As of January 1, 2020, you will notice a familiar smell increasing in its intensity around Illinois. And no, it’s not going to be from an abundance of skunk roadkill either. It will be as a result of the new legislation passed in the Illinois general assembly allowing the recreational use of marijuana.
While the use of marijuana for medicinal purpose has been legal in Illinois and 32 other states, recreational use is not as prevalent. In fact, Illinois is the first state to legalize recreational use of the weed through legislation and not through a vote by the citizens of the state. There are 10 other states that currently allow recreational use.
Further complicating the issue is that the use of marijuana remains illegal at the Federal level as it is considered a schedule I illegal substance under the Controlled Substances Act (CSA). That fact creates many complications for those involved in the business, including how they process and store revenue received from sales. (Due to the fact that marijuana is illegal at the federal level, federally insured financial institutions are not allowed to accept deposits for marijuana sales. – See FinCEN Letter of 2/14/2014) As a result, for those of you that are old enough to remember the TV show, you might start to imagine a “Get Smart” kind of security system protecting the product and cash related to the business.
There are two products that are relevant to Marijuana. First is THC (Tetrahydrocannabinol), which is the compound that creates the “High” and is the potent portion of the drug. It is also the reason that marijuana is classified as a schedule I substance under the CSA. The other is CBD (Cannabidiol). CBD can be derived either from the marijuana plant itself or it can be derived from Hemp. While not psychoactive like THC, CBD derived from Marijuana is considered a controlled substance. On the contrary, CBD derived from Hemp contains not more than 0.3% THC and, as a result of the Agriculture Improvement Act of 2018 (AIA), the federal government has legalized industrial hemp. (The AIA does not preempt state and tribal laws that regulate hemp in a more restrictive manner.)
As you are probably already aware, there are certainly known medicinal advantages to THC and CBD, especially as a replacement for other forms of drug therapy for pain such as the highly addictive Opioids. That’s not to say that THC is not an addictive drug either. It remains to be seen just how much of an effect it will have on society as its use becomes more prevalent.
Certainly, states like Colorado have seen increases in fatal automobile accidents since marijuana has become legal for recreational use. Unlike alcohol, currently law enforcement does not have a reliable impairment test for marijuana to identify impaired drivers. It also creates complications for those people in high-risk jobs, as THC can be detected in the bloodstream for weeks after the “High” has expired. It then becomes a judgment call as to when the drug was last consumed, creating challenges for HR professionals tasked with administering zero-tolerance drug policies.
Notwithstanding the aforementioned issues, the industry is “growing like a weed.” Projections are that by 2020, the industry will realize over $20 billion in annual sales, from approximately $9 billion in 2017. As other states and perhaps the federal government move to end prohibition, growth will certainly continue at an exponential pace.
We have the expertise to assist with the insurable risk portion of the business. It can be complex and there are many moving parts, but now that it’s a legitimate business in Illinois and other states, if you enter this industry we can help you protect your interest.