Marijuana Industry Bracing for DOJ’s Response to Cannabis Legalization in Colorado, Washington

The long wait is almost over.

Attorney General Eric Holder revealed this week that the Department of Justice is close to issuing an official response to cannabis legalization in Colorado and Washington, saying residents of the two states “deserve an answer and you will have one soon.”

Entrepreneurs hoping to capitalize on the emerging recreational marijuana market have been on the edge of their seats for several months. How the government responds to the new state laws will have huge business implications. Billions of dollars in revenues and countless opportunities are at stake.

Colorado and Washington became the first two states to legalize marijuana for adult use in the November elections, yet the Obama administration has sidestepped the issue and offered up vague comments about how it will respond. As a result, industry professionals have tried to read between the lines whenever a federal official says something about cannabis legalization, no matter how small.

Still, entrepreneurs in Colorado and Washington have already started writing up business plans for retail operations, hoping for the best. And dozens of companies have cropped up to capitalize on this emerging market, providing everything from legal services to educational events to consulting.

If Holder sticks to his word, they’ll know more about their long-term business prospects shortly.

On Tuesday, Holder told state attorneys general gathered in the nation’s capital that the federal government has been conducting an in-depth review of the new laws. That analysis is almost complete, Holder said, and the government is now in the final stages of determining how it will address recreational sales.

It’s tough to say at this point which way officials are leaning.

The government could take several approaches:

– In a worst-case scenario, it could challenge the laws in their entirety, possibly by suing the two states to prevent retail stores from opening. This option is reportedly still on the table, but it would create a highly contentious situation, lead to drawn-out legal battles and set up a state-federal showdown.

– At the other extreme, the government could decide to completely respect rights states’ rights on the issue and allow Colorado and Washington to proceed as they see fit. Don’t get your hopes up for this option: There’s almost no chance the feds will take a completely hands-off approach given that the issue involves a federally banned drug.

– It could attempt to find a middle ground by influencing the regulations covering production and sales of cannabis or challenging some aspects of the laws that it deems most egregious. This might be the best solution the industry can hope for given the circumstances.

There are of course other options as well. The government could employ a strategy (if you can call it that) similar to the uneven and confusing one it has used on the medical marijuana industry, maintaining that recreational cannabis is illegal but letting district attorneys decide how to address the situation. Or its response could depend on the exact rules and regulations each state develops to oversee the industry and whether they are successful at preventing the diversion of marijuana to other areas of the country.

Regardless, individuals in Colorado and Washington will likely still be able to consume marijuana, as Obama has already indicated that he won’t target cannabis users in those states. At the very least, therefore, the market for products and services aimed at recreational users will expand over the coming years, even if retail cannabis stores never open.

Daily News | National Medical Cannabis Business & Marijuana Legal News | Recreational Marijuana News

 11 Comments

  1. Doug Greene February 27, 2013
    • chrisw February 27, 2013
  2. Headcoach February 27, 2013
  3. Unbe Hagen February 27, 2013
  4. Jack February 27, 2013
  5. Jack February 27, 2013
  6. moldy February 27, 2013
  7. FedUp February 27, 2013
  8. David Calvo February 28, 2013
  9. Unbe Hagen February 28, 2013
  10. jack March 4, 2013

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