Midterm Elections Looking Green

By Madeline Grant, NCIA’s Government Relations Manager

The midterm elections are quickly approaching with less than three weeks away. Not only will the elections determine the balance of power in Congress, but local elections and ballot measures are set to make a big impact across the country. As the midterm elections approach, another 20 million Americans could soon be living in a state where anyone at least 21 years old can legally possess marijuana. There are six states with recreational cannabis legalization initiatives or referendums on the ballot this November: Arkansas, Maryland, Missouri, North Dakota, Oklahoma, and South Dakota. Let’s take a closer look at each state:

Arkansas

Although the Arkansas Board of Election Commissioners rejected the ballot question in August, the state Supreme Court cleared the way for the question to make it to the poll. The Responsible Growth Arkansas campaign submitted about 193,000 signatures- more than double what’s required to qualify the constitutional amendment- in July. If the initiative, Issue 4/ the Marijuana Legalization Initiative, is approved by voters, it would allow adults 21 years and older to legally possess up to an ounce of cannabis. It would implement a 10 percent tax on sales and require the state’s Alcoholic Beverage Control Division to develop rules for businesses, according to Ballotpedia. The initiative does not allow for home cultivation, and it has no provisions to expunge cannabis-related criminal records. For more specifics on what the initiative would accomplish read HERE.

Maryland

When Marylanders head to the polls in November, they will be asked to approve or reject legislation that allows adults 21 and over to possess, use, or grow small amounts of cannabis. If passed, the referendum would open the door to creating a taxed and regulated recreational cannabis industry in the State. State lawmakers have been paving the way for future cannabis legalization when they passed two separate bills in April of this year. House bill 837, which is set to go into effect in July 2023, would allow anyone over the age of 21 to possess up to 1.5 ounces of cannabis, with anything between 1.5 and 2.5 ounces subject to a civil fine of $250 and anything above 2.5 ounces subject to a charge of possession and intent to distribute. The second bill, House Bill 1, established that the question of legalization would be put to voters via a referendum on the November ballot. It’s important to note that this bill does not establish the regulatory framework for the recreational market, and state lawmakers will need to return next session to build out a framework for the cannabis industry if the referendum passes in November. A recent Goucher poll found that 62 percent of residents- including about half of Republicans- support legalizing recreational cannabis, with just 34 percent opposed. 

Missouri

After a long battle between the Legal Missouri 2022 and prohibitionists, an initiative to legalize cannabis in Missouri officially cleared for ballot placement this September. Joy Sweeny, who is affiliated with the Community Anti-Drug Coalitions of America (CADCA), filed a lawsuit, alleging that the legalization initiative violated the single-subject rule for ballot measures under the state Constitution and that the signatures were improperly certified, according to Marijuana Moment. Two lower courts dismissed the challenge, so Sweeney sought to bring it directly to Missouri’s Supreme Court, where they would not take the case. Missouri Amendment 3, Marijuana Legalization Initiative (2022) would legalize the purchase, possession, consumption, use, delivery, manufacturing, personal use for adults over the age of 21; allow individuals convicted of nonviolent cannabis-related offenses to petition to be released from incarceration and/or expungement; and exact a 6 percent tax on the sale of cannabis.

North Dakota

The campaign New Approach ND delivered 25,762 signatures to the secretary of state’s office in July 2022. A month later, Secretary of State Al Jaegar’s (R) office approved the measure, certifying that the campaign had submitted enough valid petitions to put the measure before voters, according to Marijuana Moment. The initiative would allow adults 21 and older to purchase and possess up to one ounce of cannabis and grow up to three plants for personal use. The legalization proposal will now be designated as “Measure 1” on the ballot this November. 

Oklahoma

South Dakota

Similar to North Dakota, in May 2022 the secretary of state’s office confirmed that South Dakotans for Better Marijuana Laws (SDBML) turned in a sufficient number of signatures to qualify a cannabis legalization measure for the November ballot. In the 2020 election SDBML’s success at the ballot was overruled by the state Supreme Court as a result of a legal challenge funded by Governor Kristi Noem’s (R) administration. The court ruled that the measure violated a single-subject rule for ballot initiatives. Ironically, Governor Noem made comments pledging to implement cannabis legalization if voters approve the ballot initiative at an event this past August. Some advocates believe she has no choice but to pivot her support now that she is up for reelection. With SDBML’s success this year, South Dakotans will vote on the ballot measure in November. 

There is no denying that 2022 is a big year for cannabis policy reform. Although state campaigns have met challenges through the courts, state officials, governors, prohibitionists, law enforcement, and more; it is evident that there is no stopping the voice of the people. As the country gears up for the midterm elections, all of these states will continue to educate and campaign for the recreational passage of cannabis. The 2022 midterm elections come on the heels of President Biden’s announcement to pardon thousands of people convicted of marijuana possession under federal law and review whether marijuana should be in the same legal category as drugs like heroin and LSD. The timing of President Biden’s announcement illustrates an important fundamental change in America’s response to cannabis and the National Cannabis Industry Association is hard at work on Capitol Hill to continue educating Congress. 

