Massachusetts' Marijuana Vote: What You Need to Know

By Markets Fool.com


Image source: Getty Images.

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What's being voted on

This is proving to be a pivotal year for the marijuana industry, with nine states in total voting on some degree of marijuana legalization. Five of those states are aiming to legalize recreational marijuana, with Massachusetts being one of those states.

The Massachusetts Marijuana Legalization Initiative, or Question 4 as it's more commonly known, would legalize recreational marijuana for adults ages 21 and up and create a regulatory agency, the Cannabis Control Commission, which would oversee the industry. If approved, the measure would go into effect on Dec. 15, 2016, and it would tack on an additional 3.75% excise tax on top of the state's existing 6.25% tax rate. Individual municipalities could choose to pile on another 2% tax, leading to an overall tax on recreational marijuana of between 10% and 12% in Massachusetts.

Medical marijuana has been legal in Massachusetts since 2012.

What the polling suggests

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If the latest polling figures are any indication, Massachusetts could be seeing green on Election Day. A recently released survey from Western New England University Polling Institute found that 61% supported the measure compared to just 34% who opposed it.

However, support for the measure hasn't always been this strong. A September WBUR/MassINC Polling Group survey found that only 50% of respondents were in favor of the measure compared to 45% who opposed it. Take into account the 4.4% margin of error and things are probably a lot closer than you may realize.


Image source: Pixabay.

What's at stake

Supporters of Question 4 have argued that legalization would tack on an estimated $100 million in annual revenue for the state and local governments. While this pales in comparison to what California could bring to the table -- potentially $1 billion in annual tax revenue just from recreational pot -- it would still be a major victory for the cannabis industry if Massachusetts voters approve Question 4.

Both presidential candidates, Hillary Clinton and Donald Trump, have suggested a wait-and-see approach with recreational pot, meaning the more approvals that are enacted at the state level, the more points of reference lawmakers in Washington, D.C. will have to determine if marijuana can effectively be regulated on a larger scale.

But in spite of the rapid growth of the marijuana industry Cowen & Co. has estimated that compound annual growth could near 24% through 2026 investors could be left on the outside looking in. With licensing restrictions in Massachusetts likely (as in other states), it's going to be hard for large businesses to emerge as industry leaders. These large businesses, which can cope with the high regulatory costs associated with pot, are investors' best chance of participating in the growth of the cannabis industry. However, with the federal government unlikely to change its tune anytime soon, and small businesses mostly dominating the recreational marijuana landscape, reasonably safe investment options are slim to none.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

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