As Sessions Tries to Kill the High, Cannabis Industry’s Domestic — and Global — Aspirations Continue Speeding Up

The new year began with a bang — especially for those in the U.S. Pacific Time Zone.

That’s because the entire contiguous western seaboard has now officially legalized and instituted recreational marijuana sales and consumption, with California joining Oregon and Washington on Jan. 1 as the latest state to open dispensary doors for rec sales.

Many in the pot press were quick to point out that with more than 50 million people, California represents the single-biggest individual market for recreational cannabis as the world’s sixth-largest economy. Various analysts estimate the state’s total value of the pot market will eclipse that of all other U.S. states with recreational markets combined in just a few years or less.

But everything that goes up (in smoke), must come down (from its high).

In short order, the following Thursday, U.S. Attorney General Jeff Sessions rescinded an Obama-era policy — put out by former Deputy AG Jim Cole in what was known as the Cole Memo — that allowed states’ legal cannabis markets to operate largely unobstructed by the federal government. (Marijuana is still federally illegal under the Controlled Substances Act.)

“Sessions said future prosecutions would be up to individual U.S. attorneys,” according to Politico. Because the announcement was “deliberately vague about future federal enforcement efforts,” the new approach “will probably increase confusion about the legal risk of marijuana-related activity in states that have passed legislation allowing people to grow, buy or use pot.”

Meanwhile, that’s not necessarily stopping players within the domestic legal cannabis supply chain — nor is it hindering a broader movement toward making it a truly global market.

In fact, Australia recently announced “it planned to become the fourth country in the world to legalize medicinal marijuana exports in a bid to score a piece of the estimated $55 billion global market,” according to a Reuters report via CNBC.

According to the report, Health Minister Greg Hunt said “the new legislation would include a requirement that growers first meet demand from local patients before exporting the remainder of their crop,” but besides that, and the fact that Australia’s current market and growing capacity is still relatively small, there’s no denying that the global movement is pushing forward.

Uruguay, Canada and the Netherlands have so far legalized the export of medicinal marijuana, and Israel has said it intends to do so within months, according to Reuters. Although this proposal still has parliamentary hoops to jump through, key parties have signaled support and exports could follow just months afterwards.

We got reactions from leading figures at various points in the U.S. cannabis supply chain on what the Sessions move means to the industry, and what trends they expect in 2018.

Banking and the Rise of Blockchain

Even before Attorney General Sessions made his announcement, the financial side of the legal cannabis business remained one of the industry’s biggest concerns in 2017.

Banking has been a major issue within the industry, said Erik Knutson, CEO of CanCore Concepts, a cannabis consulting and licensing firm. “This reversal will throw further doubt into the financial sector, potentially leading to an increase in violent crime as cash transactions will once again be the norm.”

However, the center of a hot coverage topic on Spend Matters over the last year may change that sooner rather than later.

According to Sasha Aksenov, CEO of The Blinc Group, “2018 will bring increased adoption of blockchain technology that could add much needed transparency, legitimacy and security to the cannabis market, especially in terms the fields of payments and supply chain management.”

That certainly would help Mike Kramer and his business. He’s the CEO of 420Blockchain, a provider of such enterprise network solutions.

“If the cannabis industry wants to stay legitimate in the eyes of the state governments standing up for them, it’s imperative that we combat this stigmatized federal prohibition with strong data, secure networks, and the confidence that our businesses are run with the due diligence we claim,” Kramer said.

That includes shared-ledger accountability and smart contracts, among other things.

“My biggest concern for our industry is keeping the companies within it, that make it thrive so well, secure compliant and transparent so they can never have the rug swept out from beneath them,” he continued.

Silver Lining: Driving More Compliance, Not Less

If anything, the DOJ’s pivot will likely bolster the infrastructure of compliance throughout the cannabis supply chain, thereby providing less incentive for individual U.S. attorneys to pursue anything but the most high-profile cases.

“This development will undoubtedly have an at least temporary chilling effect, particularly on new investment and banking,” said Nathaniel Gurien, CEO of FINCANN. “However, it is also likely to drive marijuana-related businesses to higher levels of accountability and compliance, making their businesses less susceptible to targeted enforcement and overall more sustainable in the long run and this would be a positive outcome.”

Leslie Bocskor, president of Electrum Partners, agrees. “When we look back on this day in years to come, one of the big factors will be separating the dedicated from the dilettantes of who is building this industry.”

“This is an opportunity.”

Meanwhile, Innovation Continues

Bethany Gomez, director of research for Brightfield Group, notes certain trends that could become mainstays, such as the rise of microdosing.

During 2017, “microdosed products emerged right and left, targeting newbies and more sophisticated consumers who want to use cannabis on a regular basis and still be able to function throughout their day,” Gomez said. “With recreational [having opened] in California and recreational markets taking off in Nevada this trend is expected to explode in 2018.”

Gomez also pointed out perhaps the most ironic prediction — “2018 will be the year of CBD.”

CBD — the acronym for cannabidiol, a cannabis compound — has “significant medical benefits but does not make people feel ‘stoned,’” according to this non-profit run by journalists.

The ironic part? According to the firm, the majority of research pointing to the breadth of conditions that CBD could treat, from diabetes to alcoholism, is sponsored by the U.S. government.

If these types of claims prove to be true, Congress will have a hard time siding with Sessions’s hard-line stance if — or when — they finally take discrete regulatory action on this industry.