Regulated sales of marijuana in Arizona topped $1.4 billion last year, according to state data, marking the third year in a row that licensed weed sales have exceeded $1 billion in the Grand Canyon State. Sales of recreational marijuana totaled more than $1 billion in 2023, while sales of medical cannabis brought in nearly $350 million, the Arizona Mirror reported on Tuesday.

Arizona’s continued strong weed sales were welcome news for the state’s licensed cannabis businesses. Luke Flood, senior vice president and West regional leader for multistate operator Curaleaf, said, “Arizona has been a strong success story for us, and has become one of the top markets in the country for Curaleaf.” 

“Since the launch of adult use, we have seen a lot of consolidation in the market on the retail side, along with a multitude of new third-party brands and products coming into the market, resulting in a wider selection for consumers at an affordable price,” Flood wrote in an emailed statement. “Uniquely, Arizona offers one of the lowest prices per gram at the retail level in the country.”

Adult-Use Sales Dominate the Arizona Market

Adult-use cannabis sales came to $1.1 billion in 2023, according to data from the Arizona Department of Revenue (ADOR), or about 72% of the year’s total sales. The year before, recreational marijuana sales contributed 70% of the yearly total. In 2021, the year adult-use cannabis sales began in Arizona, recreational weed made up only 45% of the state’s total cannabis market.

“Reaching $1.4 billion in sales is a huge milestone for the state and I think it speaks to the wider efforts of de-stigmatization surrounding the plant,” Josh Hirschey, president of Arizona-based concentrate manufacturer Timeless, said in a statement.

“The consumer demand for high-quality cannabis is there and Arizona brands are strategic in navigating natural limitations to normalize the plant,” he added.

Monthly sales of recreational marijuana have totaled between about $80 million and $93.5 million since July 2022, peaking in March 2023 at $100 million. In January, adult-use sales dropped to $76.8 million, the first time in 18 months the figure was below $80 million.

Medical cannabis sales totaled $348 million last year as the market for medicinal weed in Arizona continues to decline. Medical sales hit a monthly sales record of $73.4 million in April 2021 and have steadily decreased nearly every month since then.

The decline in medicinal cannabis sales has coincided with a drop in the number of registered patients in Arizona’s medical marijuana program. Last month, the total number of medical marijuana cardholders was 111,168, down from the peak of 299,054.

Weed Taxes Fund Social Services

Arizona levies a 16% excise tax on adult-use cannabis sales in addition to the usual sales tax. Medical patients pay the sales tax of about 6%, depending on the area. Additionally, local jurisdictions add a tax of about 2% to all weed sales. 

Last year, cannabis excise taxes totaled $172.8 million. Since recreational marijuana sales began in January 2021, the marijuana excise tax has generated $451 million in revenue for the state.

Approximately one-third of Arizona’s marijuana tax revenue is earmarked for community college and provisional community college districts and 31% is dedicated to fire departments, fire districts, law enforcement and other first responders. One-fourth of state cannabis taxes are reserved for the Arizona Highway User Revenue Fund, while 10% is dedicated to the justice reinvestment fund supporting public health services, counseling, job training and other social services for communities that have been disproportionately affected by the War on Drugs.

Although Arizona’s cannabis market has begun to stabilize, many of the state’s weed retailers are still optimistic about this year. Eivan Shahara, CEO of Mint Cannabis, said the business is “anticipating an even busier 2024, as we prepare to employ more people to serve more customers at our additional dispensary locations.”

“The marijuana industry is blossoming into a significant job creator,” Shahara wrote in an email to High Times. “It’s estimated that the cannabis industry employs about 500,000 full-time equivalent positions in the U.S., with about 280 new jobs being added daily. This showcases a promising trend, as more than 100,000 new jobs were established in the previous year, making the cannabis industry one of America’s fastest-growing job sectors.”

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California was the first state to legalize medical cannabis back in 1996, 20 years later ushering in adult-use legislation. Now, the Golden State has the single largest cannabis market in the world. 

As cannabis has gradually become more ingrained into the fabric of the state, and the country as a whole, it appears that California residents are increasingly more supportive of the market.

The California Department of Cannabis Control (DCC) recently released survey data exploring the modern-day stances of Californians regarding the state’s cannabis market. The survey was conducted by FM3 Research as part of the DCC’s Real California Cannabis Campaign, which aims to help consumers easily find and verify licensed dispensaries in the state.

FM3 Research interviewed more than 1,000 California adults to compile the data.

Growing Support and the Responsibility to Uplift the Legal Market

One of the most prominent discoveries from the survey shows that 62% of Californians believe that Proposition 64, the voter initiative that legalized recreational cannabis, has had a positive impact on the state. The initiative was originally passed with 57% voter support, so the figure implies that cannabis reform in California has garnered more support over time.

The poll also found that 86% of Californian adults believe that it is important to purchase cannabis from the legal market, while similarly 72% said they believe consumers have a responsibility to verify they are purchasing cannabis from licensed retailers.

Even though California boasts the largest cannabis global cannabis economy, illicit sales are still highly prominent. A 2022 Reason Foundation report said that roughly two-thirds of total cannabis sales in the state still come from the illegal market. 

The California Unified Cannabis Enforcement Taskforce (UCETF) also recently released its first annual report detailing the money, illegal cannabis plants/products and firearms obtained in its seizure operations from last year. In 2023, the task force said it seized more than $312 million in illegal cannabis, 189,854.02 pounds of cannabis, eradicated 317,834 cannabis plants, served 188 search warrants, seized 119 firearms and seized $223,809 of money on-site.

Though, according to DCC Director Nicole Elliot, the UCETF has made serious progress in eliminating illegal operations, leveraging the resources of more than 20 state agencies and departments alongside the taskforce’s local and federal partners. 

“The UCETF’s progress in 2023 reflects California’s ongoing commitment to disrupting and dismantling illegal cannabis activity,” Elliott said. “I look forward to working with all our partners in 2024 to build on this progress.”

Education Gaps in the California Cannabis Industry

While it appears to be a widely shared belief that residents must take it upon themselves to seek out legal cannabis retailers, the survey also sheds light on some education gaps surrounding the legal cannabis market among Californians. 

The survey found that 85% of respondents living in areas where retail cannabis is not allowed either incorrectly believed that cannabis was allowed in their region or simply didn’t know what the local laws were at all.

Elliott highlighted this piece, saying that education and enforcement are two crucial pillars that help to support a well-regulated cannabis market.

“The Real California Cannabis campaign will provide cannabis consumers with information that empowers them to make informed decisions regarding their cannabis purchases,” Elliott said. “These smart choices support safer communities, local businesses, and our continuous efforts to disrupt the illegal market.”

Though, when it comes to actually identifying a licensed or unlicensed cannabis business, respondents also appeared to be split: 44% said that it was easy to identify if a retailer was licensed, while 42% said it was difficult to recognize the distinction.

Additionally, the polling results showed that 88% of respondents who have consumed cannabis said they would purchase it from a licensed retailer and more than half (56%) said they have used cannabis.

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Bank of Guam announced in a press release on Wednesday that the launch of “Cannabis Banking” will give it a “platform [to allow] cannabis clients the ability to share data from their day-to-day business activities, such as sales, inventory and required licensing documentation.” 

According to The Guam Daily Post, “Cannabis Banking” will make the institution the first in the region “to serve ‘all tiers’ of cannabis-related businesses, or CRBs.”

“It has always been the mission of our founder to serve the underserved and to provide access to safe and secure banking services to our communities. This now includes our cannabis-related businesses. As your partner in growth, we are committed to extending our expertise as trusted financial advisers to this new industry and to allow our local cannabis-related businesses who follow the process and play by the rules, a fair chance to succeed,” Bank of Guam President and CEO Joaquin L.G. Cook said in the press release, as quoted by the Guam Daily Post.

Per the outlet, Bank of Guam will begin this month to “offer deposit and lending services to CRBs in Guam and Saipan legally licensed to engage.” Those CRBs are “organizations or businesses that grow, process, dispense, administer or derive income from selling marijuana products,” according to the Daily Post, which offered the following breakdown of the qualifying businesses:

“(Tier 1) Direct Cannabis-Related Businesses: Businesses licensed to touch the plant directly. Types of direct CRBs include adult use/medical use, retail, processing, cultivation, dispensaries, seed producers, testing, delivery and consumption lounges. (Tier 2) Indirect Cannabis-Related Businesses: Includes industry-specific professional services. Types of indirect CRBs include operations support such as attorneys and accountants, landlords, hydroponic suppliers, packaging suppliers, delivery device suppliers, security firms, cannabis consultants, marijuana testing facilities, employment/payroll providers and cannabis software providers. (Tier 3) Hemp-Related Businesses: Businesses licensed by the United States Department of Agriculture or state regulatory agency to grow, test, or otherwise prepare hemp. (Tier 3) Cannabidiol Businesses: Businesses engaged in the production or sale of hemp-derived cannabinoids intended for human or animal consumption, as regulated by the Food and Drug Administration.”

Guam legalized recreational cannabis in 2019 with the “Guam Cannabis Industries Act,” which, per NORML, “legalizes the personal possession of marijuana by adults, and establishes regulations governing the plant’s commercial production and retail sale.” 