Make sure to stay informed as we head towards the lame duck session via our newsletter and social media platforms and don’t forget to register for NCIA’s upcoming 11th Annual Cannabis Industry Lobby Days in May 2023! If you’re interested in learning more about our policy work please reach out to madeline@thecannabisindustry.org

 

Committee Insights | 9.28.22 | Cannabis Ballot Initiatives in the November 2022 Election

In this edition of our NCIA Committee Insights series originally aired on Wednesday, September 28, 2022 members of NCIA’s State Regulations Committee convened a panel of government affairs, business development and licensing experts for an in-depth discussion focusing on cannabis ballot initiatives up for a vote this coming November.

They provided a detailed overview on the status of each campaign so that you’ll learn how best to position yourself for success and what you can do to help push these efforts across the finish line. If you’re considering business Arkansas, Maryland, Missouri either of the Dakotas then this session is specifically geared for you.

At the conclusion of the discussion they hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the cannabis regulatory and licensing space, join today to contribute to future conversations!

Learning Objectives:

• Provide practical information to NCIA members about the cannabis ballot initiatives and potential new business opportunities.

Presentation Slide Deck: https://bit.ly/3RD8ivn

Panelists:

Sumer Thomas
Director of Regulatory Operations
Canna Advisor

Nicola Batten
CEO & Founder
koLaB Consulting

Larry Luksha
Government Relations & Business Development
Veritec Solutions

Joseph Smith
Senior Managing Associate
Thompson Hine LLP

Midterm Election Voters Will Likely Determine Cannabis Legalization Amid Several States

By Sadaf Naushad, NCIA Intern

With midterm elections just four months away, cannabis activists are paving the path for major reformations to take place nationwide.

In order for voters to see cannabis legalization on their state’s midterm ballot, cannabis advocates are scrambling to collect the number of signatures necessary. Fortunately, residents within various states are in support of cannabis legalization, as demonstrated through the high volumes of submitted signatures.

The rapidly emerging cannabis industry has led to spiked encouragement of cannabis legalization across the U.S., emphasizing the demand for lawmakers to implement safe and secure cannabis policies. 

Let’s take a closer look at some of the state-level progress:

Arkansas

Cannabis activists are highly optimistic after their recent efforts to push for legalization on Arkansas’ midterm ballot. Last week, advocates turned in more than twice as many signatures to the Secretary of State’s office as required to appear on the ballot. According to Responsible Growth Arkansas, 89,151 signatures are needed to qualify for the measure. Advocates stunned the Secretary of State when they delivered just over 190,000 signatures. 

Provisions on the measure would permit anyone at least 21 years of age to possess up to one ounce of cannabis. Additionally, Arkansas would grant its current medical shops permission to add adult-use sales on March 8, 2023. A lottery would also distribute 40 additional licenses for adult-use dispensaries, and municipalities would need to hold a referendum if they prefer to prohibit adult-use businesses. On the other hand, the measure does not include expungements of prior marijuana convictions. 

While many view the signatures as enhanced legalization support, Arkansas True Grass and Arkansans for Marijuana Reform have raised concerns about the potential provisions. Both organizations state that the measure would favor large businesses in the present medical cannabis industry. But Steve Lancaster, Responsible Growth Arkansas’ spokesperson, believes that the “constitutional amendment provides a sound infrastructure for reform that prioritizes regulations.” If voters approve legalization, Lancaster intends to advance further reforms in the legislature. 

At the moment, however, two weeks remain for Arkansas to verify the submitted signatures. 

North Dakota 

Cannabis consumers find themselves one step closer to legalization in North Dakota. Just three months ago, lawmakers approved the cannabis legalization ballot language, clearing the procedural obstacle to begin gathering signatures.  

On Friday, cannabis activists collected numerous signatures, exceeding North Dakota’s 15,582 minimum requirement. The New Approach North Dakota campaign claimed they obtained 21,400 valid signatures and anticipate that number to increase before today’s deadline. 

The measure’s initiative would allow those 21 years of age and older to purchase and possess a maximum of one ounce of cannabis, along with permitting adults to cultivate a maximum of three plants for personal use. Furthermore, the Department of Health and Human Services would be responsible for conducting regulations and overseeing licensing for cannabis businesses. The department’s regulators would have until October 1, 2023 to incorporate rules regarding security, advertising, labeling, packaging and testing standards. To mitigate the possibility of a monopolized market, North Dakota’s initiative specifies that any individual or organization can only own up to four retail locations or one cultivation facility. 

Nebraska 

Tremendous momentum builds across Nebraska, as activists exceed the amount of signatures to qualify medical cannabis legalization initiatives for the midterm ballot.  

