The real “Purple Haze“ (sorry, I meant “Purple Wave“)

While Trump and Biden provided the world with an epic political slugfest, some significant referendums, snuck onto the state ballots. In ballot measures, five states put the question of marijuana legalization in different forms directly to their constituents. New Jersey, Montana (results still undeclared at the time of writing but lean towards passage), South Dakota, and Arizona approved legal recreational marijuana for adults age 21 and older. While Mississippi approved cannabis for medical use. South Dakota not only approved medical marijuana but also recreational, in a single vote. Don’t expect stores to open tomorrow, as after voters approve the measures, state legislatures normally need time to set up regulatory structures within each state. Yet dispensaries are coming. Currently, in the USA, 11 states have legalized full, adult marijuana use. Investors should watch for the trend of lawmakers to place cannabis legislation directly towards a public vote to continue.

But it’s not just the change of political landscape that is driving the mandate for cannabis legislative reform. US state economies have been devastated by the coronavirus pandemic and are expecting to borrow billions to cover the shortfalls in the government’s budget. Cannabis stimulated revenue will help the issuing of billion of debt. In this time of weak economic growth, the government is searching for quick solutions to generate tax revenues. New Jersey is expected on the sales of marijuana would levy the state’s 6.6% sales tax on cannabis sales and allow local governments to implement an additional levy of up to 2%. Experts anticipate the NJ initiative in 2021 will produce $100-130 million of new tax revenue on $1.9 billion of sales.