Noteworthy Cannabis Legalization Challenges for 2021
Cannabis legalization challenges may slow progress, despite the industry’s impressive growth.
Here are the bottlenecks the cannabis industry must handle to continue scaling to its full potential:
Federal Prohibition in the U.S. Market
Some of the most significant challenges the cannabis space faces in 2021 revolve around the U.S. market. This market is still complicated for cannabis investors and operations. Even though cannabis is prohibited federally, an increasing number of states and localities are allowing cannabis companies to operate. Local legalization decisions are pushing this progress.
Many cannabis companies would like to expand into the U.S. However, the process isn’t easy. Between the legal and financial barriers paired with the liability associated with federal prohibition, it’s a challenge that demands capital.
Federal cannabis prohibition in the U.S. also impacts imports and exports. Since these products are still federally prohibited, even bringing them across state borders is problematic. Thus, operating across state lines in which the laws change is complicated.
Banking is also an issue related to federal prohibition. Since Congress still has banking restrictions on cannabis, cannabis operations don’t have much access to capital, which means they must deal in cash. This acts as a bottleneck for U.S.-based cannabis firms interested in expanding.
At this point, the end to cannabis prohibition seems within reach. The COVID-19 pandemic made some incredible progress as the plant was dubbed essential, despite its federal status.
Simply put, it’s only a matter of time before the U.S. ends federal prohibition. But if you want to do something to help the cause, you have some options:
- Donate to organizations working against prohibition.
- Donate to fund more cannabis research.
- Keep track of what’s happening at the federal level and join efforts allocated towards the change we want to see.
The Stigma Around Cannabis
Despite more people understanding and accepting cannabis than ever before, it still has many stigmas. As an industry, it’s our job to educate consumers and businesses about what cannabis is and isn’t. Since it was illegal for such a long time, this is likely to be one of the most time-intensive challenges to overcome.
Acceptance is the first step towards destigmatizing cannabis. Over time, society will become more accepting of it, which will lead to more progress. This can include success during large-scale marketing campaigns, fewer employer drug tests, honest discussions at the dinner table for families, and more.
New Products Demanding New Restrictions
As the cannabis industry evolves, innovations are on the rise. This includes hemp- and CBD-based products, edibles, extracts, vaping equipment, and other impressive product developments.
While the majority of innovations might not impact the entire sector, some call for legislative changes. For example, once cannabis products are no longer classified as Schedule 1 substances, we’ll likely see some significant legislative alterations to accommodate the market. Each product type will need appropriate regulations to ensure safety on multiple fronts, including at the consumer and business operations levels.
For innovators in the cannabis space, it’s crucial to consider regulations before they’re implemented. Predict how your innovation will impact society, and make sure you’re prepared to handle any hurdles you may encounter.
A Changing Environment for Cannabis
The cannabis sector continues to evolve, which forces businesses operating in this space to adjust to these changes. Mainly, the legality of cannabis in different states shifts seemingly with each passing month, which can cause some confusion. This is especially true for the cannabis businesses that have operations spanning across state borders.
From a financial perspective, cannabis-related businesses are challenging to invest in because of the ever-changing landscape. There’s simply no telling when a regulatory change could help or damage part of the industry. The risk is too high for many investors, although this also adds to the appeal for some.
However, it’s important to note that the legal cannabis industry is becoming more appealing as it becomes more stable. The progress is attracting established companies from outside of the sector to become involved in it, which has some cannabis advocates worried.
The industries that cannabis will damage the most, the “addiction” industries, are beginning to invest heavily in the cannabis sector. Alcohol, pharmaceuticals, and tobacco companies are obtaining firms that they plan to use to sell cannabis in mass quantities, just as they’ve been doing with other consumer products. While some believe this will damage the industry, others remain hopeful that these companies will not acquire a massive market share.
Larger, better-established companies are also getting involved in cannabis. Brands like Coca-Cola and others are interested in claiming some of the cannabis space. This could aid in making the industry less volatile, which can make it more appealing to investors. But at this point, there are so many issues surrounding legality that the cannabis sector is a challenge to navigate.
For now, those who are considering investing in cannabis should look for news focused on the SAFE Banking Act and the STATES Act. Both of these legislations could allow cannabis companies in the U.S. to facilitate their operations and scale.