Nebraska requires each proposal to have 87,000 valid signatures from registered voters to qualify for November’s ballot. On Wednesday, however, advocates encountered a legal hurdle when a federal court overturned a lower federal court’s ruling that had momentarily eased ballot prerequisites. The ruling states that signatures “must come from a minimum of five percent of voters in at least 38 counties across the state.” The Nebraskans for Medical Marijuana Campaign, in addition to many activists, deem this ruling as unconstitutional, stating that it generates a detrimental burden that gives oversized influence to small, rural communities that are more challenging to reach.    

Nevertheless, these barriers have not fazed activists assembling cannabis legalization support. In May, the campaign collected 20,000 signatures on each petition, and now that number has increased to over 90,000. To guarantee sufficient valid signatures, the Nebraskans for Medical Marijuana campaign aim to gather several thousand more signatures before Thursday’s turn-in deadline. 

Minnesota

With Minnesota’s recent legalization of edibles and drinks infused with low amounts of THC, consumers remain excited for what’s to come. 

But for lawmakers, this means acknowledging Minnesota’s current absence of statewide cannabis regulations. For now, local governments are responsible for enacting market rules within their jurisdictions. According to U.S. Representative Heather Edelson (DFL), “the ability for municipalities to offer important guidance and clarity on day-to-day operations and compliance within a city is vital.”

That being said, Representative Edelson has conducted meetings with mayors, city council members, city managers and the League of Minnesota Cities to inform them about how the new law could shape their areas and how they can execute parameters within local markets. 

Oklahoma

Oklahoma is yet another state pushing for cannabis legalization to surface on the November ballot. Last Tuesday, The Oklahomans for Sensible Marijuana Laws campaign submitted over 164,000 signatures to the Secretary of State’s office, surpassing the minimum number of 94,911 signatures necessary to qualify for the ballot. 

If passed, the measure would permit adults 21 and older to possess and purchase up to one ounce of cannabis. Adults would also be able to grow a maximum of six mature plants and six seedings for personal use. The Oklahoma Medical Marijuana Authority Department is in charge of regulating the market, as well as issuing cannabis business licenses. The department would impose a 15% tax on adult-use cannabis products, in which its revenue would go towards the “Oklahoma Marijuana Revenue Trust Fund.” These funds would initially cover the costs of managing the program, while the rest of the funds would be allocated between municipalities where the sales followed, the State Judicial Revolving Fund, the general fund, public education grants and grants for organizations involved in substance abuse treatment and prevention. 

Finally, for those serving time due to prior cannabis convictions, the measure allows inmates to “file a petition for resentencing, reversal of conviction and dismissal of case, or modification of judgment and sentence.” Those who previously served a sentence for past cannabis convictions can petition for expungement. 

Altogether, the cannabis industry is witnessing a growing number of legalization support nationwide. From Minnesota to Oklahoma, cannabis consumers are eager to have their voices heard and addressed on November’s midterm ballot. The recent legalization efforts across states shine a light on the mounting acceptance of the industry’s movement, setting the stage for crucial cannabis reformations to follow.

Stay tuned for more updates on cannabis policy reforms. If you are interested in learning more about NCIA’s government relations work and how to get involved, please reach out to Madeline@thecannabisindustry.org.

Video: NCIA Today – September 17, 2021

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.

Member Blog: Want to Open A Dispensary In Oklahoma? Here’s What You Need to Know. 

by Tommy Truong of KayaPush

In Oklahoma, the cannabis business is thriving. Yes, the controversial plant that users were prosecuted for using so very recently, is on a roll. You could even say, there is a cannabis rush.

In this article, we will cover how you can go about opening a dispensary, including how to acquire a license, and some laws you should be aware of. And we will also touch on how to set up your dispensary operations and software!  Let’s dig in!

What do you need to open a dispensary in Oklahoma?

The process of opening a dispensary should go smoothly if you fill out an application form and follow the Oklahoma Medical Marijuana Authority’s guidelines. Although the costs of opening a cannabis dispensary in Oklahoma are significantly lower than elsewhere, it is critical to have accurate information and to review some of the most relevant regulatory constraints.

Let’s start at the beginning, if you intend to learn how to open a dispensary in Oklahoma for commercial purposes, you must be at least 25 years old before proceeding. You must also make the following items available:

  • Proof of Oklahoma residency
  • A tax ID number, as well as a general business license
  • Valid identification documents 

You’ll need to assess your commitment after you’ve got everything in place. Not only must you be informed of current cannabis production and sales regulations, but also of proposed legislation and revisions that may shortly come into force. 

Now that you’re certain you’re ready to make this big move, it’s time to proceed to the next step: finding a suitable property. 

You should check the following:

  • Rent cost
  • Cost of license
  • Licensing application fee
  • Employee salary
  • Transportation and storage of product
  • Security

How to get a dispensary license In Oklahoma.

Licenses for growers in Oklahoma come in the form of a certificate and are issued through the OMMA website. The charge to producers, processors, and dispensaries for applying for a license is $2,500. You must provide the following to apply:

  • A business plan
  • A financial plan
  • An inventory control plan
  • Patient education
  • Record keeping 
  • Security plans 

There are distinct rules in every state in the United States about opening dispensaries. Each state sets its own standards. You will need to study the rules that apply in Oklahoma.

