While legal marijuana markets thrive in states like California and Colorado, the federal Drug Enforcement Agency still classifies the drug alongside more addictive and debilitating substances like cocaine, heroin and methamphetamines. | AP Photo/David Dermer Health Care Marijuana skeptics fear 'de facto legalization' in states

When Jason Nemes, a Republican legislator in deeply conservative Kentucky, proposed a bill allowing the sale of medicinal marijuana this year, he included strict conditions to prevent doctors from rampantly prescribing the drug.

After all, Nemes has no interest in actually legalizing pot: He hasn’t smoked, he’s decidedly anti-drug and, until recently, he was even skeptical of marijuana’s effectiveness for treating conditions like cancer or epilepsy.


“We’re not interested in allowing people to go and smoke marijuana just for the heck of it.” Nemes told POLITICO.

He has good reason to be worried. With nine states, and the District of Columbia, now allowing the recreational use of cannabis — and more in the pipeline — advocates on both sides of the issue say that medical cannabis programs are increasingly functioning as a Trojan horse for de facto legalization in the 40 states where the politics of legalization aren’t quite ripe yet. And that’s rapidly changing the political and policy dynamics surrounding the emerging industry.

While legal marijuana markets thrive in states like California and Colorado, the federal Drug Enforcement Administration still classifies the drug alongside more addictive and debilitating substances like LSD, heroin and ecstasy. The Justice Department softened its stance on cannabis under President Barack Obama, deferring cases to state and local prosecutors. The Trump administration reversed that policy in January, adding another obstacle to any state-level effort to legalize recreational use or medical marijuana.

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The Trump administration’s stance, as directed by Attorney General Jeff Sessions, came even as cannabis advocates made inroads across several states. New Jersey is widely expected to legalize cannabis for adult use by the end of the year. State lawmakers in Pennsylvania and New York have kicked off efforts to put recreational use on the books as well. In Connecticut, a recreational use bill made it out of committee for the first time in April.

In even in far more conservative states, even ardent opponents are increasingly willing to take a look when it comes to medicinal use. In Kentucky, Nemes — a member of the state’s House of Representatives — had his own epiphany. “Last year, I was against it. But I met with some constituents and heard, 'hey, maybe I’m wrong,'" Nemes told POLITICO, describing how he became the main sponsor of a medical cannabis bill that stalled in Kentucky’s House earlier this year. He’s optimistic that a similar bill will pass in late 2018 or early 2019, noting that public opinion has shifted in support of medical cannabis as communities grapple with the opioid addiction epidemic.

But, he says, “we don’t want the Wild West.”

Medicinal marijuana has, indeed, been a driving force for legalization in other states. California’s decision 20 years ago to become the first state to approve the sale of legal medicinal marijuana paved the way for the Golden State to become, as of this year, the world’s largest legal recreational cannabis market. Now, with polls showing public support for medical cannabis in the U.S. at around 90 percent, medical marijuana proponents have shifted their gaze to more conservative states like Kentucky, West Virginia, Oklahoma and Louisiana, or towards enlarging existing medical marijuana programs in places like New Jersey or Pennsylvania.

And while medicinal advocates insist their efforts are simply meant to help patients, opponents say that’s laughable.

“There’s a marijuana industry making all sorts of medical claims that, if they were pharma companies, they’d probably be jailed,” said Kevin Sabet, the president and CEO of Smart Approaches to Marijuana, which opposes recreational use policies. “It’s not this bright line between medical and recreational. And there should be a bright line.”

Those lines are certainly being blurred in New Jersey, where lawmakers are working on connected bills that would simultaneously expand the scope of the state’s medical cannabis program and legalize recreational use.

Under former Governor Chris Christie, a Republican, New Jersey restricted medical marijuana prescriptions to a small handful of chronic and debilitating ailments. But in March, new Democratic Gov. Phil Murphy’s administration granted doctors the authority to treat common conditions like anxiety and chronic pain with cannabis, doubling the program’s size in matter of months. Soon, the state’s Department of Health may permit cannabis therapies to supplement existing treatments for opioid use disorder despite scant evidence of its effectiveness.

Similar efforts are underway in neighboring New York and Pennsylvania. According to Sabet, who supports medical cannabis for certain diagnoses, the promulgation of medical marijuana is happening despite insufficient research to support its efficacy. In effect, medical marijuana programs have become a political smokescreen for the cannabis industry at large.

“This doesn’t have anything to do with cancer patients, or folks with epilepsy, this is about the expansion of the marijuana industry,” he said. “The worst kept secret about most medical marijuana programs is that they often act as de facto legalization. With the expansion of programs in New Jersey or other states, this is often tied to the marijuana industry’s interest to expand the user pool and make money.”

Marijuana proponents don’t necessarily disagree. The growing acceptance of medical cannabis has helped eliminate the stigma around recreational use, multiple sources told POLITICO. We’re far from the days of “Reefer Madness.”

