Cannabis Musings - May 7, 2025
Why do the states make this so hard?
Friends – as various news outlets have reported, the Keystone State (Pennsylvania) is one step closer to legalizing adult-use cannabis. Now, it’s a little too early to shout Mazel Tov!, but, progress!
And yet, the proposed bill has some fairly unique features that really make you go hmmm. First, adult-use cannabis would be sold exclusively in state-run retail stores, sort of how alcohol is sold in the state. That’s weird! What does it mean for the state (yes, yes, I know Pennsylvania is a commonwealth, but for Cannabis Musings purposes, it’s a state) government itself to be directly violating the Controlled Substances Act, and not just facilitating its violation by private actors in other licensed states? Will the Department of Justice care? The federal-state conflict implications are fascinating. Plus, what will the cannabis retail experience look like? What kind of training will state-employed budtenders have? So many practical questions.
On the other hand, this move kind of de-risks retail adult-use cannabis in Pennsylvania. If the government owns the store, it won’t be subject to the same economic stresses as privately-owned stores. Why does a state-owned need to run a profit? This could help stabilize access to adult-use products in a way that isn’t available elsewhere. Still weird, though.
The bigger feature is in the licensing. The state will initially issue 50 main cultivator licenses (up to 125,000 sf of canopy each) and 50 processor licenses, all through a lottery (there will also be 50 microcultivator and microprocessor licenses). Here’s the funny thing – if the state decides to expand the pool of licenses because there’s not enough product, a current Pennsylvania licensed medical cannabis grower/processor may apply for an adult-use cannabis cultivator license and/or an adult-use cannabis processor license, which are two different licenses, for the low, low price of $20,000,000 (that’s not a typo – twenty million) for each license.
A few months back, someone very wise characterized for me how the states have approached cannabis legalization – the goal is to isolate cannabis, not nurture it in order to allow it to grow and thrive like every other business. (I’d love to credit the person who told me that, but I never got their name.) Although this paints the states with a very broad brush, I think it’s not too far off for many states.
I mean, why does Florida have a handful of licenses for unlimited locations, while Oklahoma and New Mexico have thousands? Why does Florida require vertical integration and not allow for a wholesale market? Why did California raise its excise taxes in a declining market? Why did New York take so long to crack down on unlicensed dispensaries, to give licensed businesses some breathing room? Why don’t other states do the same? Why do some states allow dispensaries to display products throughout the store, like every other store, while others only allow products to be kept behind the counter? Why do some states allow customers to walk out of the store with products in regular bags, while others require sealed bags that take an engineer to open? Why do so many states and municipalities insist on zoning laws that make dispensaries practically inaccessible? Why do other states have medical programs that are so broad that they ought to just be adult-use? Why do states like Texas not have a proper medical or adult-use cannabis program, but allow non-hemp cannabis to continue to be sold with (relatively) minimal regulation? Why doesn’t Nevada allow italics to be used on product labels? Yada yada yada.
Don’t get me wrong – I welcome regulation. The whole point here is to offer a wide variety of safe, tested, accurately-labeled medical and recreational cannabis products to consumers in a welcoming shopping environment. You can’t do that without regulation. As for the regulators themselves, many of them are doing yeoman’s work with not enough resources. The blame here primarily lies with state legislators who are crafting laws that purport to solve for real and fictional concerns, but are operationally unfeasible (once again proving that logic and reason don’t necessarily apply to cannabis policy). Does Pennsylvania (or anyone else) want to grow a normalized, robust, and functional licensed cannabis market, like any other adult consumer packaged good, or does it just want to continue to barely tolerate its presence?
Unfortunately, I think that the solutions here are very limited. There’s plenty of state-level lobbying going on nationally, but, to my knowledge, there really hasn’t been much overhaul of any one state’s laws, only tweaks at the margins. Any federal solution likely will defer to the states for the bulk of regulation, and, if you know anything about alcohol beverage regulation, you know it’s a mess of disparate laws. There’s some impact litigation out there to get state agencies to enforce the laws on the books, but that’s expensive to scale. I think that it’s going to require a combination of all of this, in addition to continuing to change the narrative about what cannabis is, and, more importantly, what it isn’t. Because what we have now simply doesn’t work.
Shlimazel, vohin gaist du? Tsum oreman! (“Bad fortune, where goest thou? To the poor man!”)
Upgrade now to Paid ($5 per month - Cheap!) and get your questions answered by the Law-Talking Guy!
© 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.