New Jersey residents are ready for adult-use cannabis, but the state’s Cannabis Regulatory Commission (CRC) is not.
The commission missed another self-imposed deadline March 15, the 90-day target date to finish reviewing applications for potential adult-use cannabis cultivators.
During the commission’s last regular meeting, executive director Jeff Brown asked for patience in the review process, which has become more time consuming than expected because of a decision to allow applicants to amend their submissions if found to be flawed, The Press of Atlantic City reported.
“Here we are, moving through hundreds of applications, ready to kick off this legalized market under an entirely new framework,” Brown said. “We are making tremendous progress.”
The cultivation application deadline isn’t the first target CRC officials have missed. The Garden State also missed a Sept. 18 deadline to begin accepting and processing business license applications from potential cultivators, manufacturers and retailers, as well as a Feb. 22 deadline to allow operational medical dispensaries to begin serving adult-use shoppers.
Brown said last month that one of the factors holding up the retail launch includes a lack of confirmation from local municipalities, where officials must provide in writing that they support the medical cannabis cultivators and dispensaries in their communities transitioning to the adult-use market, NJ.comreported.
There are 11 companies with 23 retail locations selling cannabis to the state’s 120,000-plus registered patients, according to CRC. As of earlier this month, the commission had received eight requests for the expanded certification that will allow medical cannabis dispensaries to sell to all adults, according to Brown.
But whether medical cannabis operators have enough supply to serve an adult-use market remains an uncertainty, putting more pressure on CRC officials to finish the review process for adult-use cultivation license applicants.
Nonetheless, Gov. Phil Murphy projected last month that New Jersey medical cannabis dispensaries would make the transition to launch adult-use retail operations in March.
“If I had to predict, we are within weeks—I would hope in March—you would see implicit movement on the medical dispensaries, some of them being able to sell recreational,” Murphy said during his radio show on WBGO in Newark. “They’ve got to prove they’ve got the supply for their medical customers.”
His remarks came more than a year after New Jersey voters approved adult-use cannabis via Question 1 in the November 2020 election.
Brown is expected to provide further updates during the next CRC meeting at 1 p.m. March 24, which will be held remotely.
Dmytro Sukharevskyi | Adobe Stock
California’s Cannabis Market: ‘A Recipe for Disaster’
Headset’s Jocelyn Sheltraw says that while sales in California continue to grow, unstable market dynamics highlight the need for regulatory changes.
Cannabis sales in California are on the rise, but the state’s regulated industry continues to struggle.
But if it’s not sales numbers holding back licensed operators from thriving, then what is?
According to Jocelyn Sheltraw, Director of Industry Relations for Headset, a provider of cannabis data and marketing solutions, the biggest hurdles for California’s licensed cannabis businesses are:
an imbalance between supply and demand,
wholesale price compression,
a declining market share for flower,
high taxes
and a still-thriving illicit market.
“It’s just a recipe for disaster,” Sheltraw tells Cannabis Business Times. “It’s just created turmoil on the cultivation side.”
From February 2021 to February 2022, for example, Sheltraw says the market saw 7% growth, although on a month-over-month basis over the last 12 months, sales figures are beginning to return to where they were prior to the COVID-19 pandemic.
For example, Sheltraw says that in April 2021, monthly cannabis sales in California were just over $475 million. Then, in February 2022, sales dipped to $402 million for the month.
“You can see that even though as a market, we’re growing—this is a higher sales percentage than we saw last year or higher monthly sales than we saw last year—we’re starting to see sales that are just declining in the market,” Sheltraw says. “We’re seeing sales retracting to pre-COVID levels. We’re seeing a sales decline month over month.”
For California’s licensed cannabis cultivators, there are much more complex issues at play. While sales in the regulated market continue to grow, Sheltraw says this growth isn’t necessarily translating to individual licensed cannabis businesses due to a variety of factors.
One of these, she says, is an imbalance between supply and demand.
