Cannabis Musings - January 9, 2025
The industry could use some more self-reflection.
Friends, I was interviewed! Make sure to tune into the premier on January 14th at 10:00PT of Big Ideas in Cannabis Episode #3, a podcast series from Beard Bros Pharms and hosted by Cassie Tomaselli of Tomaselli Media. We talk about building a career in cannabis. More information is available here.
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New York is back, baby! We’ve talked a few times about the early challenges and failures of the Empire State in its rollout of state-legal cannabis, a problem that was well-covered across the news media. In case you missed it, the state legalized adult-use in 2021, but for various reasons (including slow regulations and lots of lawsuits), the opening of licensed dispensaries very much lagged an explosion of unlicensed brick-and-mortar dispensaries and repurposed food trucks, particularly in New York City. You couldn’t swing a dead cat without hitting a shockingly brightly-lit bodega selling (purportedly) name-brand cannabis sourced from who-knows-where.
This proliferation of unlicensed retailers, and the lack of enforcement for too long to shut them down, evidenced the very real tension of where we are with cannabis policy these days. The whole purpose of cannabis legalization is to make available to consumers a wide array of tested, known products in a safe retail environment. In order for that to happen, we need to end, or at least stifle, competition from the unlicensed/illicit cannabis market (which is estimated to still be larger than the licensed market). You can’t effectively promote the growth of an industry if its biggest competitor is its own rogue twin (c.f., Superman III).
On the other hand, the industry, its veterans, and the states are all understandably reluctant to restart the War on Drugs. This has created a veritable Hegelian dialectic that so far hasn’t resolved itself. Or, well, maybe it has, at least in New York. According to New York State’s Office of Cannabis Management (the primary cannabis regulator), over $1 billion of licensed cannabis was sold in the state in 2024. Indeed, in a moment of self-reflection, the NY OCM issued a long report detailing the success of the state’s licensed market last year, championing in bold graphics its efforts to support the industry. It’s an effective piece of public relations to try to put the state’s prior failures in the rear mirror (not that there’s anything wrong with that), although its recommendations are somewhat anodyne.
As an aside, AnnaRae Grabstein, Founder and CEO of strategic advisory firm Wolf-Meyer, pointed out a fun little graphic posted by the NY OCM announcing the report (and thanks for the tip on the report). The post notes the top five cannabis strains in 2024 in the state – Blue Dream, OG Kush, Strawberry Krux, Alaskan Thunderf%$k, and Sour Diesel. Aside from the pedantic debate over whether they should have used the term “cultivar” instead of “strain” (they should have), AnnaRae noted the curiosity that these are mostly traditional, old-school cultivars. Probably a combination of what products are being produced and what customers are choosing, it’s an interesting data point on what the retail base wants.
In a more critical attempt at self-reflection, the State of Illinois issued an in-depth report last July investigating its own social equity program (thanks to Cole Preston of the excellently-named The Cole Memo for the tip on this). Titled the “Illinois Adult Use Cannabis Industry Disparity Study”, the state’s own Cannabis Regulation Oversight Office commissioned a wide array of firms to dig deeply into the diversity (and the deficiency thereof) of its own licensed cannabis market and system. The state touts the report’s findings, claiming that an “[i]ndependent disparity study shows Illinois has most diverse cannabis business ownership in the nation,” though it’s not clear from the report how they drew this conclusion. But, overall, my takeaway from this report, which is worth reading, is that Illinois has done a good job to date, and also has a lot of work to do. In particular, they note:
“[D]isparities may be rooted in systemic issues related to access to capital, regulatory complexities, and the operational difficulties of navigating the cannabis industry, rather than discrimination. This nuanced understanding calls for targeted policy interventions and support mechanisms to address the unique obstacles faced by M/WBEs in the cannabis sector.”
In other words, the state, in try to achieve its diversity in cannabis goals, isn’t actively discriminating against the groups it’s trying to support. I mean, that’s good, right? Instead, the problems are systemic, which any critical theory major could tell you, as well as just about anyone else who’s an observer of the cannabis industry.
What’s impressive is that they have some very specific recommendations on how to address the systemic problems, which are similarly totally unsurprising – better access to financing, streamlining compliance, better data, continued study of the problem. I give them a lot of credit – I’m not aware of any other comprehensive studies by other states like this on the highly-lackluster performance of social equity measures (please post in the comments if you know of any).
Certainly, these are not the only studies and reports done by regulatory and related agencies on the state of the cannabis state. One good, recent example is a deep dive into the Nevada cannabis market done by the UNLV Cannabis Policy Institute. These exercises in critical self-reflection are important tools in improving the way our industry functions. And yet, it’s one thing to schmooze, it’s another thing to get regulators and state legislators to act on their own recommendations for systemic changes. Verter muz men vegen un nit tsailen (“Words must be weighed and not counted”).
There are a lot of good people working in the industry’s regulatory agencies who sincerely want to see the business succeed and thrive. However, many of the statutory and regulatory frameworks that were initially put into place by state legislatures seem to have been developed with the goal of isolating the business, rather than allowing it to act as simply another adult-oriented consumer packaged good. And it’s unfortunately still not terribly politically expedient to do the basic things that would make cannabis less of a pariah – equalizing taxes, funding enforcement, rationalizing compliance, and all the other good stuff that these reports recommend. The industry certainly has been begging these improvements for years – perhaps this intensive psychotherapy will help move the needle.
Be seeing you.
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© 2025 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín.