The Adolescence of Newly Legalized States
A number of big states passed some kind of legalization laws
in recent years. We though it would be
interesting to spotlight some of them and take a look at what challenges they
may be facing.
California – the country’s largest market, seems to have challenges
- Lack of licensing.
- Lack of test labs.
- Lack of distributors following ‘the rules’.
- Shortage in point of sale at the retail level.
- Local government agencies not allowing businesses to operate in their jurisdictions.
- New mandates for testing may create supply problems which may lead to black market versus ‘white market’ competition.
- Only 33 percent of municipalities have adopted some sort of authorization for businesses to operate leaving 2/3 of the state without a place to legally do business.
- suffering from “high-grade” problems
- Stores have waited to restock to due higher than projected sales, and distributors not being able to keep up.
- A small group of testing facilities were suspended due to improper procedures.
- The state is adding funding for their own taxation department for staff and technology – apparently Nevada has so much money to collect from sales tax it need to hire more people to collect it!
Maine – a medical-use state evolving into the realm of recreation
- Considers themselves a ‘laggard’ and behind other states in joining the industry (although Nevada just did).
- Delays in setting up regulations for recreational use, although medical use has been in place for some time.
- Laws and regulations to balance how local municipalities can control businesses are still taking shape.
Massachusetts – they love it or they don’t
- In what could be a $1BN market, experts expect less than a dozen establishments will be open by summer.
- Local restrictions.
- Reluctance of banks, landlords, and traditional lenders to do business with an industry with a stigma.
- About two-thirds of the state’s municipalities have enacted bans or moratoriums on licensed marijuana companies.
- Others are demanding high payments or fees to operate, perhaps even exceeding state limits on taxation.
Florida – expansion of medical marijuana, legal challenges
- Application process registration is behind schedule.
- Some laws were tailored to help (or favor) former citrus growers, and those laws face legal challenges.
- Some argue that high entrance costs, onerous requirements, and high conviction rate of low-level drug charges unfairly target minorities.