The general requirement for opening a dispensary in Oklahoma is that you undergo marijuana dispensing training and acquire a license. 

How to keep your dispensary compliant in Oklahoma.

You must abide by all of Oklahoma’s strict marijuana regulations to keep your dispensary compliant. These include:

  • Complying with Metrc
  • Operating under a recognized license
  • Enlisting compliance software’s assistance
  • Consider a compliance manager

Marijuana dispensaries in Oklahoma are prohibited from selling more than the following amounts in a single transaction:

  • Three ounces of cannabis
  • Concentrate of one ounce
  • 72 ounces of cannabis

Oklahoma dispensary owners, like any other legitimate business, must pay taxes and ensure that they give the following information:

  • All cannabis-related information with other permitted firms
  • Details of batch numbers that show the weight of cannabis acquired at wholesale
  • The number of plants that have been approved for relocation to other locations
  • Batch numbers showing the weight of cannabis sold
  • Record of all items that have become obsolete

Substantial fines are imposed for noncompliance. There is a $5,000 punishment for a first infraction while a second offense will result in license revocation. Because of this, you are going to need the assistance of technology to automatically update you if the OMMA cannabis rules change. 

Understanding Metrc in Oklahoma.

Metrc is an integrated system for tracking and tracing marijuana products in real-time. Every plant and its wholesale shipment has a unique tag attached by licensees. To uniquely identify each plant, these tags use readable text, barcodes, and radio frequency identification (RFID) chips for easy identification.

Metrc is already being used in Oklahoma following the state’s legalization of marijuana. The OMMA can only see and track inventory once it has been entered into Metrc by a commercial licensee.

To get started with Metrc in Oklahoma you should:

  1. Watching their training videos and schedule training.
  2. Request online access and complete the New Business System Metrc training with your dedicated Metrc Account Manager.
  3. Connect all of your employees with Metrc and make sure they have the permissions they need for their jobs.
  4. Request Metrc plant tags, package tags, and other UID tags and document the physical receipt of requested Metrc UID tags.
  5. Assign UID tags to your cannabis items.
  6. Access the Beginning Inventory Guide in Metrc for proper guidelines and references to other important factors.

What are the dispensary laws in Oklahoma?

Cannabis laws in Oklahoma are the guidelines that every cannabis dispenser must heed while dispensing medical marijuana. Every prospective cannabis retailer will be guided by these same rules, and it is one of the first things you discover when learning how to operate a dispensary in Oklahoma.

Some of these rules include:

  • To legally sell cannabis, you’ll need a state-issued license, but CBD oil made from industrial hemp is permitted without one.
  • Patients must first obtain an authorized medical marijuana card to acquire and consume medicinal cannabis.
  • Possession of paraphernalia is a misdemeanor that carries a maximum sentence of one year in prison and a fine of $1,000.=
  • Individuals under the age of 18 are only allowed to enter a dispensary with an adult who has a valid medical card.
  • The sale of fewer than 25 pounds of marijuana is a felony punishable by a two-year prison sentence and a $20,000 fine. 

Who can your dispensary sell to in Oklahoma?

Only medical cannabis patients (or their caregivers) with valid patient licenses can shop at an Oklahoma dispensary. Medical cannabis is available to Oklahoma residents over the age of 18 who have a physician’s recommendation.

A physical medical marijuana ID card or the state’s database can be used to verify a patient or caregiver. Out-of-state persons or companies are not permitted to purchase medical marijuana from licensed dispensaries. Licensed processors can sell to other licensed processors and licensed dispensaries.

Oklahoma dispensary market size and opportunity.

Despite its accomplishments, the cannabis industry in Oklahoma is still in its infancy, and the environment is rapidly changing. Marijuana laws in the state are continually changing to make it more accessible. 

Another feature that distinguishes Oklahoma from other states is that it allows cannabis smoking and vaping anywhere that tobacco can be lawfully consumed, such as on the sidewalk or in a bar that allows smoking. As a result, Oklahoma has morphed into an industrial cannabis state with a variety of dispensary options. 

There are only a few challenges to overcome. Any sort of cannabis — from raw flowers to topical lotions, from oils and gels to vaporization and patches — can be sold by anybody who pays $2,500 for a dispensary license.

Cannabis legalization has resulted in a significant expansion in legal cannabis cultivation and distribution, as well as an explosion of related service providers in many states. Cannabis has become a lucrative business prospect for many inhabitants in the state.

What cannabis software do I need to run a dispensary?

To run a compliant dispensary in Oklahoma, you will need the following business software:

What should I look for in cannabis software? 

POS compliant system.

