The House voted to decriminalize marijuana and remove it from the list of banned controlled substances at the federal level on Friday. Now the Marijuana Opportunity Reinvestment and Expungement (MORE) Act will move to the Senate, where it is unlikely to attain the 60 votes needed to pass.
And while the passage of the MORE Act would certainly expand cannabis markets in the U.S., Weedmaps CEO Chris Beals thinks that a bigger obstacle lies in the 37 states where the substance is already legal for adult use.
"The single biggest issue facing legalized cannabis markets... is that there's just not enough licenses," Beals told Yahoo Finance Live (video above), adding that consumers are still choosing the illicit market over the legal one "by a four-to-one ratio."
As a result, “a lot of the harm that's being inflicted is not from the federal illegality," Beals said, "It's from states not issuing enough licenses because the biggest correlating factor to these high illicit market rates is you have to drive too far or there's not enough robust competition on pricing or product selection."
NIMBYism curbing marijuana market growth
Cannabis is one of the fastest-growing industries in the U.S. Last year, the industry generated $25 billion in sales — up 43% from 2020 — and the U.S. cannabis market is projected to hit $65 billion by 2030.
The industry also benefits from increasing popular support among Americans: 68% believe that pot should be legal, according to the latest Gallup poll, and 18% of Americans now admit to using it, which is up from 10% in 2005.
Congress is responding to an extent: In addition to the House passing the MORE Act, the Senate has been preparing its own cannabis legislation: the Cannabis Administration and Opportunity Act.
"Taken together, Congress is strongly signaling that the end of federal cannabis prohibition is nearing," US Cannabis Council CEO Steven Hawkins said in a statement.
Beals agreed — with one caveat: "While I think federal is part of it — it will undoubtedly help — states issuing more licenses for legalized cannabis businesses will help far more."
He explained that the growth of the industry remains dependent on licensing at the state level.
"The biggest reason is local NIMBYism," Beals said. "Most states that have legalized have left it up to local governments, which tend to be slower to move and more conservative." (NIMBYism, which stems from the acronym for 'Not In My Backyard,' refers to local residents who oppose development projects in their area.)
Beals cited California's legal cannabis market as an example of this.
"Even though California legalized in 2016, less than 25% of cities and counties have allowed legal cannabis businesses to open up there," he said.
"I think the interesting thing is New York and New Jersey to some degree are learning from this," Beals continued. "In New York, about 50% of cities and counties opted into allowing cannabis sales, and people bemoan that saying, 'Well, it's gonna be an anemic market launch,' that sort of thing. People are forgetting that California is only at about 22%, 23%. Newer markets are gonna stem the tide."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv