On Friday, April 13, news broke that President Trump will not challenge states that have legalized cannabis according to Colorado (GOP) Sen. Cory Gardner. This development came
about during a private conversation between the President and Sen. Gardner where the President promised that the Department of Justice would not crack down on state-legal cannabis industry operators.
This news came as a great relief to cannabis businesses who were concerned that Attorney General Sessions would begin systemic Federal enforcement of the Controlled
Substances Act following Sessions’ rescission of the Cole Memorandum in January. It now appears that the Federal Government is on a path to begin formally recognizing state laws
legalizing cannabis through legislation currently being developed by a bi-partisan group of senators.
The details of the proposed legislation are hazy, but the areas reportedly to be covered under this law will be issues such as taxation, research, access by veterans, and banking. While the
actual legislation may take a while to be finalized and implemented, this development is likely
catalytic for the cannabis industry.
This is especially true with regards to investors who are eager to participate in cannabis businesses but have been reluctant to do so because of the lack of clarity between state and federal laws. Private investors, family offices, and venture funds may now be more willing to invest in cannabis companies which will come as a welcome development to the thousands of such businesses searching for Seed and Series A capital.
In California’s biggest cannabis markets such as Los Angeles, San Francisco, and Santa Rosa, the most significant barrier to entry for new cannabis enterprises is the acquisition of a permit eligible facility. This is because qualified locations for cannabis businesses are limited and draw premium rents and purchase prices. Hopefully, with the diminishment of federal barriers, local jurisdictions will also feel empowered to loosen their land use rules which dramatically limit where (and whether) cannabis businesses can site their facilities.
All in all this development is good news for the cannabis industry as it continues to grow exponentially in 2018.