The cannabis legalization movement has gained significant ground in the past three decades, but much work remains. While it may be easy to rest on our laurels and applaud the progress made, looking ahead and preparing for what’s next is essential. Where does cannabis legalization stand in 2023, and what opportunities await the legal cannabis industry?
Cannabis Legalization In 2023: Where Do We Stand?
Today, 40 states and Washington D.C. have legalized cannabis in some form. Although cannabis remains federally illegal, the sort of widespread legalization and growth of state markets we see today was unthinkable just a few short decades ago.
To understand the significance of this progress, it’s important to know a bit of history surrounding the cannabis legalization movement. In 1996, California became the only state to allow cannabis for medical use with the passage of Proposition 215, also known as the Compassionate Use Act of 1996.
Of the states that have legalized cannabis in some form, 23 have legalized cannabis for all adults over 21, called “recreational cannabis” or “adult-use cannabis.” That trend began with Colorado, which legalized adult-use cannabis on November 6, 2012. The Centennial State was followed closely by Washington, which legalized adult-use cannabis exactly one month later.
Despite encouraging progress, legalization remains a contentious debate in the remaining 10 states without any form of legal cannabis industry, as well as at the federal level. Even for the 17 states that have legalized medical cannabis, recreational cannabis proposals hang in the balance. In 2023 and beyond, much work remains to advance the cannabis legalization movement and ultimately realize universal legalization throughout the U.S.
Which States Might Legalize Cannabis In 2023?
Each year brings new opportunities to expand cannabis legalization on the state level. In 2023, we’re keeping an eye on the following states which may legalize cannabis this year.
Delaware: Delaware legalized cannabis for adult use in April of this year. A companion bill setting up the state’s industry infrastructure passed and went into effect shortly after. Sales are not expected until 2024, but adult possession and consumption are now legal.
Hawaii: Hawaii was the first state to legalize medical cannabis through its state legislature rather than by ballot initiative. The most recent effort to bring legal adult-use cannabis to Hawaii failed in March when it wasn’t scheduled for a key House vote in time. Between the overwhelming support for the bill in the senate and Hawaii Gov. Joshua Green’s stated support for adult-use cannabis, advocates are hopeful that recreational cannabis may soon come to Hawaii.
Kansas: The 2022 legislative session was disappointing for proponents of medical marijuana in Kansas. Multiple efforts failed to pass in the state legislature, including the most recent attempt in March 2023. Sen. Rob Olson (R) said during a 2022 Special Committee on Medical Marijuana meeting that he plans to reintroduce the legislation this year, though he has yet to submit such a proposal.
Kentucky: Kentucky legalized medical cannabis earlier this year when Gov. Andy Beshear (D) signed Senate Bill 47 in March 2023. The state first took a big step toward legalization in November 2022, when Beshear issued an executive order allowing residents with qualifying medical conditions to possess and consume up to eight ounces of legally purchased medical cannabis at a time. However, Beshear said at the time, the order was not a substitute for legislative legalization, which the state has now achieved.
Minnesota: Minnesota failed to legalize adult-use cannabis in 2022 when the Senate blocked a floor vote on a cannabis legalization bill. However, the measure passed in 2023, and Minnesota joined the majority of the U.S. by signing an adult-use cannabis bill into law.
New Hampshire: Last year, New Hampshire’s House passed a pair of cannabis legalization bills that were voted down in the Senate. In December 2022, a bipartisan group of legislators announced plans to reintroduce the measures in 2023. In April 2023, the House approved a cannabis legalization measure, but it was shot down in May. However, it seems likely that the state’s proponents of legalization will continue attempting to find a path forward. As a result, New Hampshire remains a state worth watching this year.
North Carolina: North Carolina is home to a medical marijuana legalization bill called the NC Compassionate Care Act, which made it through the Senate last year but eventually died in the House. The bill has been submitted in 2023 as Senate Bill 3 and may have a strong chance of passing the legislature this time around.
Ohio: Adult-use legalization may be on the ballot in Ohio this November. That’s encouraging to legalization supporters since 60 percent of Ohio residents support adult-use legalization, and only 37 percent oppose it. If Ohio residents approve the measure, state regulators would need to develop a framework for the adult-use cannabis industry. Marijuana for medical use is currently legal in Ohio.
