12/18/19 By DAN ULLOA
MJ Biz Con is the largest gathering in the cannabis industry and thus a perfect place to get an overview of the cannabis markets as it stands.
According to MJ Business Daily President Chris Walsh, the legal market states and New York have the biggest domestic markets. (New York City consistently ranks as one of the highest-grossing cannabis markets even if it’s not legal there). In addition, Illinois could be a $2.5 billion cannabis market in only a few years.
New Jersey should very close to gaining that revenue, but politics has gotten in the way.
In California, there is blowback on regulations, anti-cannabis towns, license suspensions for non-compliance, delays, high taxes, and great uncertainty. Its historically strong underground market is not taking kindly on their pro-police stance that the underground market actually must be stamped out.
(Did they really think they were going to be able to stamp out the market like that? The cannabis market that’s survived Ronald Reagan and recessions? Regardless, narcs in California seem hell-bent on trying.)
Moreover, some of the underground businesses in California are struggling to go legitimate now that cannabis is legal. Many were penalized for not complying with regulations. In terms of non-compliance, some don’t have the money to pay experts, some didn’t realize the issues of the market in California, some were victims of the circumstances of the vape issue, and regulatory chaos does not help. Despite all these issues, the California cannabis market is growing the quickest among the legalized states. Some firms in pro-cannabis towns are doing well. Merger & Acquisition activity will also likely to grow in California. But some are just barely hanging on.
“Social equity is becoming big in this industry, as it should be,” Walsh said regarding reforms in the legal markets.
In Colorado, they are open to investments. They were previously “hamstrung by archaic laws preventing outside money from coming in to scale,” according to Walsh. That was likely done to keep businesses small, mop and pop affairs. Now MSOs can acquire big local businesses. Walsh believed this would be good for the market there.
However, if unchecked, this could be a trend toward monopolization.
Massachusetts’ adult-use market is doing all right, but there are only 36 stores in the whole state. However, in the near future, they are expecting that another 200 will come online. Their market was finally opened last year after a delay of two years.
Michigan recently opened its adult-market a little over a year after its referendum passed amidst the 2018 Midterm elections.
In terms of medical marijuana, Louisiana, North Dakota, Arkansas Missouri and Utah opened their respective medical markets in 2019. “In New Jersey, the Jake Honig Act, the initial plan was fantastic,” he noted.
In an intriguing turn of events, Oklahoma’s medical marijuana program has grown very quickly with $350 million in sales by the end of the year. In stark contrast to many other medical states, Walsh said it was a “truly free market” which has led to its cannabis market to grow steadily. This means that doctors are free to prescribe cannabis for any condition they see fit, there are no limits on the number of medical dispensaries allowed, and cities cannot opt-out. Thus, there are 200,000 patients which amount to five percent of the state’s population.
Cannabis Market Growing
Overall, Walsh was optimistic about the continued push toward legalization, saying that the states of Arizona, Delaware, Minnesota, Montana, North Dakota, New Mexico, South Dakota, and Florida could all go legal next year. That would be stupendous.
In addition, Vermont’s legal cannabis market could go commercial. It seems so strange that in Vermont you can grow cannabis and consume it, but not sell it legally. I can’t imagine the underground market and the grayness there. Washington, DC has a similar situation where Republicans in Congress able to hold up the city’s cannabis law so there are a lot of businesses operating in a gray area.
In terms of progress on the state level, Alabama, Louisiana, Missouri, Kentucky, Nebraska, and South Carolina might pass medical marijuana programs next year. And Iowa, Georgia, and Virginia could expand their respective programs in 2020.
Virginia just elected a full Democratic government for the first time since 1993 in November so a great deal is expected to occur there. Many advocacy groups like the Marijuana Policy Project have fought hard there Walsh said.
On the federal level, Walsh said that, like in New Jersey, politics are holding up legalization in Congress.