I’ve been grumbling about this on social media for long enough, and today is a “weed holiday” for many purposes, but also a professional holiday for yours truly, so I’m going to lay out some…nonsectarian and sincere gripes I have, as an informed expert, about US cannabis policy and regulation.
(Disclaimer: these are purely personal takes, none of these reflect the opinions of my employer or any political group that I may be affiliated with. This is crusty weed-wonk stuff, straight from my policy-nerd heart. It is likely upsetting to some interest or another, but comes from a place of wanting good policy for everyone. I have no stakes in an active or dead cannabis license, I do not handle plants in a licensed capacity, I have not written cannabis policy for a state or municipality, I am a senior regulatory analyst for the longest-running cannabis compliance platform in the biz. I draft and review audit checklists and standard operating procedures.)
Things in legal cannabis are bad, chat. Most any thing related to a “licensed operator” and “legal weed” is struggling, dying, or dead.
This comes as a surprise to some folks, who see headlines and think “oh wow, working in weed must be awesome,” or “look at those fatcats making money on a historically oppressed substance,” and let me tell you: there aren’t any cats who are fat these days. Big companies have become medium companies, and even some of the “strongest” companies in licensed cannabis are toting around nine-figure tax bills that will come due. Small companies have sold on, closed up, or found a small size that is somewhat sustainable (if you’re on a border with a prohibition state).
And while what I’m about to say could obviously be read in a conspiratorial or seething voice, I promise you I’m just saying this as a mundane fact: the groups that have unquestionably brought in revenue in the first decade plus of adult-use cannabis are the state governments, and sometimes the municipal governments. No one else has secured a steady revenue within the cannabis industry.
Which kinda brings me to my Gripe: we need a new conversation about cannabis policy, one that can get us past the gooey Early Days hype/concern/boom cycles of the 2010s and lower interest rates and national enthusiasm shoved into a handful of states’ markets. We need a conversation about cannabis that involves policymakers and regulators and politicians realizing that the first decade of cannabis was generally a failure for everyone but some customers and most governments. The pile of “failed cannabis businesses” dwarfs the pile of “sustainable or successful cannabis businesses”, and the pile of successes is dwindling, not growing.
We need resets to policies that were written as guesses, educated and otherwise. We need to be able to say that some of the guesses were quite wrong, and try completely new regulatory structures and processes.
This is not a comprehensive list of specific examples or complaints, but I want to demonstrate the comprehensive nature of the misses. A survey of takes:
Every state so far has gone through a predictable Boom/Bust cycle after launching adult-use cannabis in a serious manner. Early prices for adult-use weed are bold and pricey, but as the gray market and the additional licenses enter a state, the prices collapse to levels below what can be a profitable return on the early model. The long term burdens on every cannabis licensee have been (i) absence of basic business deductions for federal taxes, a significant anchor on accounting, and (ii) absence of normal business services in banking and finance. Without regular business banking, companies rely private financing that comes at much more intense rates.
Market saturation has effects on existing states. California and Colorado and Washington benefitted from having national customer bases funneled into state-sized markets. As more states legalize, the booms get smaller, and the early states shrink. There aren’t big, profitable weed businesses in Colorado, and that’s better than California, where many of the biggest names in cannabis have completely retreated!
Private interests have died, retreated, or moved on. Like I just mentioned above, the notions of “Big Weed” and dangers of their corporate control are very antiquated or nonsensical to anyone who’s been in legal cannabis in the 2020s, let alone the 2010s. The names that have lost money trying to be early Weed Business Tycoons (coughcough Jay Z) are long. Anyone who is serious about money has pulled way back on cannabis, and is waiting for federal legalization and integration with basic business accounting before returning.
“Regulate cannabis like alcohol” has failed. There’s a whole lot to be written about the ways that cannabis and booze are different, but: as a question of regulation, it’s just not similar to alcohol production or pharmaceutical production. Alcohol is produced through brewing or distilling, which involves inputs and infrastructure that…sits in one place, and people know about it. Cannabis did not get the name “weed” for arbitrary reasons– it can grow all over the place. Monitoring or controlling unlicensed production of cannabis is an expensive and exhausting prospect (that increasingly looks like the old War on Drugs), even in a state with legal weed. Just ask California.
No one knew. Pharma-vice was a guess. When citizens voted to legalize adult-use weed (never forget, voters faced bipartisan resistance for legalization), we forced state governments into truly foreign territories of policymaking. We tasked states with crafting regulations for the licensing, production, sales, testing, and handling of cannabis and cannabis goods. And (conservative guess) at least 85-90% of the people tasked with drafting the regulations and schemas were non-consumers of cannabis, and many with an overt suspicion and ignorance about how cannabis is made or commonly consumed. The regulations and rules defaulted to a strict and comprehensive ideal of controlling cannabis. We could track it from “seed to sale”, or so we promised each other. Instead of approaching cannabis like a botanical or a commodity crop, we gravitated to models like an extreme version of a brewery or a pharmacy– controls and taxes on retail and customers, but also stringent tracking and surveillance requirements for every step of the production process. This has generally served as onerous to operators, but ineffective at preventing “diversion” of product from licensed retailers to unlicensed markets. Put simply: tracking requirements are more often used for “stacking up penalties upon discovery by another method” rather than ” a source of detection of bad-faith actors by regulators”. (there’s all kinds of allegations and conspiracies about this fact, to put it lightly)
Truly have found the limits of federalism for an…outlaw…industry. It’s banking and taxes. As always. Cannabis in the US is a fascinating experiment in federalism– not many places have the dichotomy to allow one of our constituent states to declare a felony substance a recreational product within their boundaries. The system only arose with prosecutorial discretion, and at any point those policies could change. But it’s undeniable that American cannabis arose in a novel manner, in light rebellion of federal law and jurisprudence. But there’s still limits to federalism for a state-legal substance, and the biggest limit is “federally regulated banking systems”. Cash handling and security, extremely heavy interest rates on private loans, these kinds of impediments are a drag on any business, let alone a fledgling industry trying to fit in.