NORML continued: “The law permits those age 21 or older to legally possess and transfer up to one ounce of marijuana flower and/or eight grams of concentrated cannabis. The measure, which took immediate effect, also permits adults to privately cultivate up to six cannabis plants (no more than three mature) in an ‘enclosed, locked space.’ Public consumption of cannabis will remain a violation of law. The Act creates a new regulatory board to draft rules governing the plant’s commercial production and retail sale. The board has a one-year timeline to adopt rules necessary to permit for the operation of licensed cannabis establishments.”

Guam’s regulated cannabis market has been slow to take shape, however. In 2022, it was reported that no one had applied for a cannabis retail license yet. 

According to the Guam Daily Post, the “cannabis industry has yet to take off on Guam as there have been various roadblocks, including permitting issues that have affected at least one potential cultivator.”

The outlet said that Guam is still awaiting clearance on a crucial testing laboratory. 

“A testing laboratory is integral to developing a commercial cannabis industry on Guam. No cannabis or cannabis products can be sold without being tested for potency and safety. Essentially, without a testing laboratory, there can be no industry on the island under the current regulations,” the outlet explained.

In 2021, Guam’s governor, Lou Leon Guerrero, said that the territory had reached an agreement with a U.S.-based company called Metrc to oversee the cannabis regulatory systems. Guerrero’s office said at the time that Metrc’s “system combines advanced software, radio-frequency identification (RFID), a dedicated customer support team, and a secure database to track cannabis from growth, harvest and processing, to testing, transport, and sale,” and that the company “holds exclusive government contracts in various areas of the United States, including Alaska, California, and Washington, D.C.”

“Over the last decade, we have seen substantial evidence that cannabis has medicinal benefits. With the final review by our Cannabis Control Board on the rules and regulations for the industry, we can more efficiently control recreational use and ensure safe and regulated products,” Guerrero said at the time. “The cannabis industry will benefit our community by funding expanded public services in health and public safety, and providing alternative treatment and rehabilitation for people who need it.” 

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Sales of cannabis in Arizona have exceeded $1 billion this year, according to data from the state Department of Revenue. Total marijuana sales eclipsed the billion-dollar mark in September, marking the third straight year the state’s weed sales have reached the seven-digit milestone. 

So far this year, Arizona’s sales of adult-use cannabis have totaled $797 million, while medical marijuana sales reached $267 million, bringing the total for 2023 through September to $1.1 billion. The state’s overall cannabis volume since recreational marijuana sales began in January 2021 has now reached $4 billion, with sales of adult-use cannabis contributing $2.5 billion to the total.

Arizona voters legalized the medical use of marijuana in Arizona in 2010 with the approval of Proposition 203, which received just over half of the vote. The first licensed medical marijuana dispensary in the state began serving patients on December 6, 2012. 

Recreational marijuana was then legalized in the state with the passage of Proposition 207 in 2020. Known as the Smart and Safe Act, the ballot measure was approved by 60% of voters. Regulated sales of recreational marijuana began on January 21, 2021, less than three months after the ballot measure succeeded at the polls.

Arizona Department of Revenue (ADOR) cannabis sales data from August and September of this year show that medical marijuana accounted for about one-third of the state’s total sales, according to a report from the Arizona Mirror. The ratio of medical marijuana sales to sales of adult-use cannabis continues a trend the state has seen over the last year, leading to the lowest total recorded sales of medical marijuana ever.

Sales of medical marijuana in September were just under $27 million, down from $28.7 million the previous month. September’s figure marks the lowest monthly total for medical cannabis sales since regulated sales of adult-use cannabis began nearly three years ago. The last time monthly medical marijuana sales topped $30 million was in June. Medical marijuana sales have steadily declined in Arizona since the peak of $73.4 million in April 2021. Total medical weed sales have not exceeded $40 million in a single month since June.

Sales of adult-use cannabis totaled $85.8 million in August and just over $80 million in September. Recreational cannabis sales hit their highest monthly total in March of this year at $100 million. Sales of recreational pot have exceeded $80 million per month since dropping below $90 million in May. Since first reaching $80 million in March 2022, sales of adult-use cannabis have only failed to reach that level twice—in May 2022 at $79.3 million and June 2022 at $77.2 million.

Eivan Shahara, the CEO of Mint Cannabis, a multistate operator that opened its sixth dispensary in Arizona last week, says that the state’s dip in cannabis sales coincided with changes in the way consumers are shopping.

“In terms of consumer spending, we’re seeing cannabis customers visit our dispensaries more frequently with smaller basket sizes. During the pandemic, we saw customers visit less frequently but with larger basket sizes,” Shahara writes in an email to High Times. “We’re responding to this trend by continuing to offer day-of-the-week deals, stock up and save promotions, giveaways, and buy-one-get-one offers to drive additional traffic and sales at our locations. We have also responded by incorporating more conveniences like online ordering and drive-thru pick up.”

