Biggest Challenges The Marijuana Industry Will Face As It Becomes More Widely Legalized

Marijuana’s future prospects as a major cash crop have brightened in recent years. Dozens of states in the US now allow marijuana either for medical purposes with a prescription from a doctor or have outright legalized marijuana for all purposes. In places like Colorado and California, among others, customers can now shop in specialized stores dedicated to marijuana in a similar manner to purchasing alcohol at a liquor store.

The newfound mainstream success of commercial marijuana production and increasing sales has opened a pandora’s box of new problems that the industry faces. From handling higher volumes or products to managing cash to ensuring protections for buyers and sellers, the industry now faces many of the same problems faced by other new industries. As marijuana moves from its “Wild West” phase characterized by black-market sales under the table and all the dangers associated with illegal products to assume its new status as “big business”, several new issues have emerged. Here are some of the biggest challenges the industry players will face moving forward.

Interstate Commerce

Conflicting laws between states that have legalized marijuana and the federal government, which maintains its position that marijuana is dangerous and still classifies it in the same category as heroin, mean that growers and sellers face huge legal headaches when it comes to moving product between state lines. The federal government still maintains authority to regulate trade between states, as outlined in the Constitution. Since the feds still actively prosecute black market distributors of marijuana, it is possible and even likely that, without a change in federal policy, legitimate growers and sellers who operate above board may get swept up in federal drug busts and possibly even face prison.

Transitioning to Major Production

Marijuana cultivation was previously the domain of home gardeners and underground grow operations with shady tactics and practices. Accidents were common but unreported. Employment protections, such as those guaranteed by the Occupational Health and Safety Act, now apply to companies growing marijuana legally. Common problems with farmers of all crops apply equally to marijuana cultivation, so marijuana farmers will need to adopt the equipment and risks of large-scale farming. For example, tractors without canopies are responsible for most farmer deaths. Growers will have to contend with the enormous costs of purchasing industrial-grade farm equipment, training workers to use them properly, and guaranteeing worker safety.

Growing Marijuana Responsibly

Like all crops, marijuana is sometimes grown using harsh chemicals like pesticides. Although the cannabis plant is actually quite hardy and grows well even in difficult circumstances, many growers still choose to use pesticides to protect their investment. Unfortunately, a large percentage of marijuana sold today has these pesticide residues on them which have been linked to cancer, neurological disorders, and other diseases. More forceful advocacy for proper labeling and education campaigns regarding the dangers of these agriculture chemicals can help reduce their use and increase safety for consumers.

What to Do With All the Cash

A crushing burden that distributors face in states where marijuana is legal is how to handle cash. Credit card companies often refuse to process payments for dispensaries, resulting in a cash-heavy business. Furthermore, banks often refuse to do business with growers and sellers based on fears of repercussions from federal prosecutors. But is there any good news on this front? Banks are becoming friendlier toward marijuana businesses in the hopes of looser control and fewer prosecutions by federal anti-drug zealots in the Justice Department.

Paying Taxes

Similarly, to the banking crisis in the marijuana industry, paying taxes on marijuana can be a nightmare. In California, for example, marijuana growers are required to pay their taxes in cash because of the complications involved with banking. This is a monumental accounting task, consuming large resources in labor and logistics involved in moving so much physical money around.

Maintaining Public Image

One of the biggest boons to the legalization movement is the hefty tax revenue from marijuana. Income generated from taxing cannabis contributes to funding for schools and other public services in states where it has been legalized. This has increased public support for legalization and shifted opinion in support of the plant. Any industry expert will report that goodwill campaigns can have a hugely positive effect on a business’s bottom line. The marijuana industry should focus on maintaining the public’s goodwill in this way by innovating new ways to connect with and improve the lives of people living in areas where marijuana is legal.

Preventing Crime

Because marijuana distributors rely on cash for their business, they are often targets for criminals. In fact, many sellers who cannot open bank accounts are forced to stockpile large amounts of cash in warehouses. To protect their assets, they must hire ex-military and other skilled specialists to defend their money from criminals looking to take advantage of the situation.

Lobbying Efforts From Competitors

Several industries have interests in preventing cannabis from achieving universal legality and widespread accessibility. Perhaps the most ardent opponent of marijuana legalization is the multi-billion dollar pharmaceutical industry, which stands to lose billions in revenue with the legalization of medical marijuana. With a well-funded army of lawyers and lobbyists, Big Pharma is giving its all in Washington attempting to curtail the legalization trend.

The alcohol industry is another major opponent of marijuana legalization because they perceive the plant as a threat to alcohol sales. Alcohol lobbyists have long been involved in keeping marijuana illegal and suppressing positive information about the plant and will likely continue their efforts to reverse legalization moving forward.

Law enforcement also has a stake in fighting back against legalization. The Drug Enforcement Administration (DEA), for example, owes a huge portion of its budget to curbing marijuana in the US. Legalization could mean the loss of jobs and lower budgets for the organization, prompting them to oppose legalization. Similar examples of conflicts between marijuana growers and industries with an interest in maintaining the status quo exist in the private prison industry which incarcerates nonviolent drug offenders.

These are just a few of the challenges that the newly-formed legitimate marijuana industry will face as it steps out of the shadows and into the mainstream.

Here’s another article you might be interested in: With the Legalization of Cannabis, is There Still a Place for CBD?