The Evolution of Cannabis in the USA

Translated from the website Health Europa

As the National Cannabis Industry Association celebrates its 10th anniversary, CEO Aaron Smith tells MCN about the evolution of Cannabis in the USA.

Aaron Smith is the CEO and co-founder of the National Cannabis Industry Association (NCIA), the largest trade organization in the USA for legal Cannabis businesses. NCIA was founded in 2010 with the goals of advocating for policy reform, providing educational resources, and serving as a voice for the growing legal Cannabis sector in the USA.

Smith tells MCN about the evolution of the association, its current policy priorities, and the impact of the COVID-19 pandemic on the sector.

NCIA celebrates its 10th anniversary in 2020. How has the Cannabis industry evolved since 2010? How do you see the sector developing in the next 10 years?

The changes we have seen in the Cannabis industry over the past decade have been significant. In 2010, there were only a few states with medical marijuana laws, many of which did not explicitly allow legal commercial production and distribution. Raids by federal, state, and local authorities were quite common, although the 2009 Ogden Memo began to decrease federal involvement in enforcing laws against compliant businesses, in line with state laws. No state had yet passed an adult-use law. Public support for legalization was just over 50%.

The evolution since then can be witnessed through the history of NCIA itself. Nearly all states now allow Cannabis in some form; most have effective medical marijuana laws; and eleven states and several territories have legalized adult-use marijuana. Two-thirds of Americans support legalization, and this sentiment is growing across almost all imaginable demographic data. Support for allowing medical Cannabis is nearly universal. The Department of Justice policy is not to enforce the federal ban against legal state businesses. The international Cannabis industry, which did not exist a decade ago, is flourishing.

We come to 2020 shortly after the first passage of independent marijuana policy reform in Congress, after the House of Representatives passed the SAFE Banking Act in September 2019. Regulated marijuana businesses have shifted from being viewed as undesirable liabilities to essential pillars of public health, safety, and economic stability during the pandemic. And now there is serious discussion in Congress on how to federally legalize Cannabis in a way that helps undo the harms caused by prohibition. In short, this is a completely different world for Cannabis than it was 10 years ago - and even more significant changes are on the horizon.

How should US banking and financial legislation evolve to meet the needs of the Cannabis industry?

The SAFE Banking Act, passed by the House of Representatives in 2019, represents the most needed changes in federal banking and financial services policy, in the absence of measures implementing federal legality and relief. Financial institutions need to know they will not be punished for working with Cannabis companies, nor will they be forced to file intensive and unnecessary reports on every transaction. While it seems that some larger, risk-averse banks may still have issues before marijuana is fully legal, many others would be willing to work with - and crucially, provide capital to - the marijuana industry if this legislation becomes law.

Fortunately, the House recently passed a pandemic relief bill known as the HEROES Act, which contains the language of the SAFE Banking Act: this will put this issue in front of the Senate in a more immediate way than the standalone legislation that was under consideration last year and was postponed due to COVID-19.

What has been the impact of the Drug Enforcement Administration (DEA) inclusion in the Cannabis research approval determination process? How can Cannabis research in the USA benefit from excluding the DEA from the approvals process?

The DEA has been - and continues to be - the biggest impediment to research and research material production. Making a federal health and science agency the guardian of Cannabis research would greatly help align the needs of the process with the expertise of the organization controlling it. It would also allow research and production approval to focus on factors other than potential diversion, a concern that carries less weight as more states make marijuana legally accessible.

What has been the impact of the COVID-19 crisis on the Cannabis industry?

The impact of the pandemic was likely harder on the Cannabis industry than many others, but there were some silver linings. Being deemed 'essential' in most states allowed these businesses to continue operating, providing ongoing medical assistance, protecting jobs, and generating necessary tax revenue.

Recognition of their value has increased the momentum of legal and regulatory reform at the local, state, and federal levels.

Unfortunately, the Cannabis industry faces burdensome financial challenges in the best of times; and had to deal with even tougher factors during the pandemic to keep employees and customers safe, not to mention the potential for dealing with disruptions in the supply chain. Without access to federal relief funds or banking services, I fear it will take much longer for the sector to fully recover and return to a growth trajectory, and many smaller businesses will be forced to close. In the long run, however, this may help us advance federal reform more quickly when Congress returns to normal operation.