“When you have a situation in a state like California, where there are cannabis stores in your neighborhood; when you can see what that looks like, and how much it’s different from the unregulated criminal market; when you can see the effects of businesses moving into storefronts that generate jobs and tax revenue,’’ then it’s far easier to change the minds of fearful or skeptical consumers — and political leaders — about legalization, says Tom Angell, publisher of Marijuana Moment, one of the nation’s leading trackers of developments and news in the cannabis industry.

“A lot of people leading up to the midterm elections have talked about a ‘blue wave,’’’ he said. “And you can call the evolution of cannabis a green wave...”

Republican-led Florida’s legalization of medical marijuana, following overwhelming public support in a ballot referendum, has been rife with delays and lawsuits, including a bid by Republican Gov. Rick Scott to ban the smoking of cannabis or its purchase in its common bud form — a proposal that was struck down in court.

In Utah, medical marijuana advocates, following years of frustration and failure in the state legislature, decided to put the question directly to voters. Proposition 2, on the ballot this November, proved wildly popular in public polling, scaring long-time opponents who fear it’s a gateway to recreational marijuana. The result: members of the politically potent Mormon Church and Republican legislators, long opposed to medical marijuana, struck a compromise with advocates in an attempt to bubble-wrap the ballot measure. On Thursday, Gov. Gary Herbert announced a deal had been reached and he would call a special session after the election to create a medical marijuana program in the deeply conservative state.

California, which legalized the sale of recreational marijuana this past Jan. 1, essentially wrote the blueprint for moving from medicinal marijuana to full-scale legalization. The state’s cannabis market is expected to reach $5.1 billion in the next year — and $25 billion by 2026. That booming business potential on both the medical and recreational side has made it an attractive investment for Canadian companies like CannaRoyalty Corporation, which this year acquired a crowd of California-based cannabis firms that include FloraCal Farms, an “ultra-premium cannabis producer,” Oakland-based Alta Supply, a medical cannabis firm; Kaya Management, a vaporizer manufacturer, as well as RVR, a “large-scale distributor” of both medical and recreational cannabis.

Dave Mack, the senior vice president of public affairs for Eaze — the California-based delivery firm which has been described as the “Uber of pot’’ — says that with its long and established history of medicinal cannabis sales, California provided policy makers in others states — and Canada — with an important laboratory to study the pitfalls and troubles that come with moving to a legal recreational market.

“The transition here on Jan. 1 to a brand-new, much more heavily regulated and licensed industry — as with the birth of any new industry, has proven a challenge,’’ Mack said. “And one thing that California has done well is spending a lot of time and resources holding listening sessions, providing feedback in the industry for what is working and what is not.”

Michael Elkin, director of strategic sales for Canada-based Cannabis Compliance Inc., says that California’s head start in the medical cannabis arena did give the state an advantage — but that may quickly dissipate.

“In California, you had a 20-year block market program — a medical program, and everyone has been getting rich’’ as the cannabis market exploded, he said. But now, with the challenges of a myriad of regulations, consumer protections and oversight required after the passage of Prop. 64, state officials are “trying to put the genie back in the bottle,’’ he said.

“It’s very, very difficult and it’s going to take a while to get it right,’’ especially with the Trump administration, Sessions and the federal government still classifying cannabis as a dangerous Schedule I drug. Moreover, the U.S. system — in which individual states are developing their own regulatory oversight and compliance — has resulted in a patchwork that could present problems for future growth of the market here, he said.

“Even if Trump declassified it, and cannabis was federally regulated tomorrow,’’ he said, “do you know what it would take for Oregon to look like California in terms of compliance — or for Ohio, Hawaii and other states to agree on one set of regulations? It would take years.”

By that time, he predicted, countries like Canada are likely to have a huge advantage in exporting product to potentially massive markets like the European Union. Even U.S. regulators appear to be softening. On Tuesday, British Columbia-based Tilray Inc. announced it had received DEA approval to ship cannabis extract down to University of California at San Diego’s medical marijuana research center.

Already, the immediate challenges of transitioning from legal medical to recreational markets have resulted in a flood of legislation aimed at addressing concerns and regulations in the U.S.

Angell says that his publication, Marijuana Moment, tracked a whopping 863 bills in Congress related to cannabis this year alone. And along with that legislation has come a parade of “stakeholders invested in keeping legalization in effect — and eroding prohibition on the state and federal level.” That includes lobbyists, industry representatives, attorneys and innovators. What their growing numbers show is that “it will be increasingly hard for opponents to push back on the green wave,’’ he said.

With tens of thousands of Americans now employed in both the medical and recreational segments of the industry, and billions of dollars being generated in tax dollars for local and state governments, it’s no wonder that “so many ambitious politicians jumping in front of this issue,’’ Angell said.

They’re not going back, he predicts: “There are too many people invested in legalization now.”

Marinucci reported from San Francisco, Calif., and Sutton reported from Trenton, N.J. Dan Goldberg in New York contributed to this story.

CORRECTION: An earlier version of this story misstated which drugs are classified alongside marijuana by the DEA and a quote from Tom Angell has been clarified.