2021 was a nothing burger of a year for cannabis policy, regulation, and legislation. The year came in with the optimism of a giant hot air balloon and slowly but surely that optimism for change leaked out. By the end of the year, legalization supporters felt more like a helium balloon a week after a 5 year old’s birthday party.
For those of us who follow marijuana policy and the cannabis industry, 2021 kicked off with optimism at the positive changes to come. After all, for nearly a decade, state after state have legalized marijuana and implemented new legal cannabis markets. 2020 was a banner year at the state level, particularly during the November election when four states legalized by record numbers, including deep red states like Montana and South Dakota.
Surely, this overwhelming show of support at the ballot box would lead state legislatures around the country to get ahead of this clear political trend by passing their own legalization bills. Enthusiasm was especially high in the northeast and mid-Atlantic where states with long standing medical programs and at least semi-favorable political environments seemed poised to be the next in line to legalize.
Meanwhile during the pre-vaccine pandemic days of 2020, cannabis businesses and its workers were deemed essential in nearly every state with a legalization program and legal market. Amazingly, in much of the country cannabis went from being prohibited to essential in a matter of months. It stood to reason that other states looking to revive their struggling COVID economies would turn to cannabis legalization as a new source of revenue.
But most importantly, in January the Democrats swept control of the Presidency and both Houses of Congress, giving them unified control over Washington, DC for the first time since 2009. While President Biden has never been a marijuana reform supporter, nearly all other Democratic Party leaders in Washington, including House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Vice President Kamala Harris were open advocates for legalization.
Investors in the cannabis industry took notice. At the start of 2021 publicly traded cannabis companies and multi-state operators saw major rebounds in the stock prices, which were still recovering from the industry wide crash of 2019. Most cannabis companies saw record high valuations at the start of the year.
Then suddenly… nothing happened. Well, to be fair, very little happened. 2021 year did have some notable accomplishments, particularly at the state level where the legislatures in New York, Virginia, New Mexico and Connecticut joined the growing list of legal marijuana states. But other states that seemed favorable, like Rhode Island, Delaware, Maryland and Pennsylvania made no progress on legalization. Despite massive wins for at the ballot box in deeply conservative states in 2020, no Republican leaning state legislatures passed legalization and only Alabama passed as much as a medical marijuana bill in 2021.
Of course, the biggest disappointment has come at the federal level, where the Democratic controlled Congress accomplished nothing on this issue in 2021. Sure, the House of Representatives passed the SAFE Banking Act twice, first as a standalone bill and later as an amendment to the National Defense Authorization Act. But the bill thus far has failed to make it through the Senate, and access to banking remains elusive for the cannabis industry.
The House also passed the MORE Act, a bill that would legalize marijuana at the federal level and addresses many of the historic injustices of the war on cannabis but does very little to set up a federal regulatory framework for the legal sale and production of cannabis. But the House had passed this bill in the prior Congress, and it has been dead on arrival in the Senate, where Chuck Schumer decided to draft his own proposal that to date has been released as a working draft but has yet to be formally introduced.
At the start of 2021 many believed that passing SAFE Banking was the worst case legislative achievement for this Congressional session, yet as the year comes to a close, infighting among the Democratic caucus over whether to prioritize banking or comprehensive reform first has led to a stalemate with nothing of substance to show for it. It turns out SAFE Banking was not a worst case scenario after all. As it turned out, worst case was the status quo.
Cannabis industry investors have taken notice. The increased stock prices to start the year was largely a reflection of the enthusiasm at the prospect of real banking or more comprehensive reform. As the months ticked by with no progress in Washington, DC, cannabis company stock prices steadily dropped throughout the year along with investors’ faith in Democrats in Washington, DC to take meaningful action on the issue. According to New Cannabis Ventures, American cannabis company stocks have finished 2021 down almost 200% over their mid-February highs.
Before my old debate partner Kevin Sabet and the prohibitionists at Project SAM get too excited, let’s not overexaggerate the extent of the malaise around cannabis reform to end 2021. The overall trend on the issue continues strongly towards legalization. Despite legal election related loopholes being exploited in the courts by opponents and politicians willing to ignore the will of the people in states like Mississippi and South Dakota, there has been no concerted legislative effort to roll back the progress that has been made on legalization in the past decade. Not in one single state.
In fact, public support continues to grow for legalization. Gallup, who has polled Americans’ feelings on the issue every year since the late 1960’s found a record 68% support for legalization, with majorities in every age group and among members of all political ideologies and parties.
And we began to see real movement from Republicans on this issue with the introduction of Representative Nancy Mace (R-SC)’s States Reform Act, the first GOP sponsored bill in Congress to legalize marijuana, hinting that there may be openness to a bipartisan solution in the future. And should the Democrats fail to take advantage of the political opportunity in front of them, they risk ceding this issue to the Republicans if and when they take back control of Congress, possibly as soon as 2023. The GOP had the chance to own the political gains that come with legalization during the Trump administration but failed to capitalize on it. Democrats should not bet on their political rivals making the same mistake next time.
As mentioned earlier, a few state legislatures did legalize this past year, even if the number fell short of expectations. And it was never expected that 2021 would see new legalization ballot initiatives, as there are very rarely run in odd year elections.
But on the whole, for a year that started out with the sky high optimism for broader cannabis reform, 2021 can only feel like a letdown. Supporters had every reason to feel optimistic, but for the most part, their elected representatives in both parties at the state and federal level let them down.
All that said, while the events of the past year will understandably temper expectations for 2022, there is legitimate reason for optimism that it will be a more eventful and fruitful year for marijuana legalization than 2021. But that’s a subject for the next column…