Greenlighting marijuana for interstate trade would open new business opportunities but also expose existing state markets to a frenzy of national competitors.
Cannabis entrepreneurs spent decades longing for Washington’s blessing — but now a vocal corner of the industry is afraid federal marijuana legalization poses an existential threat.
Two in three Americans live in a state that has approved the sale of recreational weed. What has evolved in the policy gap with federal law over the past decade is a patchwork of state-sanctioned fiefdoms where cannabis markets have largely developed locally and extend just to the border.
“It’s going to open up a tidal wave of large operators … sucking up all the capital in the capital markets and essentially rendering social equity participants unable to even get funded,” said Aaron Goines, co-owner of Emerald Turtle, a social equity-owned cannabis delivery company in Massachusetts. “In general for social equity, I think it would be a disaster at this point for federal legalization to occur.”
Senate Majority Leader Chuck Schumer has thrown his weight behind cannabis decriminalization, producing a draft bill this summer that would regulate a nationwide industry and force siloed state markets to interact with each other. Tearing down those walls would open up new business opportunities and unlock more traditional banking tools for an industry that has long been forced to primarily use cash. However, it could immediately expose every existing state market to a frenzy of national competitors and disrupt hard-fought local policies, a combination of fears that have started to muddle the industry’s approach to federal legalization.
Struggling cannabis farmers in Oregon could suddenly ship their products anywhere in the country — including places such as Alaska and Massachusetts, where they would likely undercut the prices local growers typically fetch. The tightly controlled and expensive medical marijuana programs in Florida and Pennsylvania could be forced to compete with cheaper out-of-state products. And major national companies could pour into Washington state and Maine and buy up or push out small businesses.
Many states are trying to put guardrails up around their marijuana markets: Maine and Washington are intentionally limiting the industry to help protect small businesses. Others have created licensing requirements that intentionally help communities hurt by the war on drugs, including Massachusetts, which exclusively awarded cannabis delivery licenses to equity applicants in the state for three years.
“If you look at the states, it’s really clear that it’s always the smallest businesses and the most marginalized groups that suffer the most when you introduce this kind of chaos,” said former Massachusetts cannabis commissioner…
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