Weed Taxes Generate Millions

Arizona levies a 16% tax on recreational marijuana sales in addition to approximately 6% in sales tax. Medical marijuana patients pay only sales tax on their purchases of cannabis. Local jurisdictions add additional taxes of about 2% to recreational marijuana sales.

About a third of cannabis tax revenue collected in Arizona is dedicated to community college and provisional community college districts, while 31% is dedicated to law enforcement, fire departments, fire districts and other emergency first responders. A quarter of state marijuana taxes go to the Arizona Highway User Revenue Fund, while 10% is reserved for the justice reinvestment fund, which supports public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by nearly a century of cannabis prohibition.

So far for 2023, the state has collected $174.5 million in excise taxes on recreational marijuana. During the 11 months of regulated sales in 2021, taxes on adult-use cannabis generated $32.9 million for the state’s coffers. The total spiked the following year, with the excise tax on recreational weed jumping to $132.8 million. Overall, the excise tax has generated more than $391 million in revenue for Arizona since regulated sales of adult-use cannabis began.

Arizona collected $13.7 million in August and $12.8 million in September from taxes on recreational marijuana sales. So far in 2023, the excise tax on adult-use cannabis has generated $174.5 million in revenue. Tax revenue on medical marijuana came to $2.4 million in August and $2.2 million in September.

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Oregon cannabis producers grew too much weed again this year, according to a new report, continuing the glut of marijuana that has plagued the state’s regulated pot industry for years. 

For much of this year, analysis of Oregon’s production of cannabis showed that the state was on a downward trend compared to last year, leading to a modest increase in prices. But a new report from state economists Mark McMullen and Josh Lehner that was released on November 20 shows that this year’s fall harvest of outdoor weed pushed this year’s total crop beyond production levels posted in 2022.

“Through the first nine months of the year, the marijuana harvest was nine percent lower than a year ago, and 15 percent lower than the record crop back in 2021,” the economists wrote. “As the market appeared to be adjusting, prices were stabilizing. That changed with the large October outdoor harvest which is 15 percent larger than last October.”

Oregon’s cannabis cultivators have been growing more weed than the state’s consumers can smoke for at least five years. Mark Pettinger, a spokesman for the Oregon Liquor and Cannabis Commission (OLCC), said last year that the problem is caused in part by the difficulty operators and regulators have in predicting weed production. Because much of the state’s weed is harvested at the same time, the industry can be slow to adjust to changing market conditions at the wholesale and retail level.

“It’s because about 85% of the crop is grown outdoors, comes down in October during harvest time, but planting planning is made the following April — which there really hasn’t been enough time to really gauge how the harvest from the previous fall is impacting the market,” Pettinger told a local television news outlet in 2022.

Weed Oversupply Challenges Industry

The glut of weed in Oregon’s regulated market has wreaked havoc on the industry for years. Because of the oversupply, prices on wholesale cannabis and retail products have plummeted. While the decline in prices is welcomed by most consumers, cannabis companies have been left with dwindling margins and falling, or nonexistent, profits. As a result, producers, wholesalers and retailers throughout the state are having a difficult time making ends meet.

Beau Whitney, a Portland-based economist who monitors cannabis prices in Oregon and throughout the United States, said that more than one-third of respondents to a cannabis industry survey said that they are having difficulty paying their taxes. Even more said that managing debt is a problem. 

Whitney said that the latest report of Oregon’s abundant fall harvest “couldn’t have come at a worse time.”

“People are walking away from cannabis licenses or selling them for pennies on the dollar,” Whitney told Willamette Week.

The slump in cannabis prices has also been reflected in the collection of Oregon’s weed taxes. Throughout the state, tax delinquencies are up and cannabis tax revenue has fallen short of estimates for four of the past five quarters.

Whitney noted that Oregon regulators could spur an increase in cannabis prices with a curb in production, which could be accomplished by limiting the number of licenses or their capacity. But Pettinger of the OLCC said that the current oversupply conditions are the result of intentional policy decisions coupled with the federal government’s continued refusal to legalize cannabis, which would open up markets across the country for Oregon’s weed growers.

“The state and the industry and elected officials envisioned Oregon becoming a net exporter under federal legalization,” Pettinger says. “The oversupply we’re seeing underscores the dilemma in all states where marijuana is legal—it’s the equivalent of an Iowa corn farmer only being able to sell his crop within Iowa.”

Falling Prices Lead Trade Groups To Merge

Falling weed prices and the resulting instability of Oregon’s cannabis industry led two industry groups to join forces in a recent merger. The two groups, the Oregon Cannabis Association and the Cannabis Industry Alliance of Oregon, announced the merger last month following unanimous votes by the boards of directors of each organization. 

