Q: Will San Diego’s recreational marijuana business growth be affected by the Justice Department’s new anti-pot prosecution policy?
Phil Blair, Manpower
NO: I think this stance is to placate the conservative voters in states that would never be progressive enough to legalize recreational marijuana. The administration is going to be so tied up with much more pressing and controversial issues that this one will fall by the wayside, unnoticed.
Kelly Cunningham, San Diego Institute for Economic Research
YES: Banks tend to resist dealing with businesses targeted by federal law enforcement. Since marijuana remains illegal under federal law, access to banking services is severely restricted and marijuana business remains mainly conducted by cash. Complex regulations and heavy taxes also increase costs of production and compliance, as it does for any product. The solution is not to ignore or undermine federal laws, but repeal or adjust them. Otherwise enforcement comes by political whim and ambiguity.
David Ely, San Diego State University
YES: Rescinding the Obama-era policy that eased enforcement of federal marijuana laws creates an environment of uncertainty for the industry. It is yet unclear how the Justice Department and individual U.S. attorneys will respond, and thus, whether the number of prosecutions will increase. But at least in the short term, the increased risk could discourage entry and expansion in the industry. And, financial institutions will become even more cautious about serving marijuana businesses.
Gina Champion-Cain, American National Investments
NO: The early adopting entrepreneurs attracted to the marijuana business are very risk tolerant and will not be fazed by the Justice Department’s new anti-states’ rights position. Nor will consumers be affected or even vaguely aware of the new federal guidance. Thus there will be no negative impact on the industry’s growth. Federal banking policy barring the industry from standard banking services remains the greatest growth impediment.
Alan Gin, University of San Diego
NO: While the Department of Justice says it is going to crack down, they are going to be opposed by the state of California. That will set up a legal showdown based on federalism and states’ rights. Regardless of how that goes, it will take years to resolve itself in the legal system. Sales will continue until the case is resolved. By that time, the industry will be so ingrained that it might not be possible to roll back.
James Hamilton, UC San Diego
NO: This is a losing hand for the White House and surely they can figure that out. A significant part of Republican support comes from libertarians and conservatives who don’t want the government telling them what to do, and from people who are serious about the Constitution, who will ask why this is a federal responsibility. It would also play terribly with the broader public. I expect words but no action from the White House.
Gary London, London Group of Realty Advisors
NO: I see the (Attorney General Jeff) Sessions move as a political shot in the dark. It will get little or no support locally, state or federal. The more important question is, just how big a deal is recreational pot economically? If it is a windfall, then it is a good new source of taxable revenue, which might remedy other fiscal shortfalls. If, after the initial long lines, the demand stabilizes and the market is tepid, legal pot might at least have the impact of cutting down on associated crime, also an important economic plus. We will see.
Norm Miller, University of San Diego
He is not participating this week.
Jamie Moraga, IntelliSolutions
YES: There’s now more uncertainty and confusion with the ability of federal authorities to crack down on states that have legalized marijuana. Some of this reversal could be mitigated by U.S. attorneys in the states with legalized marijuana, where they may elect to not change their approach on prosecution and only focus on what poses the highest safety threat. Because enforcement due to this Justice Department decision remains to be seen, the risk will be much higher for recreational marijuana business owners. That said, many will likely roll the dice and move forward.
Austin Neudecker, Rev
YES: Expect little immediate impact on recreational/medicinal sales because of various protections in place by the California legislature thus far. The continued challenge seems to be banks and investors being timid about backing new production, distribution and technology in this exploding space. California is poised to reap huge financial benefits from legalization, yet it is unfortunate that this will inject undue uncertainty into a fledgling market.
Bob Rauch, R.A. Rauch & Associates
NO: Federal prosecutors will likely focus solely on black and gray markets. While there will be some uncertainty based on Attorney General Sessions’ recent position, there is no reason to expect a crackdown on legal recreational or medical marijuana sales in California. Sessions was most likely setting up an opportunity for states to be serious about illegal marijuana sales by drug cartels. There will be no impact on recreational marijuana business growth.
Lynn Reaser, Point Loma Nazarene University
YES: Uncertainty about possible actions by the local U.S. attorney is likely to have some dampening impact on the industry’s growth potential. There are also fears that national legislation could be implemented imposing new restrictions. Many existing growers, retailers, and other industry participants will continue, but new entrants may encounter increased difficulty attracting capital. With traditional banking off limits, financing will remain a problem for all, and many insurers are now refusing to offer coverage.
John Sarkisian, SKLZ
NO: I don’t expect the Justice Department taking action to stop the sale of recreational or medical cannabis. Thirty states have legalized the sale of cannabis in some form. Given this acceptance throughout much of the nation it is hard to imagine the federal government taking a hard stand against the sale of marijuana.
Chris Van Gorder, Scripps Health
YES: The use, sale and possession of all forms of cannabis in the U.S. is illegal under federal law, despite the fact that California and a few other states have made it legal. Should the U.S. Justice Department decide to enforce the federal law in California, it will impact the marijuana business here in San Diego. I suspect this will end up in the U.S. Supreme Court as a federal versus states’ rights issue.
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