November 13, 2012

Uncertainty Ahead as Cannabis Industry Awaits Federal Response to Marijuana Legalization


Marijuana advocates rejoiced last week when Colorado and Washington became the first states in the US to legalize cannabis for recreational use. But MMJ professionals in those states are experiencing a post-election hangover as they grapple with a new headache: increased uncertainty.

The future of medical cannabis in Colorado and Washington is murkier than ever, and dispensaries are bracing for volatility – just when the business climate was beginning to stabilize.

In a best-case scenario, legalization will open the floodgates and greatly expand the market, giving existing MMJ businesses the ability to move into the recreational side of the industry. On the other hand, dispensaries could face an avalanche of new competition, additional regulations and a vastly changed marketplace. Worse yet, they could find themselves in the federal cross hairs, subject to the same kind of crackdown we’ve seen in California.

Either way, there are a ton of unknowns.

“Businesses in any industry try to avoid risk,” KC Stark, the head of the MMJ Business Academy in Colorado Springs, said last week during the National Marijuana Business Conference in Denver. “What legalization does is create even more risk in an already-risky industry. That’s what you don’t want.”

The big question now: How will the federal government respond to marijuana legalization in Colorado and Washington?

The answer is of the utmost importance, as it will help determine whether retail stores selling marijuana for recreational use actually crop up – and ultimately what happens to the existing MMJ infrastructure in those states.

So far, the federal government has kept its cards close to the vest despite pleas by officials in both states for guidance. Eventually, however, the Obama administration will have to weigh in on the issue. That will clear the air a bit, but many questions must still be answered, including how the states and individual cities will regulate the new stores.

At this point, the only certainty is that we will see even more uncertainty in the weeks and months (and most likely years) to come.

Still, some MMJ professionals are looking at the bigger picture in terms of what legalization means for the future.

“I am beyond thrilled” that Colorado legalized marijuana, said Toni Fox, owner of 3D Medical Marijuana Center in Denver. “It is the beginning of the end of prohibition and that’s more important than anything.”

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