Editor’s Note: This article was updated at 3:45 p.m. Nov. 9 to reflect additional comments from industry members. It was originally published at 7 a.m. Nov. 8.

Voters in Maryland and Missouri legalized adult-use cannabis during Tuesday’s midterm election, bumping the number of states with fully legal industries up to 21.

Arkansas, Missouri, Maryland, and North Dakota each had ballot measures to set up a foundation for an adult-use cultivation and retail program, while South Dakota’s measure would have legalized possession, use, distribution and home cultivation. (South Dakota’s measure did not mention a licensing structure or regulation for businesses, which was by design.)

While each measure showed significant support, on Election Day, Maryland and Missouri were the only two to pass. Maryland became the 20th state to legalize adult-use cannabis, with voters in favor of Question 4 by a 65.5% to 34.5% margin, numbers that held throughout the night as more votes rolled in, as reported by Cannabis Business Times. (As of 8:45 a.m. ET Nov. 9, the margin remains 65.5% to 34.5% with 82% of votes in.) Missouri followed behind as the 21st state by tighter margins, with 53.1% of voters approving Amendment 3 and 46.9% opposing, with 99% of precincts reporting, according to CBT.

The ballot initiatives in Arkansas, North Dakota and South Dakota failed.

"Compared to the previous election, cannabis ballot initiatives came up short this time around. It was surprising to see the initiative in South Dakota come up short with only 47% in favor, whereas just two years ago 54% voted in favor of legalization," said Madeline Scanlon, insights analyst for cannabis industry research firm Brightfield Group. "Arkansas and North Dakota’s initiatives were not able to rally the support they needed at the polls to win during a midterm election. Activist groups were not championing Arkansas’ proposed regulations that would limit the adult-use market to existing medical operators, and that showed at the polls."

"After decades of anti-cannabis laws and government-propagated disinformation, it comes as little surprise that many voters have concerns," said Brian Vicente, founding partner of law firm Vicente Sederberg. "There is still more work to be done. It’s not really a question of whether these states will end cannabis prohibition, but a question of when." 

All five states approving adult-use measures would have represented not only nearly half the states in the U.S. having legal cannabis, but also a growing bipartisan support of the issue, as Arkansas, Missouri, North Dakota and South Dakota are all conservative states.

In light of President Joe Biden’s three-part cannabis reform plan he announced at the beginning of October, when he directed his administration to review cannabis's status as a Schedule I drug, this election also contained an added layer of significance, as its results could help steer future federal policy.

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"We are thrilled to see the victories in Maryland and Missouri, particularly Maryland, where MPP played a key role in the campaign and convincing legislators to put Question 4 on the ballot," said Jared Moffat, state campaigns manager for MPP. "... We are disappointed to see legalization initiatives come up short in Arkansas, South Dakota, and North Dakota. But on a day like this, it's important to take stock in how far our movement has come. Over the past decade, 21 states have legalized cannabis for adults, and seven of those states have been added to the list in just the past two years (NM, NY, VA, CT, RI, MD, and MO). There's more work to do, but we continue to make significant progress each election cycle."

Election Predictions: How Accurate Were Forecasts?

Leading up to the midterm elections, 18 U.S. states had legalized medical cannabis exclusively, three states had limited medical programs, and 19 states had legalized and regulated adult-use and medical cannabis markets.

Polling in all five states leading up to the election showed that a majority of voters supported adult-use legalization. It led to optimism from some that all five measures would pass, including from Brian Vicente, founding partner of law firm Vicente Sederberg.

“I've run some of these campaigns in the past, and normally we're polling 50/50 at best, and then we surge because people under-report–they get a pollster calling asking if they support something illegal, [and] they usually say no,” Vicente said. “These are well-run and well-capitalized campaigns, and I think we're going to see some degree of excitement from more progressive voters this fall because of other issues."

Paul Armentano, deputy director at the National Organization for the Reform of Marijuana Laws (NORML), anticipated voter support for adult-use legalization would remain as strong as it has in years past. In 2016, for example, voters approved legalization measures in California, Massachusetts, Maine, and Nevada, while in 2020, voters approved legalization measures in Arizona, Montana, New Jersey, and South Dakota. (South Dakota’s 2020 election results were later nullified by the Supreme Court.)

"Historically, we've seen that these sorts of measures tend to be equally successful in jurisdictions that are traditionally blue, just as likely as they are to be traditionally red," Armentano said.

While Armentano was hopeful, he noted several factors and variables can impact voter turnout, and that many had predictions that Republicans may have been far more galvanized this election than Democrats, which could have impacted predominantly red states.

