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Overview of the cannabis industry in the United States

The following is a brief overview of the cannabis industry in the United States. It's meant to give a quick and concise review of where cannabis use, regulation, testing, and research have been and where they are now. Many of the topics touched upon here will be expanded upon later in this guide.

Brief history of cannabis in the U.S.

Cannabis is a rapid-growing, flowering plant that has been used for centuries for industrial, medicinal, and recreational purposes. The plant includes three species or subspecies: indica, ruderalis, and sativa. Both industrial hemp and recreational marijuana are derived from cannabis plants, but with important differences in biochemical composition. Hemp — which has historically been used to create clothing, food and feed, paper, textiles, and other industrial items — tends to have lower levels of the psychoactive component tetrahydrocannabinol (THC) and higher levels of the non-psychoactive component cannabidiol (CBD). Some cannabis strains have intentionally been bred to produce low levels of THC, while others have been bred with the intent to maximize the psychoactive component.

Cannabis cultivation began in England's Jamestown colony of America in earnest around 1611, via formal orders. Several years later those orders turned into a royal decree, enacted by the Virginia Company, asking colonists to grow 100 hemp plants for export to England. Colonial American continued its growth, use, and exportation of hemp, even beyond the foundation of the United States. During that time, growers undoubtedly were using the female plant (which flowers and has higher levels of THC) to treat aches and pains as well as enjoy it recreationally. By the time of the U.S. Civil War arrived in the 1860s, however,the growth and use of industrial hemp declined as increased cotton and wood use took away much of the profitability of hemp. Around the same time, local governments began recognizing tonics, tinctures, and extracts from cannabis plants as potentially dangerous substances, labeling them as hypnotics, narcotics, or even poisons. In the early twentieth century, U.S. labeling and prescription laws — such as the the Pure Food and Drug Act of 1906 at the federal level as well as various state laws — saw further restrictions put on cannabis, effectively culminating in the Marihuana Tax Act of 1937 and the Federal Food, Drug, and Cosmetic Act of 1938. With the passage of those acts, hemp and marijuana essentially became illegal, controlled substances.

State efforts to decriminalize marijuana were somewhat successful in the early 1970s, though progress towards that goal slowed again with the Reagan Administration's war on drugs. Progress picked up steam again in the late 1990s into the 2000s, particularly in states such as California, Massachusetts, Connecticut, Washington, and Colorado.

As of January 2017, twenty-eight U.S. states have approved some sort of decriminalization or legalization of medicinal and/or recreational marijuana. Industrial hemp has also been addressed in some regard, with 16 states having legalized commercialized industrial help production, with federal removal of hemp containing no more than 0.3 percent THC from the controlled substances list. However, cannabis containing more than 0.3 percent THC remains remains a Schedule I controlled substance, as determined by the U.S. Food and Drug Administration. This federal classification continues to clash with changing state laws and regulations at an increasing pace, creating both opportunities and difficulties for involved citizens at all points along the industrial, economic, and social chain.

Testing and research

One area that continues to expand — while taking advantage of new scientific research and techniques — is the laboratory sphere, particularly in research, regulation, and standardization activities. While the research, analysis, and processing of cannabis has been ongoing for centuries, it wasn't until 1896 that Wood et al. conducted one of the first documented chemical experiments to determine the constituents of cannabis. Several years later, the researchers were able to correctly identify the extracted and isolated cannabinol from the exuded resin of Indian hemp as C₂₁H₂₆O₂. As of mid-2015, 104 of the more than 750 constituents of Cannabis sativa have been identified as cannabinoids, "a class of diverse chemical compounds that act on cannabinoid receptors in cells that modulate neurotransmitter release in the brain."

Yet in the United States, when it comes to 1. enacting the broad level of testing required to ensure public safety — whether it be medical, recreational, or industrial use of cannabis — and 2. researching and better understanding the pharmacokinetics and pharmacodynamics (medical use and benefit) of cannabinoids in the human population, many have argued that laboratory testing of cannabis is still in its infancy and evidence-based research of marijuana continues to be slow and bogged down in regulation. In regards to the first issue, as some form of legalization continues to sweep across states, regulators, users, and industry are recognizing the need for improved standardization of the production and testing of medical and recreational marijuana; the current state of improper labeling and potentially harmful contaminants will only serve to hinder the industry. To the second issue, some within the federal government seem to recognize the roadblocks to improved evidence-based research and are working to slowly improve how researchers can legally acquire and test marijuana in the U.S. In the meantime, government entities such as the National Institutes of Health and non-profits such as jCanna push forward with scientific conferences, summits, and roundtables that bring scientists and interested parties together to share existing knowledge and testing techniques.

Other concerns

The U.S. cannabis industry has a few additional concerns, again tightly linked to federal regulations (which are discussed extensively in the next section): banking and advertising. Issues related to both of these topics continue to limit how state-based grow-ops (grow operations), dispensaries, and testing laboratories are funded and operated.

Banking

Since the U.S. federal government still considers marijuana to be illegal, by extension banks and credit unions — which are regulated by a patchwork collection of federal (and state) laws — put themselves into potentially dangerous territory by accepting money from depositors engaging in federally illegal activities; the bank can be punished by federal institutions such as that Federal Deposit Insurance Corporation (FDIC). In an attempt to ease concerns of industry and banks in states that had implements legalization efforts, the Treasury Department released a guidance document in February 2014 that "does not grant immunity from prosecution or civil penalties to banks that serve legal marijuana businesses" but rather "directs prosecutors and regulators to give priority to cases only where financial institutions have failed to adhere to the guidance." However, the guidance has remained just that: guidance; it doesn't prevent federal law enforcement or regulating agencies from taking action. An August 2016 attempt to reclassify marijuana in a lower classification than Schedule I failed