Cannabis Corner: Part 2 – Cannabis in America – A Winding Journey

This is Part Two of a Multi Part Series

“I field several calls daily from former trading associates inquiring about investing in cannabis. Its easy to skip the basics, but that can lead to confusion and missed opportunities. Ive enlisted the help of cannabis business intelligence leader New Frontier Data to provide an editorial series for Traders Magazine outlining the fundamentals of this rapidly evolving industry.”

A Winding Journey

The first cannabis laws passed in the United States reach back 400 years, to a 1619 mandate passed by the Virginia Assembly requiring that every farmer grow some hemp, which was prized for its versatility and essential applications (nutritional seeds, clothing, rope, etc.) using its fibers.

While it has become an urban myth that the Declaration of Independence was written on hemp paper, colonists relied on hemp, and George Washington grew it at Mount Vernon. The plant flourished as the country grew, spreading south where it became a major agricultural commodity in such states as Kentucky, Mississippi, and Georgia. Yet, by the mid-19thcentury, competition from Russias cotton and hemp imports had begun to erode demand for domestically grown hemp. After the U.S. Civil War, medicinal uses of cannabis found their niches to treat migraines, arthritis, insomnia, and other conditions, and the plant was sold both for its flower and as tinctures.

Subsequently, beyond its industrial uses, the plant has for millennia been used therapeutically for its nutritionally rich seeds and curative oils, while its psychoactive properties have been incorporated into medicinal, recreational, and religious traditions by cultures across the globe.

Criminalization of Cannabis

In the U.S., cannabis was primarily used for medicinal purposes until the early 20thcentury, when Mexican immigrants fleeing the Mexican Civil War (1914-1915) introduced the social practice of smoking it recreationally. During the era when the temperance movement would lead to passage of the 18th Amendment and Prohibition (1920-1933), momentum had begun for banning the recreational use of cannabis. By 1920, nine states outlawed its use, including Massachusetts, Maine, Vermont, Colorado and Nevada. Regardless, medicinal use of cannabis continued, and by the 1930s, pharmaceutical companies were selling standardized cannabis extracts to treat pain, spasms, and insomnia, while cannabis cigarettes were touted to treat asthma.

Meantime, social momentum against cannabis began to build in earnest. Opponents began calling it marijuana – a Mexican colloquialism – to disassociate it from the popularity for cannabis and hemp. In 1930 the Federal Bureau of Narcotics was formed to coordinate the governments drug-control efforts.

That agency, led by lawman Harry J. Anslinger (who had previously built an international reputation for combating international drug trafficking), based its anti-marijuana campaign on two key assertions: that marijuana caused insanity, and its use drove people to abhorrent criminal acts. Those assertions were effectively captured in the filmReefer Madness (1936), a fictional, cautionary tale depicting licentious criminality and tragic downfall caused by irresponsibility attributed to marijuana use.

In 1937, Congress proposed the Marihuana Tax Act to limit cannabis for medical use only, and require doctors who prescribed it both to register with the federal government and pay an annual tax. The onerous requirements soon led many doctors to opt for other, more convenient treatments including aspirin and morphine, two drugs gaining popularity at the time. By 1942, marijuana was removed from the U.S. Pharmacopeia, thereby ending its legal medical usages.

Legal prosecution of marijuana use took rise in the 1950s, particularly through passage of the 1951 Boggs Act and the 1956 Narcotics Control Act, both of which established harsh minimum prison sentences and hefty fines even for first-time offenders.

In 1970, the Controlled Substances Act (CSA) was signed into law by President Richard Nixon. It established cannabis as a Schedule I drug deemed it to have a high potential for abuse with no currently accepted medical use.

Though the CSA stood in direct contrast to findings by the National Commission on Marijuana and Drug Abuse which were based on 50 related studies and detailed little proven danger of physical or psychological harm from the experimental or intermittent use of cannabis, the Nixon administration rejected the conclusions. By 1971, Nixon declared that Americas public enemy number one… is drug abuse, launching the War on Drugs and leading toward the 1973 establishment of the federal Drug Enforcement Agency (DEA).

Rise of Reform Efforts

In 1976, Washington, D.C., resident Robert Randall mounted a successful legal defense of his cultivation and use of cannabis to treat his glaucoma, and became the first American to receive medical marijuana from the U.S. government. Eventually, the Food and Drug Administration (FDA) program for Investigational New Drug (IND) applications at its peak provided federally grown medical cannabis to 30 patients, before being ultimately suspended in 1991.

In 1996, California became the first state to legalize medical marijuana, launching legal medical cannabis in the modern era. Despite consistent federal opposition to the expansion of state-level medical cannabis programs, by 1999 four more states (Alaska, Maine, Oregon and Washington) had legalized cannabis for medical use. By 2007, no fewer than a dozen states including Vermont, Rhode Island, and New Mexico approved medical cannabis programs.

A major shift in federal enforcement was marked in 2009 when the U.S. Department of Justice (DOJ) issued the Ogden Memo, stating that it would not target individuals or businesses which provided or used cannabis in clear compliance with their states medical marijuana laws.

That was followed in 2012 by the Cole Memo, in which the DOJ said it would not challenge state laws but instead focus on eight priorities related to marijuana, including preventing distribution of marijuana to minors; preventing diversion of marijuana revenues to gangs and cartels; and preventing drugged driving or other adverse public health consequences.

Likewise, the medical communitys stance on cannabis evolved. In 2008 the American College of Physicians supported reclassification of marijuana in the name of medical research, and recommended the use of provenly effective non-smoked forms. The following year, the American Medical Association (long opposed to medical marijuana) recommended that marijuanas status as a federal Schedule I controlled substance be reviewed with the goal of facilitating the conduct of clinical research and development of cannabinoid-based medicines.

In 2019 and Beyond

By the end of the 2018 midterm elections, 33 states had adopted medical cannabis programs, with 10 legalizing adult-use markets. Also, Democrats took control of the House of Representatives, displacing some key Republicans who had long blocked the chamber from voting on cannabis measures, raising the prospect of more cannabis-friendly legislation getting through Congress in the next two years.

In 2018, Canada became the first G-20 nation to fully legalize cannabis, and Canadian companies became the first in the world to legally export cannabis from North America to Europe. Other countries around the world are revisiting their cannabis laws:

– The highest courts in Mexico and South Africa each ruled that the prohibition of cannabis violated the rights of their citizens, and mandated that their respective governments develop policies to govern legal cannabis programs.

– Countries across Latin America and the Caribbean, including Uruguay, Columbia, Brazil, Panama, and Jamaica, are all working to establish medical cannabis markets designed with a priority on exports to Europe, Canada, and Oceania.

– South Korea became the first country in Asia to legalize medical cannabis use, and others in the region (including Thailand and Papua, New Guinea) are carefully assessing opportunities in the sector.

– The United Nations is releasing its first formal report of medical cannabis in early 2019, fueling further debate on the role and state of cannabis among local communities, individual countries, and within the global economy.

Cannabis has been deeply woven in the tapestry of American history, depicted as either hero or villain depending on the cultural tides of the time. However, with a strong majority (66%) of Americans now supporting full legalization, more than 90% of Americans now live in a state with some degree of cannabis laws on the books, and the odds are rising for fundamental changes to effect federal cannabis policy.

Suddenly, the outlook for cannabis looks much brighter than at any time in its long past. And in considering the medical, wellness, leisure, and applied materials applications for the plant, its commercialization will present a changing, expanding array of economic opportunities for many years to come.

Sachin Barot is CEO of CERESLabs