By Omar Sacirbey
Medical marijuana companies are finding solace in comments from the White House last week indicating the federal government might crack down on recreational cannabis but leave the $2 billion MMJ industry alone.
“It is good news for medical marijuana,” said Alex Ford, executive director of the Grassroots Vermont dispensary. “I do feel a greater level of comfort.”
White House Press Secretary Sean Spicer created a firestorm in the marijuana industry on Feb. 23 when he said there likely will be “greater enforcement” on recreational cannabis businesses. But he made an important distinction, saying “there’s a big difference between (medical cannabis) and recreational marijuana.”
While the rec industry faces an uncertain road ahead, medical marijuana seems to be standing on firmer ground, as Spicer essentially reaffirmed statements President Donald Trump made in favor of MMJ while on the campaign trail.
That could help solidify the future for a medical market expected to generate as much as $5 billion in annual sales by 2020, according to estimates in the Marijuana Business Factbook.
It’s especially welcome news in the nine states – Arkansas, Hawaii, Florida, Louisiana, Maryland, Montana, North Dakota, Ohio and Pennsylvania – that are currently setting up medical cannabis industries. Combined, these states could end up generating $1 billion-$2 billion in medical marijuana revenues once their markets mature, according to projections by Marijuana Business Daily.
Moreover, Spicer’s comments could encourage other states to legalize medical marijuana. At the same time, they will likely make it easier for existing MMJ businesses to raise funding, as some investors worried about a crackdown on the recreational side of the industry might shift their focus to medical.
‘A sigh of relief’
“The clients we have are breathing a sigh of relief,” said Ivan Lanier, president of Greenwill Consulting, which is based in Maryland and has clients there and in Pennsylvania.
Lanier added that his clients see regulators seemingly proceeding with program rollouts as planned. He also noted the deadline to submit marijuana business license applications in Pennsylvania remains March 20.
“I don’t think people were too worried before, although they recognized that the Trump administration could present a problem,” said Jeff Sharkey, president of the Medical Marijuana Business Association of Florida. “But there’s an increased sense of security in the medical space.
“We can now continue to move forward with this program with some cautionary confidence that it won’t be interfered with by the federal government.”
Spicer’s statement has also relieved the anxieties of some pro-medical cannabis legislators with whom Sharkey has spoken.
“They now feel that if we do it methodically and with a strict regulatory framework, we’ll be OK,” he said.
Spicer’s statements could make it easier for other states to legalize medical marijuana, some industry observers believe.
MMJ opponents often argue that medical legalization is a precursor to recreational marijuana. But that argument would be harder to make if Spicer is correct in his statements that the federal government may crack down on adult use.
Medical marijuana’s apparent newfound safety also would likely increase the value of MMJ licenses and make it easier for companies to raise money.
“This increases the attractiveness of medical marijuana licenses to investors,” Sharkey said.
Spicer’s statement could also mean more investment money flowing toward the medical side of the cannabis industry. It stands to reason that investors with an interest in medical cannabis but who held back capital because of uncertainty over Trump’s marijuana policy might now have the certainty they sought, some observers said.
“The investor interest hasn’t really slowed,” Greenwill Consulting’s Lanier said, “but I think now you’ll see more money flowing to medical marijuana businesses.”
And some entrepreneurs and investors with assets in both the rec and medical marijuana sectors may be inclined to move some of those assets out of adult use and into MMJ.
“There’s clearly going to be a bit of a shift (in how capital is allocated) because medical seems to be safe, and risk for adult use is now greater,” said Erik Williams, a partner with Will & Way, a Connecticut-based canna-centric consulting firm that has clients in six states.
That said, investors and entrepreneurs likely will not entirely abandon recreational marijuana but instead will adjust their strategies and proceed.
“People will continue to move forward but with a different risk analysis,” Williams said.
Others, however, believe it would take more concrete action than a statement from the White House press secretary to persuade investors to move their capital out of recreational cannabis and into medical.
Medicine Man Technologies, a consulting firm in Denver with clients in both recreational and medical states, said it has no intention of withdrawing or decreasing its adult-use cannabis investments.
“We are committed to recreational use as ever,” said Brett Roper, COO of Medicine Man Technologies. “Posturing and saber rattling won’t scare away any responsible company from a lucrative market until the feds say they’re going to invest $50 billion to close down these businesses.”
And not everyone in the medical marijuana community was assuaged by Spicer’s statements.
Michael Bronstein, president of the Philadelphia-based American Trade Association for Cannabis and Hemp, said it’s imperative that recreational and medical marijuana professionals continue to try to overturn federal cannabis laws.
“When it comes to federal prohibition,” he said, “there is no difference between recreational and medical, and until we get rid of prohibition, we’ll have to keep fighting.”
Omar Sacirbey can be reached at [email protected]