On Thursday August 29, 2013, The US Department of Justice issued a memo titled, “Guidance Regarding Marijuana Enforcement.” (Attached, below.) While it has some legal and political implications, its most profound effect will be to reduce the perception of risk in cannabis economic activity. Investment capital will then flood into the market, and the legal, or semi-legal, marijuana economy will boom.
That boom will ultimately have its own legal and political implications: it will accelerate the momentum towards legalization.
Legally, the memo does little: like its predecessors, it purports to “guide” the discretion of the regional US Attorneys (the federal prosecutors). But less than a week later, the prosecutors are already trash talking the memo like kids on a playground. Maybe they’ll follow it, maybe they won’t. it’s up to them, and according to them, they’ve already always followed it, so there.
Politically, though, the memo is hugely significant. It marks the beginning of Obama’s legacy of cannabis regularization. The Democratic party can begin to neutralize this issue now, in advance of the next presidential election, so that it will be a non-issue by then. They can do this because the issue has no political value between the parties. No party can win the presidency without the eight swing states, and that includes Colorado. Colorado loves cannabis and cannabis revenue. Therefore, both parties must allow state legalization to go forward.
Economically, the memo fuels a boom that won’t stop until legalization is fully realized. There will be fully regulated adult-use markets in both Colorado and Washington state. The California medical market will accelerate its already phenomenal growth. In all legal and semi-legal markets, capital will flood in. That will allow existing operators to expand–and it will allow new operators to enter and compete. Competition makes markets thrive. These markets are about to receive a shot of financial fertilizer that will cause an explosion of blossoming new commerce in the sunlight of social acceptance.
The California Legislature might pull a September Surprise and pass statewide medical regulations in the next week or so–partly emboldened by this memo. Regardless, more California local governments will pass regulations and taxes. More landlords will make their properties available. And if the rumors of solutions to the banking and tax problems have any truth to them, then all major impediments to the financial explosion will soon pass.
And even if they don’t, the mere perception that the risk is lower (and falling fast) will cause a green rush that will make your head spin. Hold on to your hats, ready or not, here we go.