cuomo has said that he thinks the time is right, a sentiment echoed by New York City Mayor Bill de Blasio in a tweet congratulating New Jersey.”
Connecticut’s governor said that New Jersey legalization underscores the need to legalize in there, while in Rhode Island, the state Senate and House leadership have both expressed support for legalization. Pennsylvania Lieutenant Gov. Jeff Fetterman has asked state residents to publicly pressure their legislators on the issue, and Delaware plans to expand a medical program.
South Dakota did the whole zero to 100 mph thing.
“Last but certainly not least, South Dakotans approved two separate, but equally important measures,” Skaggs said. “First, it’s the first state in the history of the U.S. to go from nothing to everything, passing both medical and recreational ballot questions and as can be expected, going from nothing to everything is logistically more difficult and time consuming. The measure becomes law next July, but regulations are not expected to be in place until much later in the year.”
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