The year 2024 began with high hopes for the end of marijuana prohibition in the United States. However, as the year winds down, many of those expectations remain unmet.
“The main issue is reclassification,” stated Alex Halperin, a journalist covering the marijuana industry since 2015 through his newsletter WeedWeek. Rescheduling would remove marijuana from the list of substances federally prohibited under the Controlled Substances Act (CSA).
President Joe Biden had pledged to reform federal marijuana policy during his 2020 presidential campaign, with rescheduling appearing to be the most likely significant step. However, recent developments suggest this change might not occur during his presidency—or at all.
In January, the HHS issued a scientific review recommending marijuana be reclassified from a Schedule 1 to a Schedule 3 substance. This shift would allow marijuana-based medications to gain FDA approval. Acting on this recommendation, the DEA introduced a proposal for rescheduling and opened the matter to public comments in May. Out of over 40,000 responses, 69% favored federal legalization or decriminalization.
Despite this, progress has slowed. Shortly after the public comment period ended, the DEA announced a December hearing to discuss rescheduling. However, the hearing was downgraded to a preliminary discussion and postponed to 2025, further extending the process.
This year’s presidential campaign offered mixed feelings for marijuana advocates. For the first time, both Republican and Democratic candidates expressed support for reform. Vice President Kamala Harris pushed for federal legalization, while Donald Trump endorsed a Florida initiative to legalize adult-use marijuana. Yet these positions have not translated into actionable progress.
Ballot initiatives to legalize recreational marijuana in South Dakota and Florida were rejected, marking the first year since 2017 without new states adopting legalization. Nebraska, however, approved medical marijuana.
Halperin remarked that predicting federal reform under Trump’s administration remains challenging as Republican lawmakers largely oppose legalization, even though younger Republican voters increasingly support it.
While legislative efforts stagnated, parts of the industry saw growth. Delaware and Ohio issued their first licenses for recreational dispensaries after legalization in 2023. Consumption lounges have also gained approval in various regions.
However, concerns over product safety have escalated. In one of his articles, Halperin highlighted the presence of pesticides in regulated marijuana products in California. The exposé spurred further reports on contamination in both marijuana and hemp products, the latter being less regulated and often sold without age restrictions.
In response to growing alarm, the California governor temporarily banned intoxicating hemp goods in September, while New Jersey lawmakers attempted to regulate the market through licensing. However, these measures face legal challenges, further delaying reforms. Meanwhile, federal bills like the SAFE Banking Act, which aimed at improving financial access for marijuana businesses, have also stalled in Congress.
A lot is riding on the policy actions that the incoming administration opts to implement, and those policies could also indirectly affect ancillary firms like Innovative Industrial Properties Inc. (NYSE: IIPR) that serve marijuana plant-touching businesses in different jurisdictions.
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