As more and more states legalize marijuana, it’s common to hear from advocates of cannabis legalization that the federal government should just legalize it nationwide. While there’s certainly some logic to that argument, there’s also an important point of view. Many of our nation’s local governments are opting out of their state’s cannabis industry because they don’t want to be held responsible for the consequences of legalizing cannabis.

In a state with some of the most progressive cannabis laws in the country, many cities and counties are opting out of the state’s adult-use cannabis marketplace, which is bound to continue to grow in popularity.

There are numerous reasons why a municipality would opt out of a state’s adult use cannabis market, but the most common—and most obvious one—is that the municipality does not want to be in compliance with state and federal laws. Being in compliance means the municipality has to provide an extra layer of security for their cannabis stores, which is incredibly expensive.. Read more about black market and drug legalization and let us know what you think.

Sources say it’s too early to say whether the municipal exemption for unwilling municipalities will be retained, and many are unsure how it will work in the future. Although 16 U.S. states and Washington D.C. have legalized cannabis for adult use, many municipalities, cities and towns refuse to participate in their state’s marijuana legalization programs. One of the consequences of this refusal is that residents who need or want cannabis must travel to neighboring areas to obtain it. While the exemption is not new, it is even affecting large markets like California, where only 161 of the state’s 482 municipalities have chosen to join the adult drug use program, which launched in 2019. Photo: Bulat Silvia/Getty Images word-image-12448 In Michigan, more than 500 cities have banned cannabis operations after the state voted to legalize it in 2018. In addition, Detroit is embroiled in a legal battle over a controversial 15-year residency requirement for welfare recipients that could lead to the Motor City refusing to sell cannabis.

Why should I deregister?

Legal experts and executives from several cannabis companies say the motivation may be different. Michael McQueeney, a partner at Foley Hoag who specializes in cannabis, gave New Jersey special attention. He said municipalities must vote on the status of cannabis within 180 days of the legalization law taking effect, and that some fear lawsuits against local police, citing legislation that carries an increased risk of police liability for cannabis-related arrests. Many New Jersey cities are open to the idea of cultivation and manufacturing, McQueeney noted, but not stores and dispensaries. They mistakenly believe that by banning dispensaries, police will be less involved in addressing marijuana possession problems. Douglas E. Maines, a partner at the law firm Honigman LLP in Detroit, says ever-changing laws and court cases can be a hindrance for some Michigan communities. His law firm is part of the trial over his Detroit home. Photo copyright SNWEB.ORG Photography, LLC./Getty Images word-image-12449 Although many Michigan residents support the legalization of marijuana, those same people don’t necessarily want cannabis businesses near the coffee shop they frequent or on the same street as the school their children or grandchildren attend, Maines said. I think there’s a lot of NIMBYism at play here too. However, Maines believes the idea of cannabis dispensaries is changing as regulations take shape and communities become aware of the financial benefits of selling cannabis. Dina Rollman, vice president of government and regulatory affairs at Green Thumb Industries Inc. (OTC:GTBIF), points to the continued lack of education. More education is needed so communities can change their mindset and understand the positive impact a clinic can have, Rollman said. David Farris, vice president of sales and marketing at Planet 13 Holdings Inc. (OTC:PLNHF), said the city’s decision to withdraw could have financial implications. Depending on where their city stands in terms of jobs and finances, [the exit] puts them in a position where they really have to think. Photo: Anton Petrus/Getty Images word-image-12450 The loss of revenue to municipalities can be enormous. Data collected by The Motley Fool shows that in 2020, revenue from legal adult drug markets ranged from $23 million (Alaska) to more than $1 billion (California). Entrepreneurs bear the brunt of the ban, said McQueeney, who noted that at least 51 percent of the business must be located in the city where it wants to operate in order to get a business license. Cities that choose not to do so, he added, often destroy the opportunity for local businesses to take advantage of this special category of permit, which is intended for new and small operators. Cannabis supports 321,000 full-time equivalent jobs, according to Leafly’s 2021 jobs report. Although cities and towns often benefit from cannabis sales, Maines said the impact on the state budget will likely be marginal. He noted that taxes are often used to fund government projects, including infrastructure and primary and secondary education. As more municipalities allow cannabis businesses, sales will likely increase, meaning those cash reserves will grow, he said. Photo: gradyreese/Getty Images word-image-12451 Maines noted that each license application in Michigan costs $6,000, with annual fees ranging from $4,700 to $28,000 for medical operators and $3,000 to $50,000 for adults.

How long will it take?

Sources say it’s too early to say whether the municipal exemption for unwilling municipalities will be retained, and many are unsure how it will work in the future. I think they always have the option to opt out, said the director of communications for Cresco Labs Inc. (OTC:CRLBF) communications director Jason Erks. Erkes noted that Cresco’s markets pay particular attention to hiring standards, marketing and other criteria that demonstrate marketability. All of these things reflect the standardization and professionalization of the cannabis industry. Nevertheless, some cities could be left out as long as the opt-out is maintained. Rollman, of Green Thumb, described the situation as ambiguous. Some municipalities just want to wait until other municipalities have worked out all the nuances before making a decision, she said.

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