“There’s a lot of knowledge, there’s a lot of passion, there’s a lot of really educated folks within the cannabis industry in Oregon,” said Hunter Neubauer, board member of the combined trade group. “Those folks need one place to go to, where they can take a little bit of money that they have, and hopefully become members, and show up with us in Salem and advocate for reasonable regulations and future opportunities for the industry.”

The newly merged group is named the Cannabis Industry Alliance of Oregon and represents more than 500 member businesses in the state’s licensed cannabis market, which generates about $1 billion in sales annually.

“It’s a community that we all really value and we want to see survive and thrive,” Mike Getlin, the board chair of the Cannabis Industry Alliance of Oregon, told local media. “We want something more than a bunch of minimum wage jobs owned by out-of-state and potentially even overseas financial interests. So that’s what this fight is really about for us.”

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The Palm Springs City Council voted last week to put a temporary moratorium on issuing new cannabis licenses while civic leaders consider steps to rein in the growth of the regulated weed industry. The council voted 4-0 to issue the 45-day moratorium, with Councilmember Christy Holstege recusing herself from the vote because her husband has business ties to the cannabis industry.

Palm Springs, a city in the southern California desert with nearly 46,000 residents, has issued 33 licenses for cannabis retailers to operate in its jurisdiction, at least 27 of which are operational. The city thus has one dispensary for every 1,700 residents, a saturation of weed shops that is reportedly the highest in the Coachella Valley and one of the highest statewide.

The proliferation of pot dispensaries in Palm Springs has prompted some city leaders and cannabis business owners to call for steps to control the growth of the industry. Prior to Thursday’s meeting, city staff told the council that several policy options were up for discussion. Recommendations to the city council include capping the number of dispensary licenses at 15, although it is unclear how such a limit would affect current license holders. 

City staff also recommended limiting owners to one dispensary in the city, banning the sale or transfer of existing cannabis licenses and cutting the city’s cannabis taxes, which are among the highest in the Coachella Valley. A report provided to the council showed that the city’s cannabis tax revenues declined for the second fiscal year in a row. Average sales per dispensary in the city of Palm Springs have also dropped. Cannabis taxes in other cities in the Coachella Valley have also been declining, according to the report. 

City staff also recommended putting a 45-day moratorium on issuing new dispensary licenses while the council considered the recommendations.  

“I just want everyone to know this isn’t a ban. This is simply a pause,” Veronica Goedhart, the director of special program compliance for Palm Springs, told the council prior to Thursday’s vote. “A pause for us to sit back, take a look at the current regulations, the current market conditions, and try to make it better for the future.”

“We do have an oversaturation of retail businesses in Palm Springs. Our city is not very large, and we have the largest number of dispensaries in the Coachella Valley per capita,” Goedhart added. “The industry is facing a lot of challenges with taxes, and then the competition with the oversaturation. so we really want to revisit what we can do to prevent the industry from collapsing.”

As the city council discussed the recommendations, Councilmembers Jeffrey Bernstein and Lisa Middleton appeared to be in favor of taking steps to limit the number of dispensaries in Palm Springs, according to media reports. Mayor Grace Garner and Councilmember Ron deHarte seemed unsure about the prospect. In addition to declining to vote, Holstege recused herself from the discussion on the issue.

Bernstein said that he supported the cap on dispensaries because of a spike in commercial rents in areas where dispensaries are allowed. This has led longtime business owners to lose their leases, only to see the new pot shop quickly fail because of market oversaturation. Bernstein also said he believes that the city has harmed the nascent regulated cannabis industry by allowing it to grow too quickly.

Middleton also expressed concern about the cannabis industry’s effect on the real estate market in Palm Springs, agreeing that many of the existing weed shops will likely eventually fail. She was not convinced that the city’s pot taxes are too high, saying that oversaturation in the retail market was more likely responsible for its ills.

“What we’re seeing is city after city trying to cut their taxes significantly in order to save an industry that is just simply overpopulated with distribution points,” said Middleton.

The mayor asked city staff to analyze if the number of dispensaries is more than what is needed to serve the number of visitors to Palm Springs.

“I understand we have oversaturation in relation to our population,” said Garner, “but are we oversaturated in terms of the tourist economy we have?”

Garner also said that if the city council does decide to limit the number of cannabis licenses in Palm Springs, it should ensure that the changes allow for a diverse mix of businesses, including onsite consumption lounges. The mayor added that doing so would be necessary to accommodate the tourists who make up much of the local cannabis industry’s clientele.

