With a stroke of Governor Tim Waltzâs pen, Minnesota became the 23rd state in the U.S. to legalize recreational marijuana on Tuesday. As Delaware and Maryland launched adult-use this year, and Kentucky legalized medical marijuana, it is clear that state cannabis legalization will continue to flower across America in 2023.
âItâs legal,â Governor Waltz said right after signing the bill into law.
Currently, 23 states and Washington, D.C., have legalized recreational use for adults 21 years and older, while 38 states have legal medical marijuana programs. Cannabidiol (CBD), another active ingredient in cannabis that is associated with some medical benefits but does not get users high, is federally legal and an additional 10 states passed laws to permit the use of products containing CBD and small amounts of tetrahydrocannabinol (THC), the compound found in marijuana responsible for getting people âstoned.â That leaves only two statesâIdaho and Nebraskaâthat do not allow for any kind of state-sanctioned marijuana use.
While three states legalized marijuana last year, Congress failed to pass the SAFE Banking Act and did not vote on two bills that would end the countryâs federal prohibition of pot, but 2022 still saw significant movement toward federal legalizationâor at least decriminalization.
In one of the most significant steps toward cannabis law reform, President Joe Biden announced in October 2022 that he would pardon all U.S. citizens convicted of federal marijuana possession and also asked the Department of Health and Human Services and the Attorney General to review âexpeditiouslyâ how marijuana is scheduled under federal law. Currently, cannabis is classified as a Schedule 1 drug, along with heroin and LSD, a category reserved for narcotics with a high potential for abuse and no medical value. âToo many lives have been upended because of our failed approach to marijuana,â Biden said in a statement. âItâs time that we right these wrongs.â
At the start of 2023, Cowen, the Wall Street equity research firm, said that while efforts toward the legalization of marijuana federally âremain at a standstillâ there was still a robust economic opportunity. But cannabis companies have seen their share prices plummet about 50% over the last six months and Cowen and other respected equity research firms have stopped tracking the $26 billion (national legal sales in 2022) industry.
Morgan Paxhia, who cofounded San Francisco-based cannabis investment firm Poseidon, which has $160 million in assets under management, says investor sentiment is low but he is still ânauseously optimisticâ that the industry will rebound. Paxhia says donât bet on federal legalization, which he thinks is still 10 years away, but instead bet that the industry hit bottom in 2022.
âEveryone’s throwing in the towel at the bottom,â says Paxhia. âWe can grow from here. For those companies that survive, the demand is still there.â
Paxhia thinks Minnesota going adult use could help trigger more Midwestern states to adopt legalization. âMinnesota is interesting as the 23rd state, because if you look at it, it’s like a desert all around itâthere’s no legal adult-use market around them,â says Paxhia. âI think that can help put some pressure on some of these more conservative states that have been slow.â
During a lobbying trip to Washington, D.C. in early May, he says there is support for marijuana banking reform measures and federal legalization but maybe not enough to get bills passed this year. And with big issues like the debt ceiling, the threat of artificial intelligence, and the collapse of banks, legalizing weed doesnât get priority.
âThis is the problem we always have with cannabis: how are we going to be in a priority position to actually get something done,â asks Paxhia.
Paul Armentano, the deputy director of nonprofit marijuana legalization advocacy group NORML, doesnât expect the federal government to legalize weed this year and is not interested in âprognosticating.â The battle of legalization will continue to be won state by state.
âI think the opportunity is going to remain at the state and local level,â says Armentano.
He says Ohio, Hawaii, Florida and New Hampshire could bring adult-use marijuana to a vote this year, but the remaining Republican-controlled states will be difficult. As for federal legalization, Armentano says it is almost irrelevant at this point.
âAs more and more states move forward with setting their own marijuana policy agendas and laws and these state-level regulations continue to evolve and mature, in many ways, what the federal government does or doesn’t do on this issue becomes less and less significant,â he says. âStates are not looking to the federal government for guidance on this issue. If the federal government wanted to have a say and wanted to have any real-world influence in dictating state-level cannabis policy, then the time for the federal government to have asserted itself was some time agoâthey missed that opportunity.â
Five additional states could vote to legalize recreational cannabis by the end of this year. Hereâs where the cannabis map could expand in 2023.
Hawaii
In Hawaii, where medical marijuana is legal, Gov. Josh Green is on record in favor of legalizing adult use. âI think that people already have moved past that culturally as a concern,â Green said during a debate.
Kansas
In 2022, Kansas Gov. Laura Kelly signed a bill into law that allows Kansans to legally take FDA-approved medicine derived from cannabis. Itâs mostly a hollow measure, but state Sen. Rob Olson, a Republican, said he will introduce a medical marijuana bill.
New Hampshire
Governor Chris Sununu issued a statement in early May about how he is âready to signâ a bill with the âright policyâ and âright framework.â New Hampshire is the only state in New England that has not legalized recreational marijuana.
North Carolina
Democratic Gov. Roy Cooper has expressed support for medical marijuana and recently said it has âan opportunityâ to become law this year.
Ohio
Lawmakers in Ohio reintroduced a recreational cannabis legalization bill in May. If legislators donât legalize, the issue could become a ballot measure in November.