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Cannabis Goes Corporate: Lobbyists, Unions Seek to Shape Marijuana Industry

05/08/2021 | 03:44am EDT

By Julie Bykowicz

HARTFORD, Conn. -- The rally at the state capitol on April 20, the unofficial holiday for pot aficionados, brought out green-wigged supporters ringed in wisps of smoke. These days, they are far from the only people advocating for the legalization of marijuana.

Black Lives Matter activists, who are seeking business opportunities for minority communities and say they have been hit hard by drug laws, joined the Hartford rally, as did labor organizers who want to see the industry unionized.

More broadly, cannabis companies, banks and new marijuana trade organizations are deploying platoons of lobbyists to state capitals and Washington, D.C., to help shape the ground rules for the industry as more states legalize use, and as Congress weighs measures that could further legitimize the market.

A decade ago, a handful of pro-pot companies and interest groups spent less than a half-million dollars on federal lobbying. By 2019, there were dozens of supporters, and they spent more than $8 million to hire about 130 registered lobbyists, according to a Wall Street Journal analysis of public lobbying disclosures.

Federal lobbying on cannabis declined last year amid the coronavirus pandemic and presidential election, but this year's first-quarter reports show spending is rebounding. Banks including Morgan Stanley, as well as tobacco and alcohol companies, are beginning to weigh in on federal cannabis policy, according to lobbying records.

The lobbying uptick comes as states are developing their own rules for recreational use and Democrats in Washington say they will soon push to decriminalize marijuana federally.

Three states have already greenlighted adult recreational use this year, bringing the total to 17 states plus the District of Columbia. Four more, including Connecticut, are set to vote on legalization this year.

The industry's increasing legitimacy at the state level has attracted a diverse set of corporate players, union advocates, personal-use supporters and social-justice activists, reflecting the industry's widening base even if its participants are sometimes at odds with each other.

Curaleaf, one of the country's largest cannabis operations by revenue, hired as its lead lobbyist Edward Conklin, who formerly oversaw state and federal government affairs for McDonald's Corp. A self-described suit-tie-and-cufflinks guy, Mr. Conklin said he raised eyebrows when he first set foot in congressional and Senate offices about four years ago.

"There was a sense of, 'Wow, you weren't what we were expecting,' " Mr. Conklin said. Lawmakers were hesitant to meet with him, and outside lobby firms were squeamish about working with Curaleaf, he said. "Now, we can walk into any office and have a meeting," he said.

Marquee names from both major parties have flocked to the marijuana influence industry.

John Boehner, the Republican former House Speaker, and Kathleen Sebelius, the Democratic former Kansas governor and secretary of Health and Human Services under President Barack Obama, now lead a pro-marijuana business group based in Washington.

Conservative billionaire and major Republican donor Charles Koch recently helped start the Cannabis Freedom Alliance to attract more GOP support to the cause.

Labor also sees an opening. The United Food and Commercial Workers International Union, which says it already represents more than 10,000 cannabis workers including at dispensaries and cultivation facilities, has worked labor provisions into many latest state legalization efforts.

In some instances, cannabis companies, as well as corporate players from the tobacco and alcohol industries angling for a foothold in a new market, are butting heads with consumer-focused groups like the National Organization for the Reform of Marijuana Laws (NORML) and Marijuana Policy Project (MPP).

One early area of dispute: homegrown cannabis. Companies that had won contracts under state medical-marijuana programs initially objected to states like New Hampshire and New York allowing consumers to grow a few plants for personal use. In more recent years, after pushback from NORML, MPP and other groups, they have largely stopped lobbying against those provisions.

Ms. Sebelius said that even among her own group's members, there are growing divisions about how best to try to shape the government's regulatory approach.

"The people who have an established market in a complicated state-by-state environment want to protect those investments," she said. "And they may not be eager to see a wide-open market or a lot of regulation on the federal level."

Cannabis advocates hope to see a trajectory similar to alcohol after Prohibition and same-sex marriage in recent decades, where states led the way.

The Obama administration's Justice Department issued a memo taking a largely hands-off approach to enforcing marijuana laws in states that had legalized the drug. Although the Trump administration rescinded that memo, it continued the Obama-era approach in practice. New Attorney General Merrick Garland said during his confirmation process that he doesn't see minor federal marijuana prosecutions as a good use of the Justice Department's limited resources.

Senate Majority Leader Chuck Schumer (D., N.Y.) plans to introduce legislation that would take marijuana off the controlled dangerous substances list. Some Democrats and most Republicans are opposed, and President Biden hasn't identified it as a priority.

A less-controversial bipartisan measure, to protect banks that service state-level cannabis businesses, has passed the Democratic-controlled House and is co-sponsored by nearly a third of the Senate; yet it faces challenges from Democrats who say they want a more-sweeping approach to marijuana policy that includes decriminalizing it.

Even with federal inaction, the state legal-pot market generated almost $17 billion in sales and is expected to grow to about $50 billion by 2025, according to a February investor note by an industry analyst for Cantor Fitzgerald.

"It seems like everyone wants a piece of this, and it's wild," said Paul Armentano, NORML's deputy director since 1993.

There are so many pro-legalization players that earlier this year they spawned an umbrella group, the United States Cannabis Council. It took seven years for the New York Legislature to approve Democratic state Sen. Liz Krueger's legalization bill, and each year, she said, the roster of lobbyists grew longer and their requests more complex.

"For years, it was just a few stoner groups who would want to come meet with me," she said.

By this year, more than 700 entities had registered to weigh in on her bill. Gov. Andrew Cuomo signed it into law at the end of March.

A similar frenzy is now playing out in Hartford, where Connecticut's majority Democratic Legislature is considering two proposals for legalizing recreational adult use of marijuana.

Democratic Gov. Ned Lamont, who introduced one of the bills, is so confident the Legislature will legalize marijuana this year that he built the projected tax revenue from it into the state budget.

Chad Day contributed to this article.

Write to Julie Bykowicz at julie.bykowicz@wsj.com

(END) Dow Jones Newswires

05-08-21 0544ET

Stocks mentioned in the article
ChangeLast1st jan.
AURORA CANNABIS INC. -1.84% 11.72 Delayed Quote.12.64%
AUXLY CANNABIS GROUP INC. -1.92% 0.255 Delayed Quote.1.96%
CANOPY GROWTH CORPORATION -3.12% 30.46 Delayed Quote.0.38%
CRONOS GROUP INC. -0.74% 10.74 Delayed Quote.22.40%
CURALEAF HOLDINGS, INC. -0.23% 17.64 Delayed Quote.16.01%
DJ INDUSTRIAL -0.25% 34393.75 Delayed Quote.12.65%
HEXO CORP. -6.48% 7.5 Delayed Quote.71.73%
MEDICAL MARIJUANA, INC. 1.23% 0.041 Delayed Quote.129.05%
MORGAN STANLEY -1.44% 90.72 Delayed Quote.32.38%
ORGANIGRAM HOLDINGS INC. -1.29% 3.82 Delayed Quote.128.99%
THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD. -1.32% 0.375 Delayed Quote.61.70%
THE SUPREME CANNABIS COMPANY, INC. 0.00% 0.355 Delayed Quote.129.03%
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