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"While this year’s mid-term election may not have been a ‘clean sweep’ for reform advocates, our momentum continues unabated. Two more states, Maryland and Missouri, have wisely elected to legalize and regulate cannabis—policies that will expand the freedoms and civil liberties of over 7 million Americans," Armentano said. "In addition, voters in cities across this country—including over 400,000 Texans—acted to end the senseless and counterproductive policy of arresting and prosecuting those who possess and use cannabis.

"Poll after poll shows record public support for the legalization of the adult-use of marijuana. This support is a testament to the fact that most Americans are now well aware of the failures of marijuana prohibition and the damages it continues to cause, and that the growing number of states which have enacted legalization are doing so in a safe and effective manner that is in accordance with voters wishes and expectations."

In the Dakotas, however, polls closer to the election showed waning support. Both states have had adult-use measures on the ballot before: South Dakota’s adult-use measure in 2020 passed but was ultimately overturned in the state’s Supreme Court; and in 2018, North Dakota’s reform effort was defeated by 20 points.

Those combined factors made some, including Darin and Moffat, more hesitant to declare every state a winner before the election.

Moffat, who was the campaign manager for the North Dakota ballot initiative, pointed out that opponents in both North and South Dakota started putting more resources toward campaigning against the legalization measures in the weeks leading up to the election. He added that the legalization campaigns in both states struggled this year to raise money that could have given proponents more of an edge.

“I'm not saying that we're about to see losses in these states, but I'm also not sitting here saying, ‘Oh, this is in the bag, and it's just a question of how much we win by.’ No, I don't feel that way. I think it's going to be very close in both states,” Moffat said.

“A lot of folks think legalization is just inevitable,” he added. “It’s not inevitable–a lot of folks have stepped up along the way and given us what it takes to win these campaigns. It’s been very frustrating to see that there hasn’t been that level of support for the Dakotas.”

Market Projections

Scanlon anticipates Missouri will likely have the biggest impact on the legal cannabis market in the U.S. and will implement an adult-use program quickly due to its strong existing medical program. Prior to the midterm election, Scanlon included Arkansas in that projection, too. 

According to Arkansas’ ballot initiative, if voters had legalized adult-use cannabis, existing medical cannabis businesses would have been permitted to sell adult-use cannabis at their dispensaries and at one additional location starting March 8, 2023. 

Arkansas legalized medical cannabis in 2016 and currently has more than 90,000 registered patients in its program. In a state with a population of just over 3 million, that's a 3% patient enrollment rate, which is “very strong,” Scanlon said.. 

She also noted that patients spent almost $24 million at the state’s 38 licensed medical dispensaries in September. 

Scanlon initially anticipated Missouri to implement an adult-use program behind Arkansas; however, Scanlon still projects Missouri to come to market ahead of Maryland, and launch its adult-use program by mid- to late-2023. 

Missouri legalized medical cannabis in 2018, and sales began Oct. 16, 2020. The state has a population of 6 million with more than 200,000 registered patients as of September, a 3.3% patient enrollment rate, she said. In the past two years, the state has generated nearly $530 million in medical cannabis sales. 

“[Missouri is] probably going to be, out of these markets, bringing in the most money the quickest because they obviously have the appetite, [and] they obviously have the infrastructure,” Scanlon said. “With metrics like that and seeing that … people are taking the effort to be part of this medical program and spend[ing] money, [it’s] a very good sign.”

Maryland legalized medical cannabis in 2013 and has roughly 140,000 registered patients according to a 2021 annual report from the Maryland Medical Cannabis Commission. With a population of roughly 6 million, that’s a 2.3% enrollment rate. 

Scanlon projects Maryland’s adult-use market to open in mid-2024 at the earliest, noting that eastern states tend to take longer rolling out their adult-use programs. For example, New York legalized adult-use cannabis last year and is still rolling out its program, while Vermont legalized cannabis in 2018, but didn’t launch sales until Oct. 1 of this year. 

Maryland’s ballot initiative is also sponsored by lawmakers, and, under the initiative, it is up to the legislature to implement a timeline of when adult-use sales will launch in the state, which could delay the market opening. 

"Maryland and Missouri are big wins for the US cannabis landscape. Maryland’s legalization brings us one step closer to the East becoming the first region (defined by the census) to have fully legal adult-use cannabis," Scanlon said. "Missouri’s appetite for cannabis outweighed concerns over the equity of the state’s cannabis regulations. When the state’s market goes online, we’ll see the first shared border between adult-use markets in the Midwest. Dispensaries along Illinois’ border will lose out on out-of-state dollars and now have to compete with a market that looks like it will have significantly fewer taxes."

Meanwhile, Scanlon didn’t anticipate either of the Dakotas to have a large share of the national market. If North Dakota voters passed the ballot initiative, adult-use sales could have started as early as Oct. 1, 2023, as laid out by the ballot measure. North Dakota also has a population of less than 800,000 people, which likely means it has a smaller set of consumers. Scanlon projected South Dakota, on the other hand, to take much longer to roll out a program if voters passed the initiative. 

