Earlier this year, recreational marijuana sales became legal in California, the most populous state in the country. While only 8 other states and Washington DC have laws that fully legalize recreational marijuana, 29 states have broadly legalized medical pot.
Still, marijuana use is still illegal under federal law. The U.S. government classifies marijuana as a Schedule 1 drug, which means it’s perceived to have no medical benefit and a high potential for abuse.
The regulatory confusion makes the cost of doing business high and burdensome. Many banks won’t work with companies in the space; in turn, companies are forced to operate in cash.
“Moving cash around is expensive,” Troy Dayton, CEO and co-founder of cannabis market research firm Arcview Group told CNBC’s “On the Money” in an interview. “It can be dangerous and it’s not in the public’s best interest.”
Dayton added that “there are quite a few banks that are doing business with cannabis businesses, but often times it’s short-lived. They have to move from bank to bank and [the banks] will often charge a lot of money because of all the extra liability and the compliance.”
Over the years, public opinion has largely swung in favor of more liberalized pot use. According to a poll conducted by Quinnipiac University, 94 percent of Americans say they are in favor of allowing adults to legally use marijuana for medical purposes if a doctor prescribes it.
Meanwhile, researchers at Gallup found that nearly two-thirds of Americans are in favor of legalizing it for recreational use. Twenty years ago, that number was at 25 percent.
The data reflects a growing shift toward acceptance amid the American public. Among those changing their opinions is former House Speaker John Boehner.
“It’s time for the federal government to take another look at this, and I think de-scheduling this drug, allowing for the research, would be very helpful for the American people,” Boehner told CNBC in an interview just last week.
This week, cannabis firm Acreage Holdings announced two new members to its advisory board: Boehner and former Massachusetts Governor Bill Weld. The latter has been in favor of legalizing medical marijuana since 1992, but Boehner has held a hard line position against it — until now.
“My position is the states, under the 10th Amendment, have the right to create laws for their own citizens. Let the people in these states decide what is they want to do,” Boehner told CNBC.
While Dayton says he wishes the former Speaker of the House would have changed his stance while in office, he acknowledged it’s a big shift. “He’s actually on the board of a company that’s violating federal law – that is a bold thing,” says Dayton.
As for taxes, even though marijuana is illegal at the federal level, companies in the industry will still need to pay Uncle Sam come April 17th.
“The tax money here is remarkable,” says Dayton. “In Colorado it has now surpassed the taxes in alcohol.”
In 2017, Colorado received $210.4 million dollars in tax revenue from marijuana, but just $45.7 million from alcohol. Even though business are facing higher tax burdens, Dayton said he still sees a big opportunity for the future.
“In North America, this is a $10 billion dollar market growing to a $24 billion dollar market by 2021 – that’s a 27 percent compound annual growth rate,” he said.
Dayton added: “This is an industry creating jobs, creating tax dollars, it’s reducing the cost of law enforcement efforts and all for a product that’s safer than alcohol.”
On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.