One of the most important technologies in a dispensary is a point-of-sale system. A compliant POS system will make sales transactions easier for your dispensary’s staff and provide the greatest payment options for customers. A POS can help run the following tasks:

  • Regulate inventory control and legal compliance
  • Manage customer check-in and ensure that your customers follow the daily sales tracking guidelines
  • Assists you in automatically rejecting transactions for people who are not authorized to buy.
  • Integrate with the Metrc system, and keep you compliant.
  • Integrate with your workforce management system and give you sales insights.
  • Integrate with your scheduling software and provide labor forecasts for scheduling.
  • Produce all sales and customer reports for the approval of cannabis authorities.

Dispensary payroll software.

Integrated dispensary payroll software will assist you in managing your employees’ pay. It manages all expenses and interfaces with other systems such as personnel administration and payroll tax deductions. It makes direct contributions to the IRS and compensates employees via direct deposit. 

Another benefit of using an integrated payroll system is that you can integrate your company’s payroll with the rest of your workforce management suite; performing tasks like approving clocked hours to payroll, and running payroll in the click of a button. Dispensaries who used this type of system report saving 5 hours per week on running dispensary payroll. 

Scheduling and time tracking software. 

Also known as workforce management software, integrated scheduling and time tracking software makes creating staff schedules, and managing staff hours very hands off. With this type of software, you are able to create schedules remotely, and staff can request shift swaps or time off. With time tracking, staff can sign into work using facial recognition technology, and staff-approved hours can be streamlined to payroll – so staff who clock into their shifts, get paid with the click of a button.

Dispensary HR software.

Recruiting, hiring, interviewing and onboarding can take up a lot of time. Especially when staff have important documents they need to sign, and criminal record checks that need to be completed. With dispensary HR software you can automate recruiting, and onboarding, by having staff onboard themselves and sign digitized documents. 

A Security system.

A good security software system with cameras to monitor what goes on inside and outside your dispensary should be paramount to ensure your dispensary remains compliant. You will need a system where you can monitor all the affairs of your dispensaries at one glance without being in different places at the same time.

Inventory management software.

You require some software to help you manage your inventory, and the process of placing orders and confirming inventory counts from your vendors. You’ll also need a system that will remind you when new orders are needed when it detects product shortages.

Website.

If you are in a state that allows e-commerce for dispensaries, a website should be a top priority for competing for top rankings in today’s market. Because of technological advancements, you may now open an e-store where customers can buy cannabis online and have it delivered to their doorsteps.

Your website should be able to collect KYC information from your consumers to verify their identities and eligibility to acquire cannabis products, so you can be confident you’re following the cannabis serving guidelines. If you deliver a cannabis product to someone who isn’t eligible for it, you’ll be breaking the rules guiding cannabis consumption, and this might be a huge risk for your new business.

Metrc. 

Metrc, also known as Marijuana Enforcement Tracking Reporting Compliance is a regulatory compliance system and was built to keep track of cannabis cultivation, preparation, and packaging. Basically, Metrc is a database for tracking cannabis from seed to sale, and identifying it using RFID tags. 

In Oklahoma, you must submit data to Metrc to run a compliant dispensary. Reporting to Metrc can be done manually, however cannabis-specific POS systems are offering a Metrc integration, meaning it is done automatically for you as you sell your product. 

What else do I need to know?

Now that we have covered all the technical and operational bases, the rest is up to you.
Other key parts of opening a dispensary include considering where your store might be located, what your brand value and vibe will be, and how your product and store will look.

Marketing should also be a consideration, as well as staff training, and company culture.
Many new cannabis entrepreneurs hire consultants to help them navigate these areas.
For now, we hope this has been a helpful way to get you started.


Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their HR, scheduling and payroll all from one easy to use platform. KayaPush also integrates with leading dispensary POS systems, giving you an end-to-end solution.
Tommy loves hot sauce, fried chicken, and running with his Boston terriers.

Member Blog: How To Know When To Expand

by Ryan Douglas, founder of Ryan Douglas Cultivation

In thriving cannabis markets, demand exceeds supply. For successful cultivation businesses, expansion is the logical next step — either through organic growth or the acquisition of operational cultivation assets. Before moving forward with an expansion project, entrepreneurs should carefully determine when is the appropriate time to expand. There are a number of market indicators that can help entrepreneurs decide if expansion is right for them — such as market demand, growth of market, and the potential for adult-use sales. 

Current market demand for your product

What is the overall market demand for cannabis, and, more importantly, what is the demand for the cannabis that you cultivate? The answers to this question should be reflected in your sales volume and price point, and it should help influence a company’s decision on whether or not to expand. If you’re wholesaling your product to dispensaries for re-sale, or to large oil extractors of raw cannabis biomass, are you currently selling everything that you grow? Are customers calling you looking for product before it’s even harvested? Or, are you spending hours on the phone trying to unload product before the next harvest? How does your product sell at the dispensary, compared to your competitor? Does it fly off the shelf or frequently find itself discounted as the weekly special?

