“They passed overwhelmingly; they were not close races,” said John Hudak, a cannabis policy expert and deputy director at the Brookings Institution. “This is a resounding win for cannabis.”
Scotts, known for its plant and garden business, has in recent years invested heavily in acquiring companies within the hydroponics sector, a soil-less gardening process popular among cannabis growers of all sizes. Scotts contributed $800,000 to the effort to legalize recreational cannabis in New Jersey, according to state election finance records.
“With New Jersey, we’re not just looking at in the context of New Jersey but that whole Northeast corridor,” Jim King, executive vice president of corporate affairs for Scotts, told CNN Business in an interview.
‘New Jersey surrounded’
Industry members and analysts say New Jersey likely will trigger a domino effect of legalization measures within the Northeast, notably in New York and Pennsylvania.
Cresco has taken the operational approach to anchor its businesses — cultivation centers, production facilities and its Sunnyside dispensaries — in areas that boast “good regulations that are supported by big populations.”
“We kind of have New Jersey surrounded,” Bachtell said.
Bachtell also expressed optimism for the state measures influencing the federal landscape.
“With every new state that passes or adopts an adult-use cannabis law, you’ve just got to think you have two more senators now in D.C. who represent states that have adult-use cannabis laws,” Bachtell said.
Bethany Gomez, managing director for the Brightfield Group, a market research and analytics company that specializes in the cannabis industry, projects that the US recreational and medical cannabis industry will post $19 billion in sales this year, grow to $24 billion by 2021 and — with the additions of this week and likely newcomers such as New York — notch $45 billion in sales by 2025.
Still, the industry faces roadblocks at the federal level.
A Senate led by Republican Mitch McConnell will mean cannabis legislative measures will remain dead in the water, especially under a Biden administration.
“Mitch McConnell is a one-man ‘no’ machine,” Hudak said. “This is just something [he] doesn’t like. He doesn’t see the political benefits.”
That’s bad for the industry, which members say there is an urgency to address key regulatory gaps for businesses that operate within state-legal systems but conduct trade in a federally illicit product. Cannabis enterprises say they can’t easily bank or obtain traditional financing as they’re subject to a 1980s tax law drafted to punish drug dealers; they have difficulty insuring their businesses; and they don’t qualify for federal disaster aid.
There is a reason for optimism, though, Devitt said, noting potential parallels to the end of alcohol prohibition and a desire during the Great Depression to spur economic growth.
“You could see a similar trajectory playing out with cannabis, whereby our economic issues that we’re facing as a country is waking people up to the fact that the cannabis industry can in fact be a benefit to the community as a whole from a jobs standpoint,” she said.