This year’s California State Fair will feature weed sales and a cannabis consumption area in the latest sign of marijuana’s growing acceptance by mainstream America. This year marks the first year that cannabis sales have been permitted at the event, which begins in Sacramento on July 12.

The California State Fair welcomed weed to the festivities for the first time in 2022 with an exhibition and competition, much like many of the state’s famed agricultural products including wine, cheese, olive oil and craft beer. The pot-friendly events will be expanded this year, with a broadened marijuana products competition, a weed consumption lounge and onsite sales operated by licensed cannabis retailer and event concessionaire Embarc.

“The California State Fair took a historic leadership position in 2022 with the introduction of a cannabis exhibit and competition,” Tom Martinez, CEO of the California State Fair, said in a statement. “This year, we’ve expanded our offerings to include onsite sales and consumption in a designated area to provide a platform to amplify California’s rich agricultural bounty and facilitate storytelling for farmers from diverse backgrounds and experiences.”

Shopping for Weed at the State Fair

This year will be the first time in the 170-year history of the California State Fair that cannabis sales and consumption will be allowed. The cannabis exhibition hall, which is restricted to adults aged 21 and up with government-issued identification, will include farm displays and educational information about California’s storied cannabis history. 

Visitors will be able to scan QR codes to learn more about Golden Bear award winners, add cannabis products to a virtual shopping basket and purchase them at Embarc’s on-site dispensary. The area will feature a 30,000-square-foot consumption lounge, accessible via a designated walking path, to give attendees over the age of 21 an opportunity to try winning products from diverse farms and brands from throughout the state.

“Hosting cannabis sales and consumption is a groundbreaking milestone in destigmatization by facilitating a deeper connection between consumers and the farmers who cultivate their products with such care,” said Lauren Carpenter, co-founder of Embarc. “Joining James Leitz, pioneer of the educational exhibit and competition for the past two years, on an expanded competition and experiential dispensary is a major step forward for responsible normalization.”

Organizers of the event say that visitors to the onsite consumption area may be surprised by how the exhibit hall has been transformed for the event.

“‘Designated smoking area’ is the required terminology,” Carpenter told the Los Angeles Times. “But that makes it sound like people standing around outside of a building smoking. This is intended to be experiential and fully built out and produced with a stage where we will have a ceremony for our [cannabis] award winners. [And] right now, our theme is ‘oasis’ — because, in case you missed it, it’s really hot in Sacramento — and our intention is to make this a respite.”

“This initiative spotlights the significant role of cannabis in California’s agricultural industry, marking a major milestone in the state fair’s 170-year history,” said James Leitz, executive producer of the cannabis competition and exhibit. “Expanding the competition to include all form factors and providing patrons the opportunity to directly engage with and consume winning brands is transformational for public understanding of the plant.”

The California State Fair kicks off on July 12 at the California Exposition Center in Sacramento and runs through July 28.

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Michigan has overtaken California as the largest cannabis market in the U.S., at least in terms of sales volume, according to data collected by multiple market intelligence firms. Both firms show Michigan surpassing California over the winter in cannabis product units sold.

Sales volume is the total number of units sold by a business over a specific period of time, such as units sold in a month, quarter, or year. A “unit” can mean several different things but in this case, it refers to a single or multipack cannabis item that is purchased, big or small.

But this is in terms of units, and California is still a larger cannabis market than Michigan in terms of dollars sold—by billions of dollars. California sold $5.1 billion in adult-use cannabis products in 2023, while Michigan sold about $3 billion in adult-use cannabis products.

Prices for cannabis products are much cheaper in Michigan compared with California due to recent oversupply issues in the Great Lakes State. That means that even if consumers buy more products in Michigan, the total amount they spend is less than what they’re paying in California.

Detroit Free Press reports that since December 2022, Michigan has sold more total grams of flower and units of other cannabis products, called equivalent unit sales, in both the adult-use and medical cannabis markets compared with California, according to data collected by BDSA, a cannabis market intelligence firm that tracks sales via point-of-sale data from a panel of participating cannabis retailers.

But it’s not just BDSA making these claims: Headset, another cannabis market intelligence firm that’s recognized in the cannabis community, compiled data showing that Michigan sold more units than California. Headset defines units as a single item that a customer buys, such as a pre-rolled joint, a multipack of pre-rolled joints, an ounce or one gram, since June 2023. Headset’s data indicates that in May, Michigan sold 24.2 million units, compared to California selling 17.3 million units.

“There are a lot of issues on the ground in California … it’s always been expensive to do business there,” Michael Arrington, a principal analyst at Colorado-based BDSA, said on a BDSA market forecast update webinar in March.

According to BDSA data, Michigan sold 56.8 million equivalent units of cannabis products in April, compared with 44.6 million in California during the same month.

In terms of units sold, BDSA arrived at slightly different numbers than Headset, however both firms found that Michigan was selling more units of cannabis products than California in recent months, such as in February and March. Michigan’s unit sales first passed California’s in December, BDSA data shows.