The council decided only to enact the 45-day pause on new licenses during its meeting on October 26 while the other recommendations are considered. The moratorium currently is scheduled to end on December 10. The city council could extend the end during its next meeting, however, to give city staff more time to return with more data and new recommendations.

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As states throughout the country continue to legalize medical and adult-use cannabis, the federal de-scheduling and later legalization of cannabis is likely to come sometime in the near future. But what exactly comes with such a widespread shift in policy?

As we look ahead at the potential for federal legalization, a new report warns lawmakers about taking a thoughtful approach, namely accounting for the potential unintended effects that interstate commerce on the current intrastate cannabis markets could have on social equity and small cannabis businesses.

Report Highlights Unintended Consequences of Federal Reform

While the shift would better align federal policy with state-level reforms and public opinion, “it will also disrupt and force the transformation of existing intrastate cannabis markets,” the report by Parabola Center for Law and Policy opens. “How the nation will shift from dozens of individual state cannabis markets to one national market, and the implications of that shift, is unknown but likely to be dramatic.”

The report continues, “It is also safe to assume that many advocates for federal de-scheduling are not aware of the consequences such a policy change portends for existing and entrenched state cannabis policies.”

The report, titled “How to Federally Legalize Cannabis Without Violating the Constitution or Undermining Equity and Justice,” offers a blueprint for Congress to protect cannabis professionals in the industry, promoting justice with care to avoid undoing the progress states with legal cannabis laws have worked toward through the past decade. 

The American cannabis market is worth $33.8 billion, composed primarily of small business owners making up more than 10,000 businesses providing an estimated 400,000 jobs across the U.S.

The report was authored by Tamar Todd, an attorney whose primary experience is drug policy alongside her role as a U.C. Berkeley School of Law lecturer teaching cannabis law and policy.

Protective Recommendations for Federal Cannabis Legalization

The report makes three key constitutional policy recommendations to mitigate the risks of corporate consolidation and monopolization that may come with federal reform. Parabola also includes draft text addressing the potential solutions. 

The first recommendation explicitly preserves states’ rights to set their own cannabis laws “as designed and without disruption” in the face of federal reform. The report states that Congress should “specifically state that it does not intend to preempt, prohibit, or otherwise limit any state law, regulation, or requirement regardless of whether the state law affects interstate commerce or favors in state interests.”

The second recommendation deems that small, social equity and worker-owned cannabis businesses should gain priority in interstate cannabis commerce. These guidelines, per the recommendation, would be regulated through a registration system with the federal government, with registrations reserved for state-licensed entities that are involved in promoting industry diversity, that offer support and services to “disadvantaged individuals, veterans, or individuals and communities most affected by cannabis prohibition and enforcement” or protect the rights of workers to organize and co-own businesses.

Parabola also recommended a focus on avoiding U.S. Constitution’s Dormant Commerce clause violations. This clause prohibits states from preventing or restricting interstate commerce, additionally granting Congress the authority to regulate this type of commerce. Should cannabis see federal legalization, the report explains that state regulatory structures could open themselves up to liability under federal legalization should they keep their industries within their respective states. 

Still Time to Mitigate Risk

The report warns that, should the government legalize cannabis on a federal level without “explicit federal protections for state-based intrastate markets, everything will change once cannabis is de-scheduled. The world of legal cannabis will look nothing like it does now.” 

Without these protections, the report predicts that the end of federal legalization and demise of interstate barriers “will likely lead to consolidation of the cannabis industry and a monopolization of the market by large cannabis companies. Additionally, large corporations currently operating in other areas will enter the cannabis market once the risks and constraints of federal prohibition are removed.”

While there are surely benefits to federal cannabis legalization, the report argues that that market is “unlikely to prioritize the social equity goals that have driven many states’ existing policies.”

Parabola ultimately calls on Congress to protect state-level cannabis equity programs and limit market consolidation and monopolization, otherwise warning that “state efforts to create an equitable and inclusive industry will be wiped out.”

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Two cannabis industry groups in Oregon have decided to join forces in a merger that comes amid a downturn in the state’s market for legal marijuana. The two groups, the Oregon Cannabis Association and the Cannabis Industry Alliance of Oregon, announced the merger last week following unanimous votes by the boards of directors of each organization.

The newly merged group is named the Cannabis Industry Alliance of Oregon and represents more than 500 member businesses in the state’s licensed cannabis industry, which generates nearly $1 billion in regulated sales per year.

“There’s a lot of knowledge, there’s a lot of passion, there’s a lot of really educated folks within the cannabis industry in Oregon,” said Hunter Neubauer, board member of the combined trade group. “Those folks need one place to go to, where they can take a little bit of money that they have, and hopefully become members, and show up with us in Salem and advocate for reasonable regulations and future opportunities for the industry.”