“South Dakota … just implemented their medical program, they have really no cultivation structure in place,” she said. “The governor [being] begrudging about it too will likely not help speed the process along.” 

Despite market size and rollout, each new state to legalize would present a new opportunity for cannabis companies to either make their mark or expand their footprint. Multistate operator Cresco Labs currently has operations in 10 states, including Maryland. The company’s recent acquisition of Columbia Care will soon bring that count up to 17, including in Missouri. 

John Sullivan, executive vice president of public affairs for Cresco Labs, said he hopes to see Cresco operate in every legal state eventually, but doing so will take time.  

“We hope to bring our consumer-branded products to every state in the country, but every state presents its own regulatory licensing schemes we have to work our way through,” Sullivan said. “It’s usually not over with the referendum–you have governors and bureaucrats that then try to set a regulatory structure, which inevitably adds layers of complication. So, there still remains to be some things seen before we make that business decision, but in general, each time a state opens up presents an opportunity for Cresco Labs.” 

Like Cresco, Darin said Curaleaf saw an opportunity in each market, and the company already has a strong position and leading market share in Maryland and North Dakota. 

The company holds four of eight retail licenses and two growing and processing licenses in North Dakota, along with four retail licenses in Maryland. 

"Maryland's a really exciting adult-use market, and that is a market that we definitely intend to continue to expand and to invest in," Darin said. "Same thing with North Dakota. ... We hold half the licenses in that state.” 

Darin said Cresco had “a very, very keen interest,” in an adult-use market in North Dakota, and that it sets up its medical operations to quickly expand to adult-use as new states legalize.  

Missouri's rules and regulations currently block publicly traded companies, like Curaleaf, from entering the medical market unless they meet statewide background check mandates and gather fingerprints from anyone with an ownership stake in the company, including all shareholders, but adult-use legalization could now change that. 

Despite the state's regulations, Darin said the company has broken into the Missouri medical market through a licensing agreement with a local operator to sell select Curaleaf products. 

"Missouri's been a fantastic medical market. It has wide access, a good number of dispensaries that have opened, and patient cards are accessible," he said. "It's really well situated for an adult-use transition given the access and just the amount of distribution and some of the availability of products already in the market. So, it is a place … where we want to continue to participate. … It borders a major state we operate in, Illinois, and it's definitely a strategic part of the country for us, the Midwest." 

Impact on Federal Legalization?

On Oct. 6, President Joe Biden announced his three-step cannabis reform plan, which consists of pardoning federal offenses for simple cannabis possession; urging governors to do the same in their states; and, perhaps most pressing for the industry, requesting a review of how cannabis is scheduled under the Controlled Substances Act. 

Some sources CBT spoke with believe the outcome of this midterm election could help sway the result of cannabis’s rescheduling. 

"Adoption of these laws at the state level will have significant implications for reform at the federal level," Vicente said. "With each successful legalization measure, there are more members of Congress who represent states where cannabis is legal for adults, generating tax revenue, and creating jobs. Members opposed to legalization are forced to reexamine their position and learn more about the issue, and supportive members typically get even more engaged." 

With it being a decade since Colorado and Washington legalized cannabis, Moffat anticipated this election to be a “crossroad” for the industry, adding that if all five states passed, there would have been eight additional Republican senators who represented states with legalization.  

Moffat added that voters opposing legalizing in red states send a message that says, “‘Hey, you know what, it's 50/50. … People are still undecided. This is still not a political winner.’ And so, what does that mean for the prospect of federal reform? I'd much rather be in a position of having eight [additional] senators on my side, at least for representing states with legalization, than the opposite or a different scenario where it's a mixed bag,” he said. 

Others, however, believed that even if all five states passed their ballot initiatives, it would not send a message to the federal government that full legalization is imminent. 

“The reality is that for quite some time, public polling has shown that about two-thirds of U.S. voters believe that marijuana should be legal, and that includes majorities of Democrats, Independents and Republicans,” Armentano said. “In addition, we are in a situation where about half of Americans reside in a jurisdiction where the adult use of marijuana is legal and the majority of states regulate medical marijuana. The message has been sent, and the message has been received. It's just a matter of politicians who have failed to act upon that message. But there can be no confusion among federal politicians with respect to where the majority of the American public stands on legalization.” 

Armentano said in the upcoming weeks, NORML anticipates Congressional lawmakers to "move ahead with longstanding promises to advance federal reform legislation while, at the state level, [it] anticipate numerous governments to once again take up a variety of bills protecting and expanding the rights of those adults who consume cannabis responsibly.”



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