This could mean more Californians are buying in bulk or in larger units while Michiganders are buying cannabis in smaller units. 

In Michigan, prices for cannabis plunged after adult-use cannabis sales started because of an oversupply problem, which led to lower prices for consumers but tougher margins for cannabis retailers. 

Michigan Sales On Steady Climb

A recent set of data released by the Michigan Cannabis Regulatory Agency (CRA) shows that the state has once again set a new record for adult-use cannabis sales.

According to the CRA, the state collected $286.8 million in adult-use cannabis sales in March, which made up for 99% of all sales. In terms of product popularity, flower still reigns supreme with $131.4 million in sales. A total of $54.4 million was sold in vape cartridges, as well as $33.9 million in inhalable concentrates, and finally edibles at $26.3 million.

The CRA splits Michigan up into five distinct regions: upper lower/upper peninsula, mid lower, southwest, east/southeast, and Wayne.

Among these regions, the east/southeast region collected the most in total adult-use cannabis sales with $128,929,767, followed by $79,432,048 in the southwest region, $31,845,920 in Wayne, $29,373,053 in upper lower/upper peninsula, and lastly, $17,209,468 in the mid lower area.

In total medical cannabis sales, the southwest area led with $141,535, followed by Wayne with $945,992, east/southeast with $809,515, upper lower/upper peninsula with $81,273, and finally mid lower with $79,695.

The latest figures leave more questions than answers. Michigan’s population is about a quarter of the size of California’s population, and California’s history of a medical and adult-use cannabis market stretches back further than Michigan’s. But the prices of pot play a large part in the outcome of units sold in both markets,

Michigan’s fifth anniversary of adult-use cannabis sales in the state is coming up, and the state is proving its viability, even compared to California’s enormous market.

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The Canadian government is proposing a series of amendments to federal cannabis regulations ranging from packaging to reporting requirements, all part of an effort to help ease the regulatory burden cannabis businesses in the country face. It would allow, among many other things, for producers to contain individual packages in bulk outer packaging.

CTV News reports that a raft of changes are expected as a push to fix several problems burdening cannabis producers remains a priority. Health Canada indicated that the amendments are expected to return about $41 million in annualized net benefits in terms of administrative and compliance cost savings. The amendments remove problematic regulations that make it more difficult to market cannabis. 

Changes to Canada’s Cannabis Act include an Order Amending Schedule 2 to the Cannabis Act, and a second Order Amending the Cannabis Tracking System Order (Cultivation Waste).

Changes to the Cannabis Act and Food and Drugs Act included Regulations Amending Certain Regulations Concerning Cannabis (Streamlining of Requirements).

“Health Canada recognizes that there may be regulatory measures that could be made more efficient and streamlined without compromising the public health and public safety objectives,” a representative of Health Canada said.

Proposed amendments including packaging changes, such as allowing the lids and containers of cannabis products to display different colors, allowing cut-out windows or transparent packaging, and allowing QR codes on packaging so buyers are able to find more information.

Producers would also be allowed to package multiple products together as long as the package is still under the 30-gram limit, and products inside also meet packaging requirements. The change would mean producers could sell higher quantities of edibles in one single, outer package.

Images or information on the packaging would still not be allowed, for the most part, but images would be exempt if other statutes require it, such as the recycling icon.

The changes mean that producers no longer have to provide paper copies of information sheets to retailers, wouldn’t have to submit a notice to the government on every new dried or fresh cannabis product they want to sell, and the sale and distribution of cannabis pollen would be allowed. Producers also wouldn’t be required to report annually on promotional efforts, and would no longer need to report on cultivation waste.

The changes aim to ease some of the problems the industry is grappling with. This includes bankruptcies and market consolidation following legalization in 2018.

The problems impacting the industry were identified earlier. Canada’s oversupply of cannabis led to $53.7 million unsold cannabis products last December.

A group organized by the federal government to study Canada’s cannabis laws earlier this year made 54 recommendations. The updates that range from packaging and labeling rule changes to a review of the excise taxes imposed on cannabis producers.

Cannabis Sales Impact Alcohol Sales in Canada

Cannabis and alcohol are highly regulated, and sales of the two impact one another.

A study conducted in Canada and recently published in the journal Drug and Alcohol Dependence shows that beer sales have declined since cannabis sales rolled out in the country in 2018. The study was conducted by researchers associated with the College Pharmacy at the University of Manitoba, School of Pharmacy at Memorial University of Newfoundland, Leslie Dan Faculty of Pharmacy at the University of Toronto.

The study, which was published last February, shows that beer sales in Canada have dropped significantly. “Canada-wide beer sales fell by 96 hectoliters per 100,000 population immediately after non-medical cannabis legalization and by 4 hectoliters per 100,000 population each month thereafter for an average monthly reduction of 136 hectoliters per 100,000 population post-legalization,” authors wrote. A hectoliter is a unit of measurement frequently used in reference to wine, beer, grain, or other agricultural goods, and is the total of 100 liters (1 liter is approximately 0.26 liquid gallons).