Oregon legalized medical marijuana in 1998 through a ballot initiative that received more than 54% of the vote. That was followed by the legalization of adult-use cannabis in 2014, the same year the Oregon Cannabis Association was founded to serve as a lobbying and networking group for the state’s cannabis businesses. The Cannabis Industry Alliance was formed in 2022 through a separate merger of three groups representing regulated cannabis industry retailers and cultivators. 

“It’s a community that we all really value and we want to see survive and thrive,” Mike Getlin, the board chair of the Cannabis Industry Alliance of Oregon, told local media. “We want something more than a bunch of minimum wage jobs owned by out-of-state and potentially even overseas financial interests. So that’s what this fight is really about for us.”

Oregon Has Too Much Weed

Neubauer noted that since the launch of adult-use cannabis nearly a decade ago, the regulated industry has experienced two boom and bust cycles. Currently, an oversupply of recreational marijuana has depressed prices, resulting in the first contraction of the market since legalization. 

“The overabundance of supply throughout 2021 and 2022 resulted in historically low wholesale and retail prices for both usable marijuana and concentrate/extract products,” the Oregon Liquor and Cannabis Commission wrote in a report released in February of this year. “The declining prices, in combination with a tempering in the growth of quantities purchased, resulted in the first-ever decrease in annual sales (from $1.2 billion in 2021 to $994 million in 2022).”

The oversupply and drop in weed prices at the wholesale and retail levels came at a time of steep inflation throughout the economy as a whole, putting further pressure on operators in the troubled cannabis industry.

“It’s been … really tough because as you look at budgets in a really constrained market –less than 30% of businesses are profitable,” said Marianne Cursetjee, owner of Alabi Cannabis.

The challenging market has led to the failure of many businesses and the consolidation of others. The owners of the remaining firms hope that the merger of the two trade groups will help align the industry toward common goals. In addition to the troubled market, operators face other challenges including high taxes and regulatory fees as well as competition from a persistent unlicensed industry.

“If I look through my phone of all of my close friends and colleagues from 2017, very few are still in business,” said Mike Getlin, the board chair of the Cannabis Industry Alliance of Oregon and a leader at Nectar. “It is more important now than it’s ever been to speak with one unified voice and to work as one unified body with regulators and legislators to try and figure out a way to carve out a better future for our businesses.”

Oregon’s troubled cannabis industry has also had to weather the fallout of a scandal surrounding the cannabis brand La Mota earlier this year. According to data reported to the state, the company had failed to pay some taxes and was facing legal action from vendors. With attention on the company, it was revealed that then-Oregon Secretary of State Shemia Fagan had signed a pricey consulting contract with La Mota. Fagan resigned in May in the midst of the scandal, which Neubauer said has led to a rift in communication between the state legislature and the regulated cannabis industry.

“It’s been really tough since something’s surfaced surrounding one of the companies in Oregon and Shemia Fagan,” said Neubauer. “Our goal with the merger is to take the industry’s leaders and advocates that are still here and combine our resources so that we can show that was one bad apple.”

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In a sign that things are absolutely at a tipping point in Europe, the Mediterranean island of Malta became the first country in both Europe and the European Union (EU) to legalize recreational cannabis cultivation, possession and use. Luxembourg announced similar plans (and a similar model) about a month ago, but this will be (at least initially) limited to the public sale of seeds. 

While the bill still needs to be signed by the President, this is a small detail. In the words of the lawmaker who introduced the legislation into the Maltese Parliament, Owen Bonnici, this is in fact a “ground-breaking” moment. It also marks the first time a European legislative body has enacted recreational cannabis reform at a federal level. 

Despite a greater federal involvement in the regulation of the industry in Holland, even the Dutch have not gone this far. Switzerland is not in the EU.  Portugal and Germany are poised to move forward but have not yet. Luxembourg has come out of the shadows, but only to create a public seed market (for the time being).

Indeed, given the timing of such announcements, it is very likely that the Luxembourgian market and the Maltese one will develop along very similar timelines if not industry constructs.

The only difference of course is that in Malta, there is no grey area left. Cannabis specific outlets will be allowed to operate—albeit at a suitable distance from schools and youth centers.

Beyond this, consumers will be able to carry seven grams in public, grow up to four plants and keep up to 50 grams of cannabis at home.

The Birth of the European Recreational Cannabis Market

This development was only a matter of time. In the past months, recreational cannabis reform has been on the top of the docket all over Europe—even if not moving quite so quickly as in Malta. Most significantly, the new coalition government in Germany, Europe’s largest economy, has announced plans to legalize recreational use as early as next year. 

Luxembourg and Switzerland are both moving forward with limited trials. Portugal is also very likely to follow suit. Italy is also hovering around the edge of this question, with over half a million signatures gathered this summer to force the issue forward at the legislative level.

