Cannabis Industry Annual “Historic” Update

While the pandemic’s impact remains top of mind for most of us, cannabis businesses have also faced wildfires, early frosts, labor shortages, licensing delays, and much more this year. We all have had our challenges in 2020, yet the industry has had its share of wins too.

As lockdowns spread across the country, cannabis businesses were deemed essential in most jurisdictions, acknowledging the value of the products our industry provides. Dispensaries successfully adapted their operations to constantly changing public health guidelines and safely provided medicine to patients amid the pandemic via online ordering, curbside pickup, and delivery services.

Cannabis won the election! Voters approved legalization measures in five states opening the door to an estimated $3.1 billion of combined sales by 2025 (Arcview). Support for legalization reached an all-time high in the United States, with 68% of Americans in favor of adult-use cannabis (Gallup). In a historic vote, the United Nations (U.N.) Commission on Narcotic Drugs (CND) rescheduled cannabis under the 1961 Single Convention, recognizing its medicinal value.

As we look to 2021, we expect further consolidation in cannabis markets globally as operating capital is stretched thin for smaller producers. While many are optimistic about legalization at the federal level in the United States, we don’t think change is likely in 2021. Below is a list of markets that are opening or have the potential to legalize next year.

United States

Arizona

  • Non-profit medical marijuana dispensaries and entities operating within counties with fewer than two non-profit dispensaries will submit their applications between January 19, 2021, and March 9, 2021.
  • Twenty-six social equity licenses will become available to “individuals from communities disproportionately impacted by the enforcement of previous marijuana laws” within six months of adopting the rules.

California

  • License applications for up to 16 retail dispensary permits in Oxnard are due by 6:00 PM PT on January 7, 2021.
  • New municipal markets include Banning, Encinitas, Fullerton, La Habra, Ventura County, and Weed.
  • More municipalities are drafting cannabis business ordinances, with many likely to pass in 2021.

Connecticut

  • In 2021, Democrats will fill 98 of the 151 House seats and 24 of the 36 Senate seats. The state’s lawmakers will have strong support to pass a legalization bill.
  • Connecticut will likely act fast to ensure they can compete with adult-use cannabis programs in neighboring states.

Maryland

  • Delegate Jazz Lewis (D) pre-filed a bill to legalize and regulate adult-use cannabis and allow sales by state-licensed medical cannabis businesses.

Massachusetts

  • Open licensing based on host community agreements.
  • Delivery-only licenses are available exclusively to businesses controlled and majority-owned by Economic
  • Empowerment Applicants or Social Equity Participants.

Michigan

  • New municipal opportunities on the horizon, including Detroit in early 2021.
  • Starting on March 1, 2021, the Marijuana Regulatory Agency will begin accepting applications from companies not currently involved in its medical marijuana program.

Mississippi

Montana

  • Regulators have until October 1, 2021, to establish rules for the recreational cannabis program. Only existing medical operators will be able to apply for licenses in 2021.

New Jersey

  • The current legislation to set New Jersey’s adult-use cannabis program into motion has stalled on Governor Phil Murphy’s desk.
  • Once the bill passes, the Cannabis Regulatory Commission will have 180 days to implement rules.
  • Existing Alternative Treatment Centers (ATC’s), vertically-integrated non-profit medical license holders, will have first access to adult-use licenses.

New Mexico

  • Gov. Michelle Lujan Grisham supports adult-use legalization and will be working with the legislature next year to get a bill to her desk. According to polling data, 72 percent of New Mexico residents favor legalizing, taxing, and regulating cannabis sales.

New York

  • Gov. Andrew Cuomo planned to legalize cannabis in 2020, but the pandemic forced efforts to the back burner. With legalization on New Jersey’s horizon, Cuomo has renewed his commitment to getting a legalization bill passed in New York in 2021.

Pennsylvania

  • Gov. Tom Wolf has called for adult-use legalization to help the state’s struggling economy. It will be tough to get a bill through the Republican-controlled legislature, but some state senators have expressed their support.

Rhode Island

  • Gov. Gina Raimo had included adult-use legalization in her state budget plan for 2020, which the Senate opposed. Lawmakers have recently expressed support for legalization to help with economic recovery amid COVID-19.

South Dakota

  • The new medical and adult-use cannabis laws go into effect on July 1, 2021. That said, we expect that it will be some time before licensing and operations begin. It will likely be 2022 before applications are accepted.

Texas

  • Several cannabis bills have been pre-filed ahead of the 2021 session. One would expand the state’s restrictive medical cannabis program another seeks to legalize adult-use cannabis.

Virginia

  • Gov. Ralph Northam plans to introduce an adult-use cannabis bill in 2021. According to Virginia Mercury, the House of Delegates could likely pass the bill. At the same time, Senate Majority Leader Dick Saslaw said that it would have “slightly better than 50-50 odds” in the Senate.

International

Mexico

  • In 2019, the Supreme Court of Mexico mandated that lawmakers legalize adult-use cannabis in the country.
  • The deadline to legalize was recently extended for the third time until the end of the next ordinary session, ending in April 2021.
  • We expect Mexico to legalize adult-use cannabis in 2021.

Netherlands

  • The government selected ten cannabis growers to participate in its cannabis experiment.
  • Selected growers are currently undergoing an integrity investigation. Those that pass will start producing cannabis for coffee shops next year.

As a result of the historic rescheduling of cannabis under international law in December 2020, we’ll likely see new countries legalize medical cannabis programs and more research and investment into the global medical cannabis landscape in 2021. While we haven’t seen the end of COVID-19, and there are indeed more trials and tribulations ahead, we are optimistic about the industry’s outlook.

The industry’s non-cyclical nature, combined with a constant flow of emerging regional markets, makes it unique, and the opportunities are plentiful. If you’re planning on expanding your cannabis business into new markets in 2021, we are standing by and ready to guide you.

Let us know what you think.

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