More than 20% of Americans waking up the morning after Election Day did so in a state that has legalized recreational cannabis.
At least six states voted to legalize marijuana in some form, with California, Massachusetts, and Nevada voting to legalize adult-use, or recreational cannabis, while Arkansas, Florida, and North Dakota legalized medical pot. (Maine's vote on recreational cannabis was still too close to call as of Thursday morning.) Now the US has 29 states with legal medical marijuana, and at least seven states have legal recreational pot markets.
The legal marijuana industry could generate roughly $22 billion in annual sales across the US within four years.
At the same time, there is some cause for concern over what Donald Trump's surprise victory could mean. Would the president-elect's administration go against the will of voters in an ever-growing number of states? Trump has previously voiced support for legalized medical marijuana, but Vice President-elect Mike Pence is an opponent of cannabis legalization. So are New Jersey Governor Chris Christie and former New York City Mayor Rudy Giuliani—both of them close advisors to Trump.
“The prospect of Donald Trump as our next president concerns me deeply,” Ethan Nadelmann, executive director of the Drug Policy Alliance, said in a statement to The Washington Post, citing Pence, Christie and Giuliani. The legalization advocacy group Marijuana Majority quickly launched a post-election petition calling on Trump to end the federal government's marijuana prohibition and to honor his pledge to respect states' rights with regard to marijuana laws.
Fortune reached out to a Trump campaign spokesperson for comment on the latest states to legalize cannabis, and the industry in general, and we will update this article with any response.
Meanwhile, though, business owners and investors in the cannabis industry reacted enthusiastically to the latest wave of marijuana legalization votes this week:
Investors Jumping In
Brendan Kennedy, co-founder and CEO of cannabis company Privateer Holdings: Kennedy's firm Privateer was the industry's first to raise more than $100 million in total financing. Now, he told Fortune, he's seeing an explosion of interest. There is, he says, "a fear of missing out" as legalization efforts across the country continue to open new markets. "Three to six months ago, we started being approached by firms who would have never looked at making an investment in this industry a year ago [and who], frankly, we would have never imagined making an investment in this industry six years ago," Kennedy said. "But, they’re all in the industry now."
California the Epicenter of Cannabis Industry
Giadha DeCarcer, founder and CEO of New Frontier Data: DeCarcer's New Frontier partners with the ArcView Group to produce an annual report estimating the size and scope of the nascent legal marijuana industry. On Tuesday, a joint release from New Frontier and ArcView projected that California's legal marijuana market could reach $7.6 billion in annual sales by 2020 alone. California, with its population of more than 38 million people, is now "the new epicenter of the legal cannabis industry," she said, adding, "As both the oldest medical cannabis state and the largest cannabis consumer population, sales in California are projected to dwarf those of any other market. Additionally, the integration of California’s technology and marketing expertise will be enormously into the cannabis industry both domestically and internationally."
Troy Dayton, CEO of ArcView Group, said in a statement that California's vote to legalize recreational cannabis will be the "vote heard 'round the world" and will be creating a "seismic shift."
A 'Bipartisan' Issue
Steve Deangelo, co-founder of Oakland-based dispensary Harborside Health Center (and president of ArcView) told Fortune that he prepared for California's long-expected decision by planning a business expansion that includes expanding into cultivation while also planning new Harborside locations in California (the company currently operates locations in Oakland and San Jose).
He also pointed out that some of the states that voted to legalize cannabis, such as Arkansas and Florida, also voted in huge numbers for Republican president-elect Donald Trump. "The only way that could happen is for a very significant number of Trump voters—red voters, Southern voters—to vote in favor of cannabis reform. And, if you look at what happened yesterday as a whole, I think what you see is that cannabis reform was the one issue that was able to cut across party lines and unite voters in a bipartisan consensus."
Henry Wykowski, San Francisco-based attorney, represents roughly 100 cannabis industry clients, also agreed, adding, "I think that, regardless of who makes up the [Trump] Administration, they have to realize that the population of the United States no longer thinks that cannabis is a bad drug. More people than not are in favor of its legalization, and there's a lot better things to do with [the federal government's] time and money than to pursue an agenda against cannabis."
New Regulations Coming
Wykowski, a former Justice Department prosecutor, expects California lawmakers will produce "more well-defined regulations" for the state's legal cannabis market now that recreational pot will be legal to grow and sell.
Nicholas Vita, CEO of medical marijuana dispensary operator Columbia Care, a company operates medical dispensaries in Arizona, Massachusetts, and New York, also said he thinks that the votes show "the need for the federal government to take a step back" and "consider adopting a long-term, data-based analytical process to determine whether or not the merits and the observations and the risks and the concerns that different stakeholders have are validated or invalidated, and to really come up with an informed federal policy" that would reshape the federal government's current regulations on marijuana, which is currently listed as a Schedule 1 drug.
A 'Green' Rush Is Coming
Adrian Sedlin, CEO of Southern California cannabis-growing operation Canndescent, earlier this year raised $6.5 million from investors to help fund a new, 9,600-square-feet cultivation facility in Desert Hot Springs, Calif., with plans to open more facilities in the area over the next few years. Having recently gone through the process of raising money, Sedlin said he expected the approval of California's Prop 64 will "make that 'Green Rush' accelerate," opening up the industry to a wave of new investments.
"There is no way the federal government is going to allow an economy as large as California to remain unbanked on this issue. It's not a tenable position," he told Fortune, referring to the fact that major banks have been afraid to take on cannabis business clients because the drug remains illegal on the federal level. Sedlin added: "The big money is about to come in. Prop 64 passing, to me, is the large domino that allows banking and de-scheduling to finally happen in a matter of time that is then going to open up all of the institutional capital."
CORRECTION: An earlier version of this article mistakenly referred to Adrian Sedlin's company as "CannaDescent." The company is called Canndescent.