Tuesday March 19, 2019
Updated on 11/13/2019
With the start of recreational cannabis sales on November 20th, 2018, Massachusetts had one of the most successful launches of adult-use cannabis since Colorado set the green wave in motion. In doing so, the state started its own wave for the Northeast, spurring surrounding states to push for recreational retail cannabis sales. New York and New Jersey are fast-tracking efforts to approve recreational sales via ballot measures. Maine and Vermont, where cannabis is legalized for adult use without retail systems in place, have ramped up commercialization efforts. The remainder of New England – Connecticut, New Hampshire and Rhode Island – all have established medical cannabis reform, various degrees of decriminalization, and eyes towards legalization. There is currently nowhere in the Northeast without some form of cannabis access.
To understand how such a basis of reform is primed to set off a wave of impact, it is important to recognize just how successful Massachusetts’ recreational cannabis launch has been. Despite having only two operational dispensaries, the state saw $440,000 in sales the first day. Sales reached $9.3 million by the end of the first week, with only a handful of stores. By comparison, Colorado cannabis sales were roughly $5 million for its inaugural week with 37 operational dispensaries.
Since launch, that momentum has only built. Massachusetts sold $23.8 million in the first two months of sales, smashing through projections of $14 million by the end of the year. The initial 5 dispensaries have grown to 11, with numerous more provisional licenses either already approved and waiting to open.
The Race for Second "First"
New York and New Jersey have been in a race to implement cannabis since January, when NY Gov. Andrew Cuomo announced a plan to legalize cannabis within 100 days, seeking to have legislation in place by April. The move mirrors NJ Gov. Phil Murphy’s similar 100-day declaration for New Jersey last year, which has is yet to materialize after numerous delays. Upon Gov. Cuomo’s announcement, Gov. Murphy reiterated his commitment to legalizing cannabis in the state, and indeed it does seem that there will be movement on it. Initial reports state that Gov. Murphy and State Senate President Stephen Sweeney have reached an agreement on a new proposal, and are expected to send the issue to legislative vote soon. As to which state will complete their goal first, the answer fluctuates depending on whom one asks. Many are optimistic about Cuomo being able to follow through on his promise, while some industry professionals see NJ as being much further along, assuming that NY will have to wade through the same regulatory details that have impeded New Jersey’s progress.
Massachusetts isn’t the only state competing with NY and NJ either. Both Pennsylvania and Connecticut have bills pending for vote that would legalize cannabis. Though legalization efforts are expected to face trouble from the Republican-held house and Senate in the former, the latter’s Democratic majority in both is looking promising. Both states have expressly stated that they fear losing out on revenue if the other were to legalize first, also including Rhode Island in the mix, where Gov. Gina Raimondo proposed legalization as part of her official 2019 budget.
Massachusetts’ smashing success in retail rollout is supplemented by a rapidly expanding cannabis tourism trade (which other legalized states have not always found traction in). The panic response of the entire surrounding area is in large part due to the speed and pace that Massachusetts has been able to maintain its cannabis rollout at. It is increasingly apparent that time is short for others to act without large sacrifices in profits, potentially losing out on millions in tax revenue.
Steps Towards a National Market
With Vermont, Maine and Massachusetts having already legalized recreational cannabis, the Northwestern United States are likely to soon resemble their West Coast counterparts. Michigan’s recent adult-use legalization has started another mini-wave in the Midwest, with Illinois now looking to keep track with its neighbor. Two adult-use legalization bills have already been proposed in Illinois, with more expected, and high hopes to have something cemented by year-end.
With both coasts and the Midwest nearing total cannabis saturation, it is only a matter of time before flyover states come on board as well. Multiple bills are also currently up for consideration that would remove cannabis from federal controlled substances scheduling. Though they face an uphill battle against certain entrenched factions, more and more bipartisan efforts have emerged in recent months. Numerous 2020 candidates have already come out in favor of national cannabis legalization. Just as Colorado’s “first-in-the-door” status helped cement it as a trendsetter among the initial adult-use states, Massachusetts’ success shows the model can be repeated.
Growing New England Cannabis Culture
The continual question on the cannabis industry’s mind is how exactly to move forward. It is an ongoing conversation that is increasingly taking place at national cannabis conference gatherings and events across the country. As Massachusetts is at the heart of the new wave of marijuana expansion, it follows that the conferences happening there will serve to set the set the regional tone. Marijuana events offer the blossoming cannabis community a chance to network, learn, and innovate together, ultimately establishing the building blocks that will construct the cannabis market of the future.
For those looking to start or expand a cannabis business in Massachusetts, or even any of the surrounding states about to enter the competition, attending a cannabis event is the perfect opportunity to both get a sense of the competition and forge new alliances. At the forefront of cannabis change in the most densely populated sector the nation, Massachusetts is primed to be an industry leader for years to come.
How to Get From Here to There
A few companies have already started to venture into the initial stages of a national market. Brands like Zoots, O.Pen, Dixie, Wana, Cheeba Chews, and Pax, among others, have launched in multiple adult-use states, creating for the first time consistency across multiple cannabis markets. At current, these brands operate as connected but independent entities in multiple states, but are barred from acting as official larger corporations. The extremely close knit nature of New England and surrounding states makes this sort of larger brand model attractive. When inevitable inter-state commerce emerges, such brands will have a large lead on the competition, which will only increase when they are allowed to merge.
This is likely to cause a rift between smaller, independently run businesses and larger deep-pocket brands that are able to extend themselves in large initial setups and wait out smaller operators to be swallowed amidst competition. For small brands to compete, they will need to forge strategic and innovative alliances to keep pace.
Favorable Conditions on the Horizon
While former Attorney General Jeff Sessions’ stance on state’s rights in the cannabis debate had once put the industry on edge, those dark clouds seem to have passed. The current administration’s new consideration for AG has stated an intention to not interfere with private businesses in compliance with local state regulations. Even in an uncertain political climate, pot is poised to thrive. It is one of the few issues seeing bipartisan movement across America. It speaks both to politicians needing to secure power through bowing to public opinion while also stimulating the economy, creating jobs, and generating massive amounts of tax revenue. In short time, any politician opposing cannabis reform is going to touting an unpopular opinion in both parties.
We already know that cannabis legalization is the popular choice among citizens as well. Pew Research Center released a polling results in October of 2016 showing that six in ten Americans favor legalizing pot. Mary Jane’s magnetic pull is at an all-time high, it seems only a matter of time before people start talking about ending the second era of prohibition. New England could indeed be the catalyzing factor toward federal cannabis legalization, but only time will tell!
What are your thoughts on New England’s impact on a national cannabis market? Share them in the comments below!