History of the U.S. Cannabis Industry and Cannabis Business Licenses | Cannabiz Media

History of the U.S. Cannabis Industry and Cannabis Business Licenses | Cannabiz Media

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In April 2023, only 10 states* in the United States do not have a regulated program for legalized medical and/or recreational cannabis use and sales. The industry has come a long way in the past six years when Cannabiz Media published the Marijuana Licensing Reference Guide 2017 Edition

At that time, only 27 states had legalized some form of cannabis (although some were extremely limited allowing high CBD, low THC only), and only five states (Alaska, Colorado, District of Columbia, Oregon, and Washington) had passed laws legalizing some form of adult-use cannabis. 

Compare those numbers to today, and the number of states with medical cannabis programs has jumped to 23, and 16 states have approved medical cannabis but not adult-use. That means since 2017, the number of states with legal recreational cannabis increased by 360%, and the number of states with legal medical cannabis increased by 41%. 

Let’s take a look at the history of cannabis business licenses to get a clear picture of how we got to where we are today – with the Cannabiz Media License Database tracking over 100,000 active, pending, applied, inactive, and denied cannabis licenses (plus more than 80,000 hemp licenses) across the United States.

Evolving Public Opinions on Cannabis Legalization

First, it’s important to understand that despite everything that happens politically related to the cannabis industry in the United States, public opinion has shifted dramatically. An October 2022 survey conducted by Pew Research Center found that only one in 10 U.S. adults says cannabis should not be legal at all. Nearly two out of three American adults (59%) think it should be legal for medical and adult use, and nearly one in three (30%) believe it should only be legal for medical use.

A separate October 2022 Gallup poll found that 68% of Americans support legalizing cannabis (nearly one in seven U.S. adults). That’s a big difference from the 12% recorded in 1970. In fact, it wasn’t until 2013 that more than half of American adults supported legalization. 

In 2017, when Cannabiz Media’s Marijuana Licensing Reference Guide 2017 Edition was published, Gallup reported that 64% of American adults supported cannabis legalization. That was at a time when only five states had approved adult-use cannabis. 

Bottom-line, regulations haven’t kept pace with evolving public opinions on cannabis legalization, and in 2023, we still have a long way to go with less than half of states having approved adult-use cannabis programs to date and 13 states still not allowing any cannabis use or only allowing limited use (i.e., high CBD, low THC only). 

History that Shaped the Cannabis Industry and Licensing

Prior to the 1900s, cannabis cultivation was not a concern at the federal level in the United States. In fact, cannabis was used both in pharmaceutical preparations and recreationally in the latter half of the 1800s, including at hashish parlors, which were popular in New York. 

Things changed in 1906 when the Pure Food and Drug Act passed, which required any over-the-counter remedy containing certain drugs, including cannabis, to be labeled as such. Fast forward to the 1930s, and cannabis gained a new, negative reputation. As reported by PBS Frontline:

“After the Mexican Revolution of 1910, Mexican immigrants flooded into the U.S., introducing to American culture the recreational use of marijuana. The drug became associated with the immigrants, and the fear and prejudice about the Spanish-speaking newcomers became associated with marijuana. Anti-drug campaigners warned against the encroaching ‘Marijuana Menace,’ and terrible crimes were attributed to marijuana and the Mexicans who used it.

“During the Great Depression, massive unemployment increased public resentment and fear of Mexican immigrants, escalating public and governmental concern about the problem of marijuana. This instigated a flurry of research which linked the use of marijuana with violence, crime and other socially deviant behaviors, primarily committed by “racially inferior” or underclass communities. By 1931, 29 states had outlawed marijuana.”

In 1930, the Federal Bureau of Narcotics (FBN) was created followed in 1932 with the launch of the Uniform State Narcotic Act by the FBN. The Act would create the same safeguards and the same regulations in all states related to the trafficking of narcotic drugs, including cannabis. State governments were encouraged to adopt the Act to control the problem of cannabis. 

By the middle of the 1930s, all states had some kind of cannabis regulation, and in 1937, the Marijuana Tax Act was passed by Congress, which effectively criminalized cannabis. The law also restricted cannabis possession to people who paid an excise tax for specific medical and industrial uses. 

The Boggs Act and the Narcotics Control Act were enacted in 1952 and 1956, respectively, and set mandatory sentences for drug-related offenses, including cannabis, as well as penalties for cannabis possession. A first-offense of cannabis possession carried a find of up to $20,000 and a minimum prison sentence of two to 10 years. 

It wasn’t until 1970 that the Marijuana Tax Act was repealed (and with it, most mandatory sentences for drug-related offenses), because it failed to control the country’s drug problems. Throughout the 1970s, 11 states decriminalized cannabis and many others reduced possession penalties.

However, in 1970, Title II of the Comprehensive Drug Abuse Prevention and Control Act, the Controlled Substances Act, assigned cannabis a Schedule I classification. Under this classification, cannabis was lumped in with drugs like heroine and peyote as having a high potential for abuse and no accepted medical use. Cannabis is still classified as a Schedule 1 drug at the federal level in 2023. 