Researchers also explained that cannabis legalization did not impact spirit sales in the same way. Additionally, researchers believe that cannabis use could potentially lead to higher alcohol use in some people, specifically “those with greater sensation-seeking behaviors.” However, they also wrote that some consumers are substituting cannabis in the place of alcohol. 

Data on beer and spirits sales in Canada were compiled by Beer Canada and Spirits Canada. 

Beer Canada provided details about approximately 90% of total Canadian beer sales, while Spirits Canada showed sales in relation to whisky, rum, gin, tequila, liqueurs, and vodka but did not include ready-to-drink cocktails. Beer sales were reviewed between January 2012-February 2020, and spirits sales were examined between January 2016-February 2020.

The new proposed changes to Canada’s Cannabis Act and Food and Drugs Act could propel these sales even more if producers are better equipped to handle it. 

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Since adult-use cannabis passed in Missouri in 2022, the state recently divided $15 million in adult-use sales revenue to fund support services for military veterans and substance abuse treatment programs, as well as the Missouri Public Defenders budget. That amount is projected to increase to $19 million by the time the fiscal year ends on July 1.

Division of Cannabis Regulation (DCR) director Amy Moore recently said that she was pleased with the fund accumulation so far. “It is so rewarding to see the impact of this voter-approved program on organizations that provide vital services to Missourians. We look forward to watching this impact grow and are grateful to be a part of it.” Moore said.

The collection of medical and adult-use cannabis revenue in Missouri differs slightly once operational costs have been paid. The constitutional amendment that legalized medical cannabis five years ago goes directly to the MVC, whereas adult-use cannabis revenue must first pay out any fees relating to cannabis offense expungement, and the leftover amounts are divided up among the three beneficiaries.

These three groups include the Missouri Veterans Commission (MVC), Missouri State Public Defender, and the Missouri Department of Health and Senior Services (DHSS). The MVC is described as a health care and “other services” group that serves both veterans as well as their families, while the Public Defender is a legal option for low-income Missourians. The DHSS’s goal is “to operate a grant program for subrecipients to increase access to evidence-based, low-barrier drug addiction treatment prioritizing medically proven treatment and overdose prevention and reversal methods and public or private treatment options with an emphasis on reintegrating recipients into their local communities, to support overdose prevention education, and to support job placement, housing, and counseling for those with substance use disorders.” This includes maintenance of veterans’ homes and various cemeteries. 

The most recent transfer to these groups on May 17 included a total of $15,229,302 split three ways, with each beneficiary receiving $5,076,434.

In January 2024, Moore gave a presentation in front of the House Veterans Committee showing that the MVC will receive a total of $19 million from cannabis sales revenue by the time that the fiscal year ends on July 1. Furthermore, Moore estimated that next year that amount will increase to approximately $22 million. “The governor’s recommendation is quite a bit more than expected and that is tied to the unexpectedly robust sales, mostly on the adult-use side,” Moore said. 

At the time, Moore’s data showed that Missouri had collected $98,873,147 in medical cannabis revenue ($41,406,336 of which went to DCR operating expenses and $39,978,820 to veterans). The state had also collected a total of $57,743,824 in adult-use revenue so far (split between $8,152,210 for DCR operating expenses, in addition to the three sets of beneficiaries receiving $1,278,973).

The MVC has received a grand total of $39,978,820 in medical cannabis sales revenue funds since the transfer began in September 2020. During that first year, the MVC received $2,135,510, followed by $6,843,310 in September 2021, $5 million in May 2022, $13 million in September 2022, and finally $13 million in October 2023.

Rep. Dave Griffith, who is also the veterans chair committee, commented on the success of legalization so far. “The amount of sales that they’ve had with commercial marijuana has been just record-breaking and exceeded all expectations and projections,” Griffith said. “Because of that, there’s going to be even more money into that pool than what they projected right after [Amendment 3] passed.” Griffith also commented that his goal is to increase the amount of funds given to the MVC to $50 million annually, citing the need for more money to better serve veterans services. “Many of them, they’re so overburdened with their caseloads that it’s hard to get in with them,” said Griffith. “If we can increase the number we have, we can start trying to cut down on that wait time many veterans have.”

During the most recent round of funds transferred, Moore released a statement in October 2023 about the positive growth coming from the adult-use cannabis market. “It is incredible that Missouri voters passed the adult use amendment less than one year ago, and we are now starting to see the financial impact the program’s success will have on multiple organizations and the Missourians they serve,” Moore said.

At the time, MVC executive director Paul Kirchoff also provided a statement about the benefits of the program. “These funds will help MVC continue to support the existing infrastructure of our seven Veterans Homes,” said Kirchoff.

While legal cannabis continues to serve Missouri, the topic of psilocybin continues to evolve. In March, the Missouri House Veterans Committee recently passed a psilocybin legalization bill (Senate Bill 768) which if passed would allow veterans to use psilocybin therapy. 