If there was a parallel, this is now a time very much like 2012 in the United States. Reform is now formally being accepted at a legislative level (although here it is at a sovereign rather than at the state level). In two years, there could be as many as five or six recreational reform states up and running.

What Does this Mean for the Industry?

Now is a very good time for American investors, in particular, to begin staking out a presence here. While flower and product cannot cross the Atlantic (at least not easily and without a few detours), investments can. The British are also circling. While reform has not (and probably will not come) as fast as it has on the continent, the equity markets in London are already a go-to place for those on the hunt for investment.

What has begun as a trickle this year is likely to become a veritable flood within the next six to 12 months.

German firms, particularly those who have managed to get into the medical space with an operational distribution license, have a clear advantage at the moment, across the region, simply because of the benefit of an early organizational head start.

Change at the EU Level

While such developments are clearly exciting, don’t expect all of this to be smooth sailing. There are still several big impediments that remain before the industry can operate more normally. While individual countries will begin to move in the recreational direction, the topic still needs to be addressed at a regional level. So far, the only place this has happened is with CBD (which still has not been adopted by many countries).

This will be an issue in (at least) the cross-border trade of cannabis—and for that reason, EU GMP is likely to play a much larger role, at least at first. German pharmaceutical specialty distributors will also have a clear advantage in the coming market—and not just in one country, but across the region.

Regardless, real cannabis change is finally coming. It just happened in Malta first.

And while it may still not make it into the top 10 most significant events in Maltese history, this development is certainly a marker of great change—and further, not limited to just this one, small European island.

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Regulators in New Jersey on Tuesday moved to award 30 new licenses for new medical cannabis dispensaries, a significant expansion of a program that has seen slow growth.

The state’s Cannabis Regulatory Commission voted to “more than [double] the number of retail locations for a growing pool of patients who for years complained about long commutes to obtain legal cannabis,” NJ.com reported.

The regulatory panel distributed the 30 licenses evenly throughout the Garden State, awarding “10 each in the central, northern and southern regions of the state,” according to the website.

The expansion will result in a significant uptick to the 23 dispensaries currently serving patients throughout the state. Those stores serve “an average of 5,300 patients per retail site,” NJ.com reported, and there “are about 5,000 patients enrolling every month—a pace that has not abated even with the prospect of a legal market for adult users opening in 2022.”

In October, the New Jersey Cannabis Regulatory Commission “accepted the recommendation to approve 14 of the 2019 medicinal cannabis business applications that had been previously held up due to a court-ordered stay of the review process,” with “10 applications for cultivation permits and four applications for vertically integrated permits” approved to “begin preparations to serve New Jersey’s medicinal cannabis patients.” Due to increased patient need, “five more cultivation permits were awarded than had been planned in 2019,” the commission said.

“The current alternative treatment centers have not kept pace with patient need,” said Dianna Houenou, the chairwoman of the Cannabis Regulatory Commission. “We constantly hear from patients that prices are too high and that there are too few dispensaries with too few product options. The situation has not changed with the legalization of recreational cannabis. Our priority is to our patients and increasing the planned number of medicinal cannabis operators in the market will greatly benefit them.” 

Last year, New Jersey voters approved a constitutional amendment at the ballot legalizing recreational cannabis use for adults. NJ.com reported that while the 30 licenses approved on Tuesday are for medical cannabis dispensaries, if those businesses so choose, “they will have a head start in expanding their customer base to adults 21 and over once the legal market opens some time in 2022.”

Despite the voters’ approval of the amendment, “a bill outlining the legitimate market did not reach Governor Phil Murphy’s desk until February,” the website explained, and the commission “did not introduce the first round of regulations needed to run until August.”

The commission “will start accepting applications for the adult-use market from cultivators, manufacturers and testing labs for the recreational market on December 15, and from dispensaries on March 15,” according to the website.

In February, Murphy signed a bill officially ending the prohibition on pot in New Jersey.

“Our current marijuana prohibition laws have failed every test of social justice, which is why for years I’ve strongly supported the legalization of adult-use cannabis. Maintaining a status quo that allows tens of thousands, disproportionately people of color, to be arrested in New Jersey each year for low-level drug offenses is unjust and indefensible,” Murphy said in a statement after signing the legislation into law. 

“This November, New Jerseyans voted overwhelmingly in support of creating a well-regulated adult-use cannabis market. Although this process has taken longer than anticipated, I believe it is ending in the right place and will ultimately serve as a national model.”

The new law, Murphy said, “will establish an industry that brings equity and economic opportunity to our communities, while establishing minimum standards for safe products and allowing law enforcement to focus their resources on real public safety matters.”

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