Unfortunately, increased decriminalization and reduced possession penalties didn’t mean good things were coming for cannabis in the United States. During a press conference on June 17, 1971, President Nixon declared, “America’s public enemy number one in the United States is drug abuse. In order to fight and defeat this enemy, it is necessary to wage a new all out offensive.” During his speech, he announced the creation of a special action committee and requested $155 million from Congress to fund the initiative.

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In 1972, President Nixon rejected the Shafer Commission’s recommendation to decriminalize cannabis for personal use, and the US Drug Enforcement Agency (DEA) was created in 1973. Given what happened in previous years, it’s not surprising that the 1980s brought even more cannabis regulation. 

President Reagan signed the 1986 Anti-Drug Abuse Act in 1986, which instituted mandatory sentences for drug-related crimes. In conjunction with the Comprehensive Crime Control Act of 1984, the two laws increased federal penalties for possession and dealing. PBS Frontline explains, 

“Possession of 100 marijuana plants received the same penalty as possession of 100 grams of heroin. A later amendment to the Anti-Drug Abuse Act established a “three strikes and you’re out” policy, requiring life sentences for repeat drug offenders, and providing for the death penalty for drug kingpins.”

Taking the battle against drugs a step further, President Reagan and First Lady Nancy Reagan announced a new campaign against drug abuse during a televised address on September 14, 1986 when the President had this to say about drugs (which included cannabis), “Drugs are menacing our society. They’re threatening our values and undercutting our institutions. They’re killing our children.”

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When President George Bush took office in 1988, he continued the work he began as Vice President under Ronald Reagan in the fight against drug problems across the United States. In 1989, he openly declared a new War on Drugs during a nationally televised speech saying, “All of us agree that the greatest domestic threat facing our nation today is drugs.”

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Seven years later, in 1996, voters in California passed Proposition 215, which allowed medical cannabis sales and use for patients with specific conditions despite the fact that federal law prohibited cannabis possession. According to Gallup, 25% of American adults supported cannabis legalization for recreational use at the time. 

Over the next 27 years, 37 additional states (including Washington, D.C.) would join California and pass laws that allow the legal sale of medical and/or adult-use cannabis despite the fact that cannabis is still listed as a Schedule 1 drug at the federal level.

History of the Cannabis Industry

History of Cannabis Business Licenses: 2017-2023

In 2017, Cannabiz Media was tracking 13,456 U.S. cannabis industry business licenses in the Cannabiz Media License Database according to the Marijuana Licensing Reference Guide 2017 Edition. In 2023, Cannabiz Media is tracking 100,734 individual U.S. cannabis licenses in the Cannabiz Media License Database. 

This number includes licenses across the value chain and represents a 631% increase in licenses over the past six years. It’s an understatement to say this industry has grown a lot. The legal cannabis industry has exploded, and 13 states still don’t allow medical cannabis yet! And more than half don’t allow adult-use cannabis yet!

Most license growth can be traced to cultivation. In 2017, Cannabiz Media was tracking 4,251 cultivation licenses across the United States, and in 2023, that number is 1,145% higher at 52,914. Manufacturing licenses have increased from 2,226 in 2017 to 14,782 in 2023, and dispensary and retail licenses have grown from 2,966 to 18,086 and from 3,973 to 12,591, respectively. 

Many new types of licenses have been added to the License Database during the past six years. In addition to cultivation, manufacturing, dispensary, retail, and testing licenses, Cannabiz Media now tracks delivery, distributor, microbusiness, event, consumption, research, marketer, and waste licenses in the cannabis industry.

When the Marijuana Licensing Reference Guide 2017 Edition was published, California had not started selling cannabis in licensed dispensaries. No licenses had been issued at the time. A lot has changed since then. Today, California has more business licenses tracked in the Cannabiz Media License Database than any other state at 33,251, followed by Oklahoma at 23,598.

It’s interesting to consider active vs. inactive licenses as well. In 2017, the Cannabiz Media License Database tracked 13,405 individual cannabis business licenses. Today, more than 100,000 licenses are tracked, and nearly half of the licenses issued over the years are now inactive. It’s thought provoking to consider why, how, and when these licenses became inactive, but that’s a discussion for another article and a deeper dive into the data in the Cannabiz Media License Database and Cannabiz Intelligence™.

Key Takeaways about the History of Cannabis Business Licenses and the Future

The history of the cannabis industry tells us that things will continue to change. One step forward and two steps back has been the story of cannabis for more than a century. The good news is progress is being made, and there is enough momentum in 2023 to ensure the cannabis industry continues to expand in the future. 

The one thing we can all count on is that Cannabiz Media will be tracking all of the cannabis business license activity in the Cannabiz Media License Database! Schedule a demo to see it in action.

*Washington, D.C. is included in the state numbers throughout this article for simplicity.

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