In April, the Missouri House of Representatives approved a budget bill that sets aside $10 million in psilocybin research grants, which would come from the state opioid settlement funds. The research studies would study how psilocybin affects people with opioid abuse disorder.

Originally this also included the research of ibogaine for treating the disorder but was changed to focus on psilocybin instead. According to Rep. Cody Smith who introduced that budget bill, the switch from ibogaine to psilocybin was due to a discussion he had with the Department of Mental Health the week prior. “They had concerns about the ibogaine research they had read, and there are concerns about the dangers involved in that research,” said Smith. “However, they are interested in the psilocybin piece. And we’ve seen many other states use their opioid settlement funds to that end.”

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Green isn’t just the color of cannabis, but cash, too. And thanks to your valiant efforts of consumption, the industry is looking to help out the economy. Info from the newly released MJBiz Factbook reveals that the economic impact of regulated marijuana sales in the U.S. could exceed a whopping $112.4 billion in 2024. That’s a 12% growth compared to last year. 

Overall, the Congressional Budget Office forecasts a slowdown in economic growth for 2024 due to higher unemployment levels and reduced inflation. As a result, the Federal Reserve is likely to lower interest rates starting in mid-2024. After this, economic growth is expected to rebound in 2025 (mark the year in your calendars hopefully you’ll have extra money for weed) and then level off in the following years. So, while 2024 isn’t likely going to be one of the best economic years on record, that’s not the cannabis industry’s fault. Without it, we’d be $112.4 billion poorer as a nation. And as new cannabis markets emerge, the industry is projected to contribute over $200 billion in additional spending to the U.S. economy by 2030.

While there were sales dips in established western markets (licensed retailers in California reported taxable sales exceeding $5.1 billion in 2023), marking a 4.7% decline from the previous year, according to the latest year-end data from the California Department of Tax and Fee Administration, you may have read about the California mass extinction), the cannabis industry continues to see growth through the expansion of new recreational and medical marijuana facilities in states like Maryland, Missouri, and New York. 

While it’s exciting to see that the cannabis industry is going to add hundreds of billions of dollars to the economy, keep in mind that MJBiz’s date doesn’t account for potential U.S. government actions like federal rescheduling or legalization, each of which could boost revenue and economic impact. While Biden has said he’d reschedule cannabis and expunge more cannabis convictions, he hasn’t turned out to be the great liberal hero who legalizes marijuana for all. Donald Trump has been all over the place when it comes to cannabis. Thirty years ago, he said drugs should be legal, but he has backpedaled in modern years to appeal to his conservative voter base. Twenty-five years later, at the Conservative Political Action Conference, he said that he thinks marijuana legalization is “bad” and that he feels “strongly about that.”

To come to the figure of $112.4 billion of economic impact, MJBizDaily applied some epic math by looking at comparable industries. Then, they used a standard multiplier to estimate projected sales for recreational and medical marijuana. The economic multiplier illustrates the broader economic impact of the cannabis industry. It suggests that for every dollar spent by consumers and patients at adult-use stores and medical marijuana dispensaries, an additional $2.50 is circulated into the economy. This money primarily benefits the local economies that sell the cannabis in the first place. 

Keep in mind that the economic impact of the marijuana industry is different from supply-chain revenue, which is commonly utilized to gauge an industry’s ‘total size.’ According to the MJBiz Factbook, total U.S. sales for adult-use and medical cannabis are projected to hit $32.1 billion in 2024 and rise to $58 billion by 2030. 

The term “economic impact” describes the effect of an industry (or an event) on the economy of the corresponding region or country. This includes economic growth, employment, wages, and overall economic activity changes. The economic impact includes direct impacts, such as the immediate benefits from business spending and salaries; indirect impacts, such as additional economic activity from local suppliers fulfilling new demands; and induced impacts, which happen from employees spending their paychecks locally. Knowing the economic impact helps stakeholders understand the economic value of different industries and make corresponding decisions. 

The projections represent the best estimates available for the ever-evolving marijuana industry, which is different from others as it operates under a complicated and ever-changing set of state regulations yet is still illegal federally (until, of course, we elect someone down to make some real progress). The cannabis industry is vast and includes agricultural, manufacturing, and retail sectors, as well as businesses that don’t sell weed but help the cause, like lighting suppliers and cannabis-friendly accounting firms. The number even includes 420-friendly events and hospitality businesses, which can really improve our economy, per the data, and make you feel good about taking part in your local cannabis community. 

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The newest set of data released by the Michigan Cannabis Regulatory Agency (CRA) shows that the state has once again set a new record for adult-use cannabis sales.

According to the CRA, the state collected $286.8 million in adult-use cannabis sales in March, which made up for 99% of all sales. In terms of product popularity, flower still reigns supreme with $131.4 million in sales. A total of $54.4 million was sold in vape cartridges, as well as $33.9 million in inhalable concentrates, and finally edibles at $26.3 million.

