Assessing 5 state cannabis markets launched in the past year

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Opening day of adult-use marijuana sales at Housing Works Cannabis Co.

Customers line up outside Housing Works Cannabis Co., in Manhattan for the first day of adult-use marijuana sales in New York state. (Photo by MJBizDaily/Emerald)

Four states in the Northeast and Midwest launched adult-use marijuana sales in the past year, while one in the Deep South began medical cannabis sales.

This roundup highlights key developments in the past 12 months in New York, Connecticut, Missouri and Maryland – which all began recreational markets – as well as Mississippi, which launched MMJ sales.

Despite some setbacks, including a major recall and inventory shortages, the rollouts in Connecticut, Missouri, Maryland and Mississippi have gone fairly smoothly for operators.

New York, by contrast, has been plagued by financial and legal challenges from Day 1, according to industry insiders and MJBizDaily reporting.

Each market snapshot below – listed in chronological order – also showcases recent sales figures for these states,  MJBiz Factbook projections and market assessments from local operators:

NEW YORK

Adult-use market launch: Dec. 29, 2022.

Adult-use sales: $110 million through early December 2023.

MJBiz Factbook first-year projection: $900 million.

Key developments: New York’s recreational rollout has been rocky, as lawsuits, a dearth of funding for social equity licensees, municipal opt-outs and a shortage of retail properties have curtailed growth.

Other highlights:

  • Fierce competition from hundreds of unlicensed weed stores in New York City has sapped legal sales.
  • New York’s state Supreme Court on Dec. 1 lifted an injunction, which for months had delayed the approval and opening for hundreds of Conditional Adult-Use Retail Dispensary (CAURD) applicants and licensees.
  • Regulators recently greenlighted multistate operators to enter the adult-use market by Dec. 29, reversing an initial policy that imposed a three-year waiting period for the state’s vertically integrated medical marijuana providers or registered organizations (ROs).
  • The state had 32 licensed adult-use retailers, as of Wednesday, far below industry expectations.

Assessment: “We are seeing an eightfold increase in the pace of openings from the previous average of two stores per month,” said Nicolas Guarino, CEO of Naturae, a New York-based producer and distributor of hash, live rosin and distillate cannabis products.

“However, this is still not nearly enough for a state of roughly 20 million people and over 250 million tourists annually.

“As new stores come online throughout 2024, we may see some reckoning regarding unlicensed operations. Whether that will be from a regulatory standpoint or free-market factors playing a role, or likely both, this remains to be seen, but 2024 will bring more clarity than any year yet for New York cannabis.”

CONNECTICUT

Adult-use market launch: Jan. 10, 2023.

Adult-use sales: $112.1 million through October.

MJBiz Factbook first-year projection: $200 million.

Key developments: Connecticut’s initial adult-use rollout included only four producers – a catchall term for vertically integrated cultivators and manufacturers – and seven retailers, both among the lowest contingent of any recreational launch.

Other highlights: 

  • Adult-use sales are up only 5% since August, underscoring some potential pitfalls of limited licensing.
  • Overall sales of recreational and medical cannabis fell in October, an uncommon development for a new market.
  • Insiders say a lack of product choice is the biggest impediment stunting growth in this East Coast adult-use market dominated by MSOs.
  • Retail joint ventures between MSOs and social equity license holders are adding several new stores to the market, with dozens more in the pipeline.

Assessment: “Connecticut’s launch has gone incredibly smoothly from an operational perspective,” said Benjamin Zachs, CEO of dispensary operator Fine Fettle.

“The program is still new with low variety (part legislative restrictions) and supply (new growers and manufacturers working to get up and running), which have impacted sales numbers across the state.

“Despite new store openings and wider accessibility for customers, sales have remained somewhat stagnant. A large number of licenses are still in the pipeline, which will bring more competition, variety and scale to the market.”

MISSOURI

Adult-use market launch: Feb. 3, 2023.

Adult-use sales: $833.4 million through October.

MJBiz Factbook first-year projection: $800 million.

Key developments: The Midwest’s newest market is on pace to eclipse $1 billion in annual adult-use sales, buoyed by a low 6% sales tax and customers from neighboring states. Missouri borders eight states, and among them, only Illinois has recreational sales.

Other highlights:

  • The market opened with about 200 medical marijuana dispensaries expanding into adult-use retail.
  • Total recreational and MMJ sales dipped to $113.1 million in October, the lowest tally since February’s launch and the third straight monthly decline.
  • A large-scale recall in August of more than 60,000 infused products and countless liters of distillate might have triggered the recent sales declines.
  • The recall’s fallout has led to millions of dollars in lost sales, at least one lawsuit and the license revocation of Delta Extraction, which made the infused THC products.

Assessment: “Our home state of Missouri has grown to a billion-dollar adult-use market in just under a year leading to more jobs, regulated products and a steadily growing number of adult-use consumers,” said John Mueller, CEO of multistate operator Greenlight Dispensary.

“From seed to sale, our commitment to quality and responsible practices has not only flourished but has helped us achieve more than $225 million in annualized revenue.”

MARYLAND

Adult-use market launch: July 1, 2023.

Adult-use sales: $213.7 million through October.

MJBiz Factbook first-year projection: $275 million.

Key developments: This limited-license market opened with nearly every medical marijuana retailer, cultivator and processor converting their licenses to serve adult-use customers.

Other highlights:

  • The market has nearly 100 operational stores.
  • Shoppers from Pennsylvania, Virginia and West Virginia, among other states without recreational retail, have contributed to rising sales.
  • Product restrictions persist, including a ban on concentrates for adult-use consumers as well as potency limits on edibles for recreational consumers and MMJ patients.
  • The initial batch of new adult-use licenses, which must be awarded before Jan. 1, are reserved exclusively for social equity applicants.

Assessment: “In Maryland alone, our total net retail sales for the first nine months of the year reached $17.7 million and on the net wholesale side, hit nearly $14 million,” said Darren Weiss, president of MSO Verano Holdings Corp. “We have been one of the top five wholesalers in the state and are encouraged by the progress we have seen in sales increases month-over-month.

“With the Maryland Cannabis Commission accepting applications for new adult-use business licenses and the prospect of new social equity joint-venture locations, we’re excited for the opportunity to partner with 75 new dispensaries across the state and bring our award-winning products to more patients and adult-use customers.”

MISSISSIPPI

Medical market launch: Jan. 25, 2023.

MMJ sales: $37.9 million through November.

MJBiz Factbook first-year projection: $10 million.

Key developments: The newest MMJ market in the Deep South has performed surprisingly well despite nearly four dozen Mississippi cities and counties opting out of the program.

Other highlights:

  • Mississippi offers new entrants a low barrier for entry thanks to a lack of licensing caps and a streamlined application process.
  • More than 100 MMJ dispensaries are operational, with dozens in the pipeline.
  • Roughly 140 cultivation facilities and 25 processors are operational, according to LeafLink data.
  • Experts point to strong bipartisan support for adult-use legalization, perhaps as early as 2024.

Assessment: “A critical issue we face is the oversupply in certain product categories, especially flower,” said William Chism, CEO of vertically integrated operator River Remedy.

“This is compounded by a disproportionate number of cultivation licenses compared to the number of operational dispensaries. Such an imbalance leads to a difficult profitability landscape for producers, with most struggling to generate positive cash flows.

“The market dynamics are further complicated by inelastic demand, a consequence of purchasing limits among patients. This complex scenario requires careful navigation and strategic foresight.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.

Where marijuana is legal in the United States