South Carolina: With two bipartisan medical cannabis legalization bills filed in the state legislature, South Carolina could soon join the ranks of states with a legal medical cannabis program. Both the South Carolina Compassionate Care Act and the Put Patients First Act remain in the House committee but offer hope that the Palmetto State will finally move forward on some form of cannabis legalization. Decriminalization bills are also up for consideration in the South Carolina legislature.
There’s no guarantee that any of these bills or referendums will pass and become law, of course. However, the fact that these conversations are being taken seriously in states where cannabis legalization used to seem like a pipe dream is progress in itself. And, with luck, some of them will lead to the expansion of the legal cannabis industry.
What Does State Cannabis Legalization Mean?
When a state legalizes cannabis, it doesn’t mean sales begin overnight. It takes time to create a regulatory framework, license businesses, and supply the market before anyone can buy anything. Typically, it takes at least one year from legalization for sales to begin; in many cases, it takes even longer.
For example, New Jersey legalized adult-use cannabis in November 2020 but didn’t see its first sales until April 2022, a full 17 months later. Its neighbor, New York, took even longer; the Empire State legalized cannabis in March 2021 and didn’t see any sales until 21 months later, in December 2022. So, should any of the states above legalize cannabis in 2023, dispensaries may not follow for quite some time.
It’s also important to note that every state’s regulatory framework differs. Since it’s up to state agencies and legislators to create the rules, legalization has taken a fragmented, patchwork approach that’s evolved from state to state.
As more states legalize, drawing on ideas from other markets and tweaking them to suit their own circumstances and goals, a varied mosaic of how to legalize cannabis emerges — there is no one-size-fits-all formula when it comes to standing up a state-legal cannabis industry.
What About Federal Legalization?
Cannabis remains federally illegal, regardless of what happens at the state level. It would take an act of Congress to change the plant’s Schedule I status under the Controlled Substances Act of 1970. While discussions about cannabis reform have become more common on Capitol Hill, federal legalization remains elusive.
Currently, the federal government is engaged in a review of cannabis’s legal status, ordered by President Joseph R. Biden, Jr. in October 2022. That review is expected to be completed by the end of 2023. The conclusion of the review could possibly bring with it recommendations to deschedule cannabis and effectively legalize it federally.
However, even if federal cannabis legalization is the recommendation that comes out of the review, Congress would still need to act to change the law. The legislative process takes time, so even assuming legalization is the recommendation and assuming Congress has the votes to pass a legalization bill, the timeline for federal legalization would extend well into 2024 or beyond.
It’s not likely we’ll see federal legalization in 2023, although there are some reasons to be optimistic about the coming years. During the past several sessions of Congress, there has been more debate around cannabis reform measures, including several proposals that would decriminalize or even deschedule cannabis federally, such as the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act. The MORE Act even passed in the U.S. House of Representatives in 2020 by a vote of 219 – 202 but later died in the U.S. Senate.
What Are The Consequences Of Federal Cannabis Prohibition for The Cannabis Industry?
Due to the ongoing federal prohibition of cannabis, state-legal cannabis businesses face significant challenges. For example, they can’t engage in interstate commerce. Businesses are either forced to limit their growth to a single state market or pursue additional state licenses elsewhere, which can be a costly and time-consuming process.
Similarly, plant-touching cannabis businesses like cultivators and dispensaries are prohibited from taking tax deductions available to businesses in other industries. Thanks to IRS Tax Code Section 280E, cannabis businesses may only deduct the cost of goods sold (COGS), keeping expenses like sales and marketing off the table come tax time. This makes cannabis businesses quite expensive to operate.
Cannabis Legalization Marches On In 2023
The cannabis legalization movement is poised for additional gains in 2023, the only question is just how much ground it will cover. As conversations continue in statehouses across the U.S. and on Capitol Hill, it’s important to keep up the momentum. Cannabis advocates everywhere can contribute by keeping the pressure on elected officials and supporting legalization measures anywhere they crop up. By doing so, we can continue taking more steps toward universal legalization on both the state level and federally.
At Cornerstone Wellness, we stand behind the cannabis legalization movement and look forward to a day when our favorite products are available everywhere. Until then, though, we’ll keep doing our part to support reform efforts in any way we can. So please join us in pushing for full legalization of cannabis now and into the future!