The CRA splits Michigan up into five distinct regions: upper lower/upper peninsula (the region at the top of the state sandwiched between Lake Michigan and Lake Huron, and also the northern portion of land that borders Canada), mid lower (sometimes referred to as Central Michigan), southwest (containing cities such as Kalamazoo and Lansing), east/southeast (which includes cities such as Ann Arbor but spans all of eastern Michigan with the exclusion of the Detroit area), and Wayne (i.e. Wayne County, which mainly covers Detroit).

Among these regions, the east/southeast region collected the most in total adult-use cannabis sales with $128,929,767, followed by $79,432,048 in the southwest region, $31,845,920 in Wayne, $29,373,053 in upper lower/upper peninsula, and lastly, $17,209,468 in the mid lower area.

In total medical cannabis sales, the southwest area led with $141,535, followed by Wayne with $945,992, east/southeast with $809,515, upper lower/upper peninsula with $81,273, and finally mid lower with $79,695.

The state has 785 licensed retailers operating, in addition to 260 processors, eight Class A cultivators, 112 Class B cultivators, and 845 Class C cultivators.

Despite record-breaking adult-use sales, medical cannabis continues to decline, and the state only collected $2.1 million sold at 213 provisioning centers. As of March 2024, Michigan has a total of 107,040 medical cannabis cardholders, 8,302 caregivers, and 191 physicians in total. The state received and approved 2,636 initial applications for medical cannabis cards, alongside 1,158 approved renewals. Out of the 27 medical conditions approved to be treated with medical cannabis, the highest percentage by far is chronic pain, which affects 62.95% of all approved patients. Other significant percentages above one percent includes patients who suffer from severe and chronic pain (48.82%), arthritis (21.98%), post-traumatic stress disorder (8.32%), muscle spasms (6.83%), severe nausea (5.99%), cancer (2.83%), inflammatory bowel disease (1.33%), and glaucoma (1.13%).

The CRA also reported that the Marijuana and Tobacco Investigation Section (MTIS), along with the Michigan State Police, worked together to conduct 37 seizures of illegal cannabis products. This resulted in the “confiscation of 14,929 plants, 11,165 pounds of flower, and 3,133 units of marijuana product.”

The most recent record in Michigan’s March 2024 sales topples the previous record set in December 2023. Tallied numbers for the entirety of 2023 show that the state surpassed $3 billion.

At the end of February, the Michigan Department of Treasury announced how adult-use cannabis tax revenue funds will be granted through its Marihuana Regulation Fund. The money was acquired with taxes from the state’s 737 licensees during FY 2023, with a total of $290.3 million. “This week, many Michigan municipalities and counties will begin seeing their share of adult-use marijuana payments appear in their banking accounts,” said State Treasurer Rachael Eubanks. “Through a partnership, the dollars received from the adult-use marijuana taxes and fees are distributed to our participating communities. These dollars may be spent how our local units deem fit to their needs.”

The agency stated that 269 of the state’s municipalities would be receiving a portion of $87 million (approximately $59,000 for every licensed retail store or microbusiness in its jurisdiction), while $101.6 million would be granted toward education and an additional $101.6 toward transportation. “The tax funding for municipalities and counties that comes from the marijuana excise tax is a very important benefit of the legal cannabis industry in Michigan,” CRA Executive Director Brian Hanna said. “The CRA is committed to doing our part in supporting our licensees so that they can continue to grow the local economy throughout the state with good-paying jobs and increased revenues for local government budgets.”

Michigan wasn’t the only state to break a few records last year. Connecticut’s monthly cannabis sales increased every month through December for a total of $274 million since sales began in January 2023. Maryland also saw an increase month-to-month in 2023 as well.

Adult-use cannabis in Illinois just passed the four-year mark, and 2023 was a particularly strong year for the state’s sales. The Illinois Department of Financial and Professional Regulation stated that total sales amounted to $1.2 billion last year, with 42 million items sold, which is a 15% increase from numbers in 2022 according to CBS News. “The legalization of adult use cannabis was the start of uplifting the communities most impacted by the failed war on drugs,” Lt. Governor Juliana Stratton said last year. “The benefits from these sales will be used to continue investing in our economic growth in historically disinvested populations.”

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Virginia Governor Glenn Youngkin on Thursday vetoed a bill to legalize recreational marijuana sales, saying that regulated sales of cannabis would be a danger to health and safety. Virginia legalized the possession of small amounts of weed three years ago, but consumers remain without a legal way to purchase cannabis in the state.

The governor vetoed two identical bills passed by each chamber of the state legislature, SB 448 in the Senate and HB 698 in the House of Delegates. The legislation would have established a regulated cannabis market in Virginia, including provisions for the licensing of small and large retailers. 

Virginia lawmakers legalized the possession of small amounts of marijuana for adults in 2021. But when the Republicans took control of the House of Delegates following an election later that year, a required second vote to legalize regulated cannabis sales was never held. 

