Growing Pains

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.

 Nevada - 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.

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