The price at which you’re selling your dried cannabis flower should be an excellent indication of whether or not expansion makes sense. Do you spend much time haggling over money, or can you name your price? In hot new markets, where there are few suppliers and great demand, wholesale cultivators can charge up to $4,000 per pound for indoor-grown cannabis. In more seasoned markets with multiple cultivators, wholesale prices are closer to $1000 to $1500 per pound. The closer your sales are to $4,000 per pound, the more it makes sense to expand. 

Figure 9.2 Wholesale prices across the U.S. as of April 2020. Copyrighted by Marijuana Business Daily, MJBizDaily.com. Used with permission.

Size and growth of market

The size and growth rate of a medical cannabis market is a good indicator of whether or not a business should consider expanding. In regions with a medical cannabis program, the percentage of the adult population registered as medical cannabis patients is an excellent indicator of the current size of the medical market. However, a cannabis business considering an expansion should be less concerned with how big the market is today, and more focused on how large it may be tomorrow instead. 

In most U.S. states, about two percent of the adult population become medical cannabis consumers. A rate of lower than one percent is rare. This typically occurs when there are few doctors willing to prescribe cannabis, or there’s a very restrictive list of medical conditions for which cannabis can legally be prescribed. In Oklahoma, more than seven percent of adults are registered cannabis patients, while in Ohio only 0.6% of the adult population have registered as medical patients. If the percentage of adult medical patients in your area is above two percent, it’s a good sign that the medical cannabis industry is thriving. Markets with more patients are more attractive for cultivators to expand.

Figure 9.3 The top three and bottom three U.S. medical cannabis markets by percentage of registered adult patients. Source: Marijuana Policy Project 

The rate of new patient registrations is a much better indicator of a given market’s potential for growth. Single-digit increases in new patient registrations year-over-year are not positive indicators. Cultivation businesses considering expansion want to be in states where the number of medical patients is increasing by at least twenty percent annually. This kind of growth would indicate a widespread adoption of medical cannabis and few barriers to receiving a medical cannabis prescription. Florida is an example of a thriving medical cannabis market, where patient registrations increased fifty percent during 2019 alone to over 300,000 patients. This kind of positive growth gives cultivation businesses a good reason to expand.

Competition

However, a robust cannabis market may not make the best expansion opportunity if there are numerous cultivators competing for the same customer base. California and Colorado are established cannabis markets — both medical and [adult-use] — servicing millions of customers each year. That’s exactly the reason expanding in those states may not be as lucrative as opportunities presented by less populated states. In 2019, California sold an estimated $3 billion in recreational cannabis — but there are nearly 3,000 licensed recreational cultivators in the state. In saturated cultivation markets, wholesale flower is quickly relegated to a commodity. Large, established markets, like California and Colorado, don’t hold the same potential value for expansion as a state that may have fewer consumers but is on the cusp of legalization. 

Competition doesn’t only come from other licensed commercial cultivators, but from caregivers as well. Caregivers are home growers that are permitted to cultivate plants for medical cannabis patients. Consumers appreciate the personal touch that caregivers offer their clients, and the growers have more flexibility on pricing than do dispensaries. In medical markets, a thriving caregiver industry can seriously hamper retail dispensary sales and lessen the need for wholesale cultivators to supply them. Cultivation businesses should be cautious of expanding into markets with a strong caregiver presence. Coupled with competition from other commercial cultivators, this may not be as lucrative an expansion opportunity as other markets without such a caregiver network. 

Adult-use cannabis is coming

The biggest influencing factor for cultivation companies considering expansion should be impending adult-use legislation. Servicing adult-use markets is much easier and more profitable than servicing medical cannabis markets. There are no patients, doctors, or prescriptions involved, and there’s a robust customer base on the very first day of sales. There is no need to develop a demand for recreational cannabis, because it already exists — everywhere! It’s only a question of transitioning paying customers from the illicit market to the legal market. 

The ideal situation for expansion is a cannabis business operating a cultivation facility in a medical cannabis market where there’s good reason to believe there will be a transition to recreational cannabis soon. Medical dispensaries are often the first to receive permission to commence recreational sales, since they already have the infrastructure and processes in place. However, these dispensaries never have enough product to meet demand. In an attempt to protect their medical patient base, most fall woefully short of supplying the adult-use market. Expanding cultivation activities in anticipation of recreational use can place a cannabis business in an excellent position to service this new market. 

This situation can be even more lucrative if the state that legalizes recreational sales is bordered by states with only medical cannabis laws, or no cannabis legislation at all. Adult-use stores sell to individuals from out of state that are 21 years of age or older, and cross-border traffic contributes substantially to a state’s total recreational cannabis sales. In the first four months of Illinois’ recreational cannabis program, transactions from out-of-state customers accounted for twenty percent of total state sales. 


Excerpt from From Seed to Success: How to Launch a Great Cannabis Cultivation Business in Record Time by Ryan Douglas. Douglas is founder of Ryan Douglas Cultivation, a cannabis cultivation consulting firm. He was Master Grower from 2013-2016 for Tweed, Inc., Canada’s largest licensed producer of medical cannabis and the flagship subsidiary of Canopy Growth Corporation.