“The proposed legalization of retail marijuana in the Commonwealth endangers Virginians’ health and safety,” Youngkin said in his veto statement. “States following this path have seen adverse effects on children’s and adolescent’s health and safety, increased gang activity and violent crime, significant deterioration in mental health, decreased road safety, and significant costs associated with retail marijuana that far exceed tax revenue.”

“It also does not eliminate the illegal black-market sale of cannabis, nor guarantee product safety,” the governor continued. “Addressing the inconsistencies in enforcement and regulation in Virginia’s current laws does not justify expanding access to cannabis, following the failed paths of other states and endangering Virginians’ health and safety.”

While Youngkin had previously made it clear he was not interested in authorizing regulated weed sales in Virginia, Democrats had hoped the legislation which serve as a bargaining chip in negotiations for a plan supported by the governor to build a $2 billion sports complex in northern Virginia. But earlier this month, the legislature passed the state’s final budget without including funding for the proposal, setting the stage for Thursday’s veto of the cannabis sales bill.

Lawmakers Blast Veto

Democratic Delegate Paul Krizek, the lead sponsor of the weed marketplace bill in the Virginia House of Delegates, said that the governor’s veto will further empower the state’s unregulated weed economy.

“Governor Youngkin’s failure to act allows an already thriving illegal cannabis market to persist, fueling criminal activity and endangering our communities,” he said in a statement cited by Politico. “This veto squandered a vital opportunity to safeguard Virginians and will only exacerbate the proliferation of illicit products, posing greater risks to our schools and public safety.”

Democratic state Senator Aaron R. Rouse, the sponsor of the Senate version of the bill, also decried Youngkin’s refusal to approve the legislation.

“This veto blocks a pivotal opportunity to advance public health, safety, and justice in our Commonwealth,” Rouse said in a written statement to the Associated Press.

Rouse further criticized Youngkin’s veto of the marijuana sales bills on social media, writing on X that the governor’s “dismissive stance towards addressing Virginia’s cannabis sales dilemma is unacceptable. Public servants are obligated to tackle pressing issues. This legislation would have combated the illegal market & ensured access to safe, tested and taxed cannabis products.”

Governor Also Nixes Cannabis Sentencing Bill

Youngkin also vetoed a cannabis sentence modification bill (SB 696) spearheaded by the Last Prisoner Project, a nonprofit working to secure the release of all cannabis prisoners. Adrian Rocha, policy manager at the group, denounced the veto as a continuation of outdated policy.

“Under the bill, thousands of individuals charged for cannabis offenses under outdated laws would have had their sentences reevaluated in light of legalization,” he wrote in a statement emailed to High Times. “Instead, the Governor’s veto message not only ignored the intention of this bill but, more importantly, ignored the plight of thousands of families across the Commonwealth whose lives have been permanently altered by prohibitionist laws repealed three years ago!”

“Virginia may have ended cannabis prohibition in 2021, but there remains a significant injustice for those individuals who continue to be incarcerated for offenses that are no longer considered illegal,” Rocha added.

Although Youngkin nixed both bills, Democrats still have another chance to make them law by overriding his vetoes. The legislature returns to the capitol on April 17 to reconsider bills vetoed or amended by the governor.

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Regulated marijuana sales in the United States are expected to exceed $31 billion this year, according to a recent economic forecast from a firm specializing in cannabis and hemp business consulting, data, and economic research. 

The projection from Portland, Oregon-based Whitney Economics estimates that legal sales of medical marijuana and adult-use cannabis will total $31.4 in 2024. The forecasted amount is an increase of $2.6 billion from 2023, representing a growth rate of 9.14% year over year.

The projection notes that legal sales of cannabis have been suppressed since the end of the COVID-19 pandemic, citing changes in consumer purchasing power, higher interest rates and delayed implementation of regulations in new markets as challenges facing the industry. Despite these factors, overall cannabis growth has remained positive. Legal cannabis sales declined in 10 states, however, an indication that new markets are needed for the industry to continue to grow.

Beau Whitney, chief economist at Whitney Economics, said that the new projection builds on a similar market analysis completed by the company last year.

“We are quite proud of our predictive analytics that resulted in last year’s forecast versus actuals being 98.3% accurate,” Whitney said in a statement about the new projection. “Although there are uncertainties in the near-term outlook, demand for legal cannabis in the U.S. will remain strong throughout the decade, with growth coming from newer markets.”

Regulatory Changes Needed For Continued Growth

The forecast projecting continued growth of regulated cannabis sales was welcomed by executives in the cannabis industry. Some noted, however, that the industry’s continued growth will depend on regulatory changes that permit cannabis businesses to operate like those in any other sector, including engaging in interstate commerce and access to banking services.

David Craig, chief marketing officer of Missouri licensed cannabis producer Illicit Gardens, said “It should be clear by now that cannabis isn’t going anywhere.”

