U.S. Attorney General Jeff Sessions’ action to rescind policies that let states’ marijuana industries proceed without federal intervention landed with a thud in the industry in Washington state and elsewhere.
Sessions’ new stance will let federal prosecutors decide how aggressively to enforce federal law prohibiting it, giving added uncertainty to an industry long used to it.
But after a flurry of industry and consumer backlash early on social media, calm settled in as more people learned of the news and considered what, if anything, will happen.
“This industry has been through a thousand challenges, and this isn’t any different from what they’ve powered through in the past,” Chris Walsh, industry analyst and vice president of Marijuana Business Daily news site, told The News Tribune in a phone interview from Denver.
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Voters in Washington and Colorado were the first two states to legalize pot for recreational use in 2012.
Since stores opened in July 2014, Washington has seen more than $3 billion in sales, with $1.94 billion in retail sales and $715 million in excise tax collected, according to state figures.
While business was brisk at local stores Thursday, there didn’t seem to be a panic-filled run on product.
“It’s just a normal busy Thursday,” responded a worker who answered the phone at Tacoma’s World of Weed.
“I don’t think the average person thinks they have to stockpile,” said Walsh, noting he had not heard of any frenzied shopping in Denver, either.
“It would be different if (Sessions) said, ‘We are going to discourage or prevent legalization,’ or ‘There will be significant consequences,’ ” Walsh said. “This just basically rolls back the clock before memos were issued.”
Cy Scott, co-founder of the cannabis website Leafly, was not surprised by the early morning news.
“Sessions has been very critical of cannabis during his time in office,” said Scott, who now leads Headset, a Seattle-based cannabis sales analytics company.
“We are confident that in the end the matter will be left to the states. ... With such a large percentage of states on board, it will be very difficult for Sessions to accomplish his goal of rolling back the progress the industry has made over the last few years.”
Session’s action is “truly disappointing, and it ignores the facts of the vibrant, healthy, legal cannabis industry,” Andy Brassington, CFO of Seattle’s Evergreen Herbal, one of the largest processors in the state and whose products can be found in Tacoma shops, told The News Tribune.
“The action also flies in the face of what the American public wants when now more than 60 percent have access to legal product in this country.”
Others considered the immediate Wall Street shock vs. long-term effects on the industry’s investors and workplace payrolls, and were leaning toward an upside eventually for the industry.
“There is certainly a large amount of turmoil in the industry today,” said PayScale chief economist Katie Bardaro. “One telling sign is the massive hit stocks related to the marijuana industry took after the news broke.
“For example, Terra Tech (the largest legal marijuana business by market cap) saw their stock price fall by more than 25 percent.”
But she thinks the fallout is short-term.
“My guess,” Bardaro said, “is the industry will be in a bit of a holding pattern until they observe any meaningful change from this news.
“Given the massive revenue opportunity (for the businesses and for taxes), the general public support of the marijuana industry, and the risk-reward mentality of those in this industry already, I think marijuana businesses will hold steady in terms of jobs and wages, but after these next few weeks, we will once again see flourishing job opportunities and wages.”
Some industry experts saw other signs of legal protection and better accountability among businesses.
“This development will undoubtedly have an at least temporary chilling effect, particularly on new investment and banking,” Nathaniel Gurien, CEO of FINCANN, an industry financial firm, wrote as part of a list of early industry responses to Thursday’s news.
“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.”