Oklahoma O-Kays Medical Cannabis Ballot Initiative

On Tuesday, voters in Oklahoma approved a measure that will make medical cannabis legal in the state with over 56% popular support.

The referendum, known as SQ 788, will allow patients 18 and older to use medical cannabis to treat their conditions with a recommendation from their doctor, and individual under the age of 18 would need the signatures of two physicians and his or her parent or legal guardian. Physicians can recommend cannabis for any condition for which they think cannabis would be a helpful treatment.

With the addition of Oklahoma, there are now effective medical cannabis laws in 30 states, as well as the District of Columbia, Guam, and Puerto Rico. A total of 46 states allow for the medical use of cannabis in some form.

“In spite of a well-financed and misleading opposition campaign, Oklahoma voters proved that medical cannabis is no longer a controversial issue by enacting a sensible law at the ballot box tonight.” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “The passage of this law is not only a great victory for some of the Sooner State’s most vulnerable citizens – it will also create new business opportunities as the state’s underground market for medical cannabis is replaced by licensed businesses with the potential to create thousands of jobs and millions in new tax revenue,” continued Smith.

About SQ 788
:
Oklahoma state will establish rules governing the licensing and regulation of facilities to cultivate, process, and dispense medical cannabis, and allows patients to cultivate limited amounts of medical cannabis at home.

The passage of SQ 788 marks the first time that a state medical cannabis ballot initiative has been approved by voters in an electoral primary. Observers were skeptical of the initiative passing in an unprecedented election cycle, particularly given strong and well-funded efforts from opponents to the referendum in the months before the vote.

 

2018 NATIONAL CANNABIS INDUSTRY FORECAST

Michelle Rutter, NCIA

by Michelle Rutter, NCIA Government Relations Manager

With the beginning of 2018, we start another election year. Multiple states in the midwest are running medical cannabis ballot initiatives, while Vermont is set to become the first state to legalize adult-use cannabis through the state legislature. In Washington, D.C., policy moves at a slower pace, but with Attorney General Jeff Sessions in office, it’s important to remain vigilant. Let’s take a look at what may happen in cannabis policy across the country:

MEDICAL CANNABIS POLICY

UTAH

  • The Utah Patients Coalition (UPC) is leading a 2018 ballot campaign to establish a medical cannabis program. The initiative seeks to protect terminally and seriously ill patients with specific debilitating medical conditions, including HIV/AIDS, PTSD, and chronic pain, among others. In addition, the initiative allows for caretakers to administer medical cannabis and would issue four types of licenses if passed: cultivation facilities, processing facilities, independent testing laboratories, and dispensaries.
  • The Chairman of the Senate Finance Committee, Orrin Hatch (R-UT) has introduced a medical cannabis research bill, and has even said on the Senate floor that medical cannabis can be an alternative to opioids. Passing the 2018 ballot initiative in his home state of Utah will be critical to furthering advocates’ work at the federal level.
  • A recent poll done by the Salt Lake Tribune found that 3 in 4 Utahns support legalizing medical cannabis. The campaign must collect 113,143 signatures from registered voters in order to qualify for the ballot. As of October 2017, the coalition had already garnered 20,000 signatures.

MISSOURI

  • A group called New Approach Missouri has formed and is in the process of collecting signatures for a proposed constitutional amendment to their state constitution that would legalize medical cannabis. The initiative would create a statewide system for production and sale of medical cannabis and provides for limited and regulated patient cultivation. Interestingly, the initiative levies a four percent retail tax, but all revenue in excess of the cost of regulating the medical cannabis program will go towards Missouri’s veterans.
  • New Approach Missouri must to collect 160,199 valid signatures from registered voters in order to be placed on the ballot. As of December 2017, the campaign had collected roughly 100,000 signatures. A poll done in 2015 showed that 85% of Missourians support implementing a medical cannabis program.

OKLAHOMA

  • Oklahomans for Health is the proponent of the upcoming state question SQ788, which would create a medical cannabis program. Obtaining a state-issued medical marijuana card would require a board-certified physician’s signature, though there are no specific qualifying conditions. The measure would enact a seven percent tax on marijuana sales, with revenue financing regulatory costs. Any surplus would be distributed: 75% to the General Fund to be used for education, and 25% to the Oklahoma State Department of Health to be used for drug and alcohol rehabilitation.
  • The initiative has already qualified, and will appear on the ballot in November 2018. Polling data is scarce, however, a 2013 poll showed that 71% of Oklahomans supported legalizing medical cannabis.

SOUTH DAKOTA

  • A group known as New Approach South Dakota is behind an effort to legalize medical cannabis in 2018. The group was also hoping to submit signatures to legalize adult-use cannabis, but was unsuccessful. The measure would set an excise tax on marijuana that would include a $50 per ounce tax on cannabis flower for buyers, and would have other taxes apply to buying immature plants and other parts of the cannabis plant.
  • In November 2017, New Approach South Dakota submitted roughly 15,000 signatures to qualify for the ballot- that’s just 1,000 more than required. The state hopes to review submitted ballot initiatives in the coming months.