“If the federal government is going to drag its feet on descheduling, then it’s up for the states to take the lead in removing regulatory hurdles to operators, especially multi-state ones,” Craig wrote in an email. “What most outside the industry don’t realize is the extreme burden operating without uniform standards across legal states.”

“It’s time for a coalition of states to come together and standardize the basics: packaging and labeling requirements, compliance fundamentals, marketing, and other restrictions,” he added. “Operating even in two contiguous states right now is practically the same as operating in two different countries. Resolving those disparities is an easy win for business and government alike.”

Sarah Carter, communications director at Symple Seeds, said that it is “fantastic to see the continued growth of the legal cannabis industry.” 

“This significant increase of $2.6 billion from the previous year underscores the momentum and potential within the market.” Carter wrote in an email to High Times. “However, amidst this success, it’s crucial to acknowledge the persistent challenge of limited access to banking for cannabis businesses. This obstacle not only hinders the industry’s ability to operate efficiently but also poses risks in terms of safety and transparency.”

Legislation that would allow businesses in the regulated cannabis industry to access traditional banking services has been passed in the U.S. House of Representatives more than half a dozen times in recent years. An updated version of the bill, known as the Secure and Fair Enforcement Regulation Act is pending before the U.S. Senate. In a statement last fall, Majority Leader Chuck Schumer of New York said that he intends “to bring the SAFER Banking Act to the Senate floor with all due speed.”

“Addressing this banking issue is paramount for unlocking the full potential of the cannabis sector,” said Carter. “With proper access to banking services, businesses can streamline operations, improve financial transparency, and foster greater investor confidence. Moreover, it would facilitate responsible business practices and compliance with regulatory requirements.”

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Long Beach, California is on track to establish an ordinance that will give cannabis retailers a minor tax break and reward the ones in good standing on their payments with a bigger tax break, cutting their local tax in half.

At a Jan. 23 meeting, Long Beach City Council members voted to request an ordinance be drafted to lower rates for businesses that meet hiring and compensation markers and are up to date with their current tax payments.

City leadership has been aware about the significant tax burden impacting cannabis businesses across California. Not only in Long Beach, but California’s entire cannabis supply chain faces a chronic debt problem, and the SF Gate called it an “extinction event” last year. In one move, state law recently shifted the burden of excise taxes from distributors to retailers. Over a dozen cities and counties in the state cut taxes to assist retailers with this dilemma.

The tax break fulfills a goal set on April 20, 2023, when the Long Beach City Council vowed to lower tax rates as part of the 2024 annual budget, the Signal-Tribune reported. “We should be aiming to create a positive feedback loop: reduce the tax burden on local operators, allow them to be competitive and expand their businesses, while rewarding those high road employers and operators who make investments back into our community, all while nurturing a new revenue source for the city,” said Councilmember Joni Ricks-Oddie, who brought the item forward.

As of the last count available in 2023, Long Beach was home to 32 retail cannabis stores and 37 cultivators. During the Prop. 215 era, the city was home to even more medical cannabis dispensaries.

Long Beach Post News reports that Tuesday’s vote advanced a cut at 1 percentage point for retailers with the opportunity to qualify for an additional 3 percentage-point drop if they meet “good standing requirements.” Cannabis cultivators would also get a similar tax break. Their square-footage tax was cut from $14.96 to $13.09, the equivalent of a 1 percentage point cut.

The Tax Burden Imposed on California Cannabis Businesses

A tax break couldn’t come sooner. The city of Long Beach currently imposes a 6% excise tax on medical cannabis transactions and 8% on recreational adult-use cannabis sales, on top of the city’s sales tax of 10.25% and the state’s excise tax of 15%. The state taxes have been imposed since adult-use cannabis use became legal in California in 2016

Long Beach adult-use cannabis sales generated $9 million tax revenue of around $13 million in cannabis tax revenue the city expected to collect in 2023. Several city council members expressed concern over the unpaid taxes, preferring to bring those payments up to date before giving businesses any kind of special tax breaks.

“I do think we should have a heavy hand for those businesses that haven’t been compliant with our taxes,” Councilmember Al Austin said at Tuesday’s meeting. “The city needs that revenue.”

In order to be eligible for the larger tax breaks, retailers would have to be up to date with licensing and tax payments, and they would have to meet several other requirements. They would also have to ensure that at least 40% of their staff are Long Beach residents and that they are paying their employees between 110% and 115% of the state’s minimum wage. Retailers would also have to support equity businesses by keeping their products on shelves or providing mentoring and incubation support for equity operators.

If the changes are fully implemented, the tax cuts are projected to cost the city about $3 million annually.  The 1 percentage point cut for retailers across the board is expected to cost the city just over $1 million, according to data presented to the council.

Many local residents complained in recent months that the equity program to support cannabis stores from low-income, justice-impacted residents has resulted in just one successful equity applicant and asked the city to do better.  Others said there’s a great opportunity in the city. Long Beach Green Room owner Adam Hijazi, for instance, said that Long Beach could cut tax rates in order to support legal cannabis businesses and create a cannabis destination in the city. 

