An end to federal cannabis prohibition is unlikely in 2023, but this year is expected to be another landmark for the industry as more states are expected to legalize adult use.
Weed the People: Seven more states could legalize cannabis in 2023.
Cannabis legalization will continue to flower across the United States in 2023. Currently, 21 states and Washington, D.C., have legalized recreational use for adults 21 years and older, while 37 states have legal medical marijuana programs. An additional 11 states permit the use of products containing CBD and small amounts of tetrahydrocannabinol (THC), the compound found in marijuana responsible for getting people “stoned.” That leaves only two states—Idaho and Nebraska—that do not allow for any kind of legal marijuana use.
While three states legalized marijuana last year, Congress failed to pass the SAFE Banking Act and did not vote on two bills that would end the country’s federal prohibition of pot, but 2022 still saw significant movement toward federal legalization—or at least decriminalization.
In one of the most significant steps toward cannabis law reform, President Joe Biden announced in October that he would pardon all U.S. citizens convicted of federal marijuana possession and also asked the Department of Health and Human Services and the Attorney General to review “expeditiously” how marijuana is scheduled under federal law. Currently, cannabis is classified as a Schedule 1 drug, along with heroin and LSD, a category reserved for narcotics with a high potential for abuse and no medical value. “Too many lives have been upended because of our failed approach to marijuana,” Biden said in a statement. “It’s time that we right these wrongs.”
But in 2023, Cowen, the Wall Street equity research firm, says that efforts toward the legalization of marijuana federally “remain at a standstill.” However, in a report, Cowen analysts write that there remains “a significant opportunity” for economic growth in the legal industry. Currently, the gray and illicit marijuana markets are at least twice the size of the legal market, which brough in $26 billion in sales nationwide in 2022. Cowen estimates that the legal industry will grow to $42 billion by 2026.
But without a clear legal framework to sell across state lines, overregulation at the state level and oversupply, the legal cannabis economy is broken—resulting in a punishing and grueling operating environment for the industry.
Morgan Paxhia, who cofounded San Francisco-based cannabis investment firm Poseidon, which has $200 million in assets under management, says investor sentiment is low. After two years of a Democrat majority in both chambers of Congress going by without lawmakers passing SAFE or federal legalization, investors want a sign from the government that legislative progress is on the horizon. Paxhia says that with all the economic headwinds, 2023 will be an “emotional roller coaster,” but his firm is “nauseously optimistic” that the year will end on a high note for the industry. “Now the full focus as an industry has to be de-scheduling cannabis,” he says.
Paul Armentano, the deputy director of nonprofit marijuana legalization advocacy group NORML, doesn’t expect the federal government to legalize weed this year. “This is going to be a very difficult Congress for moving any sort of marijuana policy reform,” says Armentano. “The window to get something done closed last session.”
But Armentano says the industry has made tremendous strides politically and legislatively over the last two and a half decades at the state level. “[Legalization] victories have almost exclusively all been at the state and local level, and I expect that trend to continue in 2023,” he says.
Three states legalized cannabis in 2022 and seven additional states could vote to legalize by the end of this year. Here’s where the cannabis map could expand in 2023.
In Hawaii, where medical marijuana is legal, incoming Gov. Josh Green is on record in favor of legalizing adult use. “I think that people already have moved past that culturally as a concern,” Green said during a debate.
In 2022, Kansas Gov. Laura Kelly signed a bill into law that allows Kansans to legally take FDA-approved medicine derived from cannabis. It’s mostly a hollow measure, but state Sen. Rob Olson, a Republican, said he will introduce a medical marijuana bill.
Kentucky is seriously considering medical marijuana. Gov. Andy Beshear said during his State of the Commonwealth Address on Wednesday that it’s time to legalize medical cannabis.
Minnesota has a medical marijuana market, but now with Democrats controlling the State Senate, Gov. Tim Waltz confirmed that he supports legalization.
Democratic Gov. Roy Cooper has expressed support for medical marijuana and recently said it has “an opportunity” to become law this year.
Lawmakers in Ohio have a four-month window to consider taking up adult-use cannabis legalization. If legislators don’t legalize, the issue could become a ballot measure in November.
Oklahoma, which is home to one of the hottest and most liberal medical marijuana markets, will ask its voters if they want to legalize recreational marijuana through a ballot measure during a special election in March.