The green rush is to marijuana what golden nuggets are to river panners – opportunity. As the legalization of cannabis have expanded throughout North America, so too have market caps and entrepreneurial spirit. Business owners and investors alike rushed to capitalize on marijuana as the legalized industry grew. But like any new industry, there are growing pains to endure.
Learn about the history of North America’s green rush, how the bubble burst and what the future might entail for the industry of Mary Jane.
What does Green Rush mean?
The green rush refers to a period of widespread excitement and optimism in the cannabis industry, from investors to companies looking to cash in on what appeared to be a limitless opportunity. The term is a play on gold rush, likening the market conditions of marijuana to those of the gold industry when it was in its heyday in the 1800s. It is a term meant to convey the excitement and promise of budding industry. While there are always hiccups along any road to success, the cannabis industry is a source of hope and success for many people.
History of the Green Rush
As with the gold rush of the late 19th century, the green rush started in California. In 1996, the golden state passed Proposition 215, legalizing the use and sale of pot for medical purposes. Although still illegal at the federal level, the move signaled to investors, entrepreneurs and consumers alike that the industry could be on its way towards legitimacy. Another landmark occurred in 2012, with the legalization of recreational use in Washington and Colorado. Today, the U.S. cannabis market is valued into the billions of dollars and provides hundreds of thousands of people with jobs.
The green rush would not have been possible without the work of activists and advocates who helped push for legalization and to end thewar on drugs.
Licensing during the Green Rush
Throughout North America, cannabis businesses – including growing operations and dispensaries – are required to obtain licenses before they can legally buy, sell, or produce marijuana products. Licensing requirements vary in both cost and nature, based on country and state. In California, for example, licenses are priced based on the projected value of the business – so, they can range from $4000-$120,000.
Some states require cannabis businesses to abide by certain rules in order to obtain and keep their license, including running background checks on prospective employees to ensure they are over 21 years of age and do not have any previous felonies on their records. Often, cannabis businesses must also be a certain distance away from schools and churches.
Canada has long been ahead of the curve when it comes to marijuana legalization, with the country entirely legalizing the drug at both provincial and federal levels in 2018. Before that, it legalized medical cannabis in 2001, then established a commercial sector for the plant in 2013.
These lax regulations, especially as compared with the United States, which continues to classify marijana as a Schedule 1 drug, enticed American companies and investors across the border. The green rush exploded after the first large-cap company went public in 2016, followed by a number of other companies looking to go public on the Canadian stock exchange. The rush soon became a bubble as investors pumped risky companies full of money, which ultimately led to a stock market crash. In some ways, this signaled the end, or the beginning of the end, of the green rush.
Illicit Market (Sometimes called the Black market)
In the United States, for anyone older than Gen Z, the illicit market for marijuana was simply a fact of life. And like many institutions in the country, this market has racist origins. Immigrants from Mexico brought cannabis with them to the U.S. in the early part of the 20th century, a time when tensions surrounding the Mexican revolution ran high. Weed was associated with Mexican revolutionaries, leading to weed prohibitions across several states in the 1920s. When the Great Depression of the 1930s hit, white America looked for people to blame, and Mexicans were among the targets.
The war on drugs came later, with Presidents Nixon, Reagan and Bush all advocates for punishing the sale and use of the drug. This pushed these activities underground, creating resilient black markets that are still going strong today. While there’s no doubt that the green rush disrupted aspects of illegal markets around the country, its entrenchment may prove difficult to entirely dislodge for years to come.
The monumental shift from illicit markets to green rush glory creates opportunity – and sometimes controversy. Below are a few instances where the roll-out of legalized weed could have been achieved in more effective ways.
Part of the motivation for the Canadian federal government and provinces to legalize was to replace the illicit market for cannabis with a regulated, tax-paying one. However, provinces like Ontario came under fire after not moving quickly enough during the green rush which occurred after legalization. Though demand soared, dispensaries took a long time to open, and in some cases product was significantly more expensive than what people were used to paying from their neighborhood dealers. These issues enabled the illicit market to flourish despite legalization.
The war on drugs unfairly targets Black communities and other minority groups, sending thousands of people to serve long prison-sentences for relatively minor crimes. Harsh sentencing and enforcement policies did untold damage to their communities, and to this day, people languish in federal facilities for minor, non-violent offenses with little hope of getting out any time soon.
Compounding this injustice is the fact that the increasingly legalized cannabis industry is being run by, and benefiting, white people – who routinely got off scott-free for possessing or selling marijuana.
The MORE Act of 2019 aims to deploy restorative justice to impacted communities to address some of these concerns. It proposes, among other measures, funneling tax money into loans for cannabis businesses in impacted communities.
Is the Green Rush Over?
While demand for legal marijuana is expected to remain steady or continue to increase, the days of the green rush are over, or perhaps temporarily put on hold. Beginning around April 2019, cannabis stocks began plunging, showing double-digit losses. By the end of the summer, investors had seen a staggering $20 billion in market cap evaporate into thin air.
Yahoo Finance outlined four primary reasons for this precipitous plunge in value: supply issues in Canada, poor operating results, share-based dilution and a lack of investor confidence.
The year 2020 brought chaos and confusion to countries around the world amid the coronavirus pandemic, impacting businesses small and large. One Adweek analysis suggested that another green rush began in March, as people stuck in quarantine made sure to stock up on pot, fueling record-breaking sales. However, it’s too soon to judge this green rush’s staying power.
Nothing lasts forever. The cannabis green rush may have run its course for now – but there’s no telling what the future holds. With strong consumer demand and an increasingly favorable regulatory landscape in the United States, a new green rush could be right around the corner.