The city hopes to follow in the footsteps of other California cities like Santa Ana, in providing tax relief by prioritizing businesses that are in good standing, and the ones that give their employees more than minimum wage or provide career opportunities. 

Santa Ana took a similar step and implemented a 1% tax cut for most cannabis stores in the city and an additional 2% for “high road” employers. 

The council will still have to vote on the ordinance twice before the changes take effect, something that’s expected to happen in the coming months.

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Is a town in Colorado the first to become a cannabis ghost town? Westword’s Thomas Mitchell reported that the green rush of cannabis business licenses in Colorado left the town of Ordway a “ghost town,” filled with vacant growing operations.

Hasn’t this happened before? Out of the hope of profitable veins of gold sprung boomtowns during the California Gold Rush, a mid-19th century rush of people seeking a fortune from gold. Bodie, California, for instance, soared to over 8,000 people looking for gold until its resources were exhausted. It happened in Colorado, too. Cripple Creek, Colorado soared to over 55,000 people looking for the same. Once the gold resources were drained, people more or less abandoned them, leaving ghost towns.

There’s a new boomtown phenomenon happening right now: cannabis.

Ordway—only a few years ago—was a cannabis boomtown. The town is about 50 miles east of Pueblo in Crowley County, with a population of around 1,000 people. Ordway had 56 active growing facilities at its peak, Westword reports, and around seventy grow operations there were registered with the state Marijuana Enforcement Division by the end of 2022. But recently, there are only about 20 left, according to local licensing officials.

Most of these grow operations weren’t able to survive 2023: From December 2022 to December 2023, the number of adult-use cannabis grow operations saw a 30% drop in the state’s cannabis workforce and a major decline in dispensary sales since pandemic restrictions ended.

Bubba’s Kush Cultivation is a small batch craft cultivator, based in Ordway, focused on providing a clean, consistent, quality product. The team behind Bubba’s Kush is concerned about the future of growing in Ordway.

“I’ve seen equipment left out in fields by people who couldn’t figure it out, and entire crops left to dry outside. No one has to worry about it being stolen. There’s barely anyone here—and what is it really worth, anyway?” cannabis cultivation Bubba’s Kush founder Chris Kaiser asked Westword.

Kaiser said he can throw a rock from his parking lot and hit one of a half-dozen failed cultivations. “That one’s closed. That one’s closed. That one’s closed,” he said. “A lot of people have just up and left. One guy is asking for $1.3 million. Ha—good luck with that.”

He said cannabis operators were promised endless potential for profit in the cannabis industry, but that’s not what ended up happening.

“Even if you’re still open, you’re struggling. Being a cannabis grower was never all it was cracked up to be, but this is getting out of control,” he says. “I guess this is what it takes if you want to win. It’s a tough scene, and I don’t think it’s going to get any easier.”

The price of wholesale cannabis reached record-low prices in Colorado, according to the state Department of Revenue, falling over 56% on average since Bubba Kush’s first harvest in 2021.

Local cannabis activist Mason Tvert admitted not everyone is cut out to survive in the cannabis industry, especially during the past few years.

“It’s been a unique period of time for all businesses, especially cannabis businesses,” Tvert told Westword. “Inflation, COVID-19 and staffing have all created real issues, so I’m not terribly surprised with how it’s played out. Anyone who’s looking at this industry should be wary of the potential for dramatic changes. With something this new and varied around the country, there are a lot of people who just want to open a marijuana store because it’s exciting, fun or unique. As people were doing that, though, we sort of realized that ten years from now they would be owning a liquor store, but with more rules.”

Decline in Colorado Cannabis Sales

The state has undergone a tough period over the past several years. In 2022, High Times reported on the decline in sales.

Sales of both medical and recreational cannabis in Colorado plummeted in June 2022 compared to the previous year, the state’s Department of Revenue reported, an alarming decline that industry officials attribute to a variety of reasons.

Medical cannabis sales totaled $19,235,656 in June—down from $34,534,293 in June 2021. Recreational pot sales, meanwhile, generated $127,157,358 in June—down from $152,719,813 in June 2021.

Colorado cannabis sales continued a downward trend in November 2023 as adult-use and medical cannabis retail locations generated $110.5 million in revenue, the lowest monthly total since February 2017.

Adult-use sales fell to $95.8 million, down around 16% year-over-year, according to data recently released by the Colorado Department of Revenue. Medical cannabis sales in November dropped to $14.5 million, down about 11.5% year-over-year. November marked the fourth consecutive month of a decline in sales in Colorado’s cannabis market, suggesting that the state is headed for its second consecutive year of significant declines in pot sales.

Colorado’s 2023 cannabis sales are on track to reach about $1.5 billion, which would be down nearly 13% from 2022.

Major declines in sales like this have left so-called “ghost towns” like Ordway, full of vacant cannabis-related properties.

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