ADULT-USE CANNABIS POLICY

MICHIGAN

  • The Coalition to Regulate Marijuana Like Alcohol has officially submitted ballot language to the State of Michigan that would legalize consumption and possession of marijuana for adults 21 and over in Michigan. The proposal enacts an excise tax on marijuana at the retail level in addition to the standard state sales tax and provides for state regulators to grant business licenses for cultivators, processors, testing facilities, secure transporters, retail stores and microbusinesses.
  • In November 2017, the Coalition to Regulate Marijuana Like Alcohol turned in more than 360,000 signatures to qualify for the ballot– that’s 100,000 signatures beyond the 252,000 required by the state. Polling done in early 2017 showed that 57% of Michiganders would support legalizing cannabis.

VERMONT

  • Vermont is poised to make history and become the first state to legalize adult-use cannabis through the state legislature in early 2018. In December 2017, Vermont House Speaker Mitzi Johnson (D) said, “It will be up for a vote in early January. I expect that it likely will pass in early January.”
  • The state came incredibly close to passing language that would have legalized adult-use cannabis back in 2017, however, the legislature was unable to make changes Governor Phil Scott (R) requested before the session ended. The Governor has since stated that he is “comfortable” with signing legalization legislation.

OHIO

  • The group that unsuccessfully ran a ballot initiative in 2015 to legalize cannabis in Ohio is making a comeback in 2018. In December 2017, a team announced that they will work to place a cannabis legalization measure on the ballot in 2018. Known as the Regulate Marijuana Like Alcohol Amendment, the measure would allow people over the age of 21 to purchase and use cannabis legally. The amendment would also create a taxed and regulated cultivation, processing, and sales system.
  • Valid signatures from 305,592 registered voters are required before July 4, 2018, in order to qualify the measure for the ballot.

NEW JERSEY

  • Unlike New Jersey’s Governor Chris Christie (R) , Governor-Elect Phil Murphy (D) is setting a positive tone on cannabis in the state. Murphy has advocated for legalization multiple times, and even made one of his campaign promises to legalize adult-use cannabis in his first 100 days in office.
  • Democrats in the state legislature have already introduced multiple bills to tax and regulate adult-use cannabis, predicted to be worth more than $1 billion in the state. The full legalization bill currently being considered is S3195, sponsored by state Senator Nicholas Scutari (D). Sen. Stephen Sweeney (D), the state senate’s president, has already promised to pass the bill within the first three months of Murphy’s administration.
  • Recent polling shows that over 60% of New Jersey residents support legalizing cannabis.


CANNABIS DECRIMINALIZATION

VIRGINIA

  • In November 2017, voters in Virginia elected Ralph Northam (D) as their next Governor. Northam made cannabis decriminalization a centerpiece of his gubernatorial campaign, and has even spoken about the hemp cultivation and the medical benefits of cannabis.
  • Virginia lawmakers considered but did not act on decriminalization legislation during the 2017 session. However, with the State Crime Commission conducting a study on the effects of decriminalization in the state at the request of the Republican Senate majority leader, advocates remain hopeful in 2018.


FEDERAL CANNABIS POLICY

  • While 2018 is shaping up to be a busy year for cannabis policy at the state level, things will likely move slowly in Washington, D.C. NCIA will be working to ensure language protecting medical cannabis patients (the Rohrabacher-Blumenauer amendment, formerly known as the Rohrabacher-Farr amendment) remains in federal law. NCIA will also be lobbying to expand that language to apply to adult use states (McClintock-Polis amendment) and to include a banking amendment that would allow cannabis businesses access to financial services (Heck amendment).
  • As leadership in both houses of Congress continue to negotiate the final version of the tax reform bill, there will be opportunities next year for Congress to make additions and changes on future individual tax legislation. NCIA will be looking at any possible avenues to have 280E legislation be included in future bills if the opportunity arises. Action on the cannabis banking bill is unlikely in 2018, however, NCIA will continue to advocate for a committee hearing, gather more cosponsors on HR 2215: The SAFE (Secure and Fair Enforcement) Banking Act, and work to identify a Republican lead sponsor for the bill in 2019.
  • NCIA will also be working to ensure that the Cole Memo remains in place. Attorney General Jeff Sessions has recently said that the Department of Justice will be reviewing current memos, and that “Guidance documents can be used to explain existing law… but they should not be used to change the law or to impose new standards to determine compliance with the law… This Department of Justice will not use guidance documents to circumvent the rule-making process, and we will proactively work to rescind existing guidance documents that go too far.” While Attorney General Sessions is very clearly personally opposed to cannabis, it’s important to note that personal feelings are not official Justice Department policy.
  • In addition, NCIA is working behind the scenes to educate the Trump Administration on cannabis policy, maintain the Cole Memo, protect cannabis patients and consumers, and make positive remarks regarding medical cannabis in 2018.

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