One-third of California’s municipalities allow adult-use cannabis businesses to operate in their jurisdictions, and Sheltraw says there are roughly 850 licensed retailers and 1,000 brands throughout the state.
“You have this unequal balance where you’ve got more brands than you do retailers,” she says. “This is creating a surplus of supply in the state because we just don’t have enough retail outlets that can move all of that existing supply, but the demand is there.”
Without enough state-licensed shops to adequately meet demand, Sheltraw says the illicit market ultimately absorbs consumers’ buying power.
In 2020, California’s legal cannabis sales reached $4 billion, while Global Go projected that that state’s illicit market sales exceeded $8 billion.
“That’s creating a problem for a lot of the cultivators, a lot of the brands, because they just can’t compete with the illicit market because of the increased cost of doing business [legally],” Sheltraw says, adding that a licensed cannabis business pays two to three times what an illicit operator pays to get product to market.
The month-over-month decrease in sales likely reflects demand moving to the illicit market, she says, and increased competition between the legal and illicit markets has created price compression.
A declining market share for flower is also wreaking havoc on California’s licensed cultivators, Sheltraw adds.
In March 2021, for example, flower sales totaled roughly $207 million, or just above 43% of total sales. In February 2022, flower sales totaled roughly $150 million, or about 37% of total sales.
“We’re not seeing an influx of new consumers that are entering the market,” Sheltraw says. “It’s more so when sales were spiking in 2020, that was existing consumers that were already in the market. A lot of those consumers were flower lovers, but as we’ve had new product innovation, we start to see some of those consumers move into new product categories.”
For many of California’s licensed cannabis operators, the pressure is becoming too great. Sheltraw says that without a drastic shift in state policy, many businesses will be forced to close up shop.
While larger, well-capitalized companies may be in a better position to weather the storm than smaller, self-funded legacy operators, Sheltraw says businesses of all stripes are affected by California’s unstable cannabis market.
Many of the state’s cannabis trade groups are banding together to appeal to the Legislature and, ultimately, Gov. Gavin Newsom to send help—and fast.
“You’ve seen a lot of these associations now joining forces and they’re all going to the state, they’re going to Gov. Newsom, and they’re saying, ‘Look, this is not sustainable. We’re going to lose all these craft cultivators that are part of our history in California. Do we want this as a state?’” Sheltraw says.
Newsom and the Legislature do seem to understand the issues that are threatening California’s regulated cannabis industry, and a few key pieces of legislation are on the table this year to provide relief to the state’s licensed businesses.
In January, Newsom included a plan in his state budget proposal that aims to reform the state’s tax policy and help California’s municipalities open up more legal cannabis retailers.
Separately, California Sen. Mike McGuire has introduced a bill that would end the state’s flat-rate cannabis cultivation tax on July 1.
Assemblymember Jim Wood has taken aim at the state’s lack of legal cannabis retail outlets with legislation that would authorize the California Department of Cannabis Control to issue temporary cultivator event retail licenses to allow small farmers to sell their cannabis products at local events throughout the state.
Sen. Scott Wiener has also come to the industry’s aid with a bill that would require all California cities and counties to provide consumers access to medical cannabis, either by hosting brick-and-mortar dispensaries or by allowing medical cannabis deliveries within their jurisdictions.
“I think at the heart of this, it’s a regulatory [or] a policy matter that I think people are really trying to get across,” Sheltraw says. “We need policy reform.”
Overall, Sheltraw is optimistic about the fate of California’s cannabis market, especially when comparing it to other legacy markets on the West Coast that may be facing even more dire economic trends.
Oregon, another oversaturated market, is experiencing -10% growth, for example, while Washington is seeing -7% growth.
While California’s market isn’t growing as fast as East Coast markets that have recently come online (Sheltraw says Massachusetts is experiencing 36% growth, for example), it is, in fact, growing.
“We’re doing $500 million in monthly sales, which is incredible,” Sheltraw says.
Pennsylvania state Sen. Judy Ward provides feedback March 14 on a series of committee hearings focused