I don’t think there’s an industry that is more ruled by non-experts. I mention it above, but: even compared to my friends in LLMs or computing, or my friends in firearms or oil and gas or any other highly regulated division of the world– at least those places have some industry voices that are taken as authoritative that policymakers will account for. Cannabis is mostly regulated by liquor-cop style agencies, with rules written by squares (to put it bluntly). I’m not against regulating substances (more on that below!), but: alcohol rules are written mostly by people who are familiar with a drink or two, or at least presume to know what the effect of “one unit” is. Cannabis is still written and handled by policymakers who presume cannabis dangerous, and it is hard to convince people who’ve never consumed that their assumptions are overcooked. Cannabis is a relaxed parent drug, it’s not “highway to fucked up”, definitely not in this current landscape (gestures at dark web).
Cannabis is weird. Cannabis is a recreational substance, and a medical substance, and a botanical substance, and a commodity crop. It’s been treated as a narcotic for many decades, and now we’re trying to do something different. An earlier accommodation, the 2018 Farm Bill, tried to split the baby by deeming certain kinds of the plant “hemp” (and safe for Red States, outside of law enforcement) and the other kinds “cannabis” (Blue State stuff, left to die in US legislative hell). This, as we all know now, went very unexpectedly. But the fact of the matter is: any attempt to shove cannabis into one of these regulatory silos (liquor cops, ag cops, lab tech cops, retail cops, etc) is insufficient, and many of them unnecessary. What it will take is people being open to something different than the past decade. This will include a lot of private investors and operators who are similarly married to the model of previous regulatory schemes– they may have privately benefitted at some points, but the entire system is so miserable that we all have to be open to walking away from the status quo.
Overzealous protections do not come without serious costs. I understand the presumption that some might have– take it slow, take the industry-side squabbles as expected noise, but Just Be Safe, Make Sure No Kids Consume. But the slow and unnecessary costs aren’t just on unsympathetic cannabis operators, they’re impacting the environment writ large. Every state in the country has mandated “child-proof packaging” for all adult-use cannabis products, before any evidence or arguments were made. It’s just common sense, right? What has happened is the laws have mandated millions of pieces of plastic packaging, most that (by regulation or law) cannot be recycled. And to questionable effect! The vast majority of children-consuming cannabis events in our time are “kids eating unmarked edibles”. Children like gummies, they aren’t (or at least haven’t in big numbers) encountering joints and bags of cannabis flower and getting down to business behind their parents’ backs. We need protections for packages that look like candy, I can agree to that, but there’s millions of pounds of useless plastic (in the shape of those little tubes for joints, or forbidding any reusable containers for cannabis flower) that are doing nothing but soothing someone’s misplaced sentiments.
We need agility and broader understanding that we’re learning as we go. Look, I have a LOT of complaints about cannabis policy, I can sound like I think I know everything good or bad about cannabis, and why everyone else is wrong and I’m correct. That’s not the case! I have great sympathy for the challenge of figuring out how to safely and reasonably regulate an interesting plant. What grinds the gears is (for work) watching state after state re-enact the structures and forms and assumptions of CA, CO, and WA regulatory systems and rules. The people pass a referendum for adult cannabis, and then state regulators look out there and riff off what someone else has done– it’s the most plausible deniability you can get, it’s the form of regulation most tolerable to legislators and sturdy enough to survive administrative challenges, there’s a reason why the inertia leads this way. But most people who write these rules then just put cannabis aside. It’s an accomplishment to tout, not a vital industry to monitor, respond to, or modify. “Legal weed” isn’t a promised land, it’s a new realm of attention.
We need to chill out. For all the problems of regulating weed, it has to be re-iterated, again and again in the face of clickbait and fretting– most of the problems of Rampant Weed have been light. We don’t need to do a big and exhausting fight about “harms of alcohol” among society and youth, vs “harms of cannabis”. That can be later, but I think, both in popular perception and in the granular details, cannabis’s impact on socially-deleterious behaviors is somewhere between 1/5th and 1/10th and 1/50th the burden of alcohol. And this is in an age with huge interstate markets for discount bootleg hemp-derived THC products! There are serious problems with preventing kids from accidentally consuming edibles, there are serious problems with ensuring some people with mental health conditions avoid THC , there are serious problems with people consuming cannabis while operating machinery like “trading desks” or “infrastructural computing work” or “DOGE crap”. But even the rates of “cannabis and driving”, when we get down to some kind of sturdy data, is way way lower than alcohol. We can take cannabis seriously, without handling it frantically or apocalyptically.
We need to figure out what the goals are. Is the goal to limit cannabis sales to the safest and most overseen manner? Is the goal to allow cannabis businesses to become regular participants in lawful commerce? Is the goal to ensure generational wealth for a limited few license holders? Is the goal to develop sturdy jobs and careers for as many people as possible? Whatever your priority is, we need more earnest and comprehensive discussions about it– how do we make that happen? Is Policy ____ in the interest of us, the enabling or in-power political party, and our political caucuses? There’s just so much Serious Talk to be had, and the intersection of cannabis with existing political struggles (like labor, environment, healthcare) is pretty easy to do…as long as you don’t just keep treating it like Booze Light.
Weed is here, we’re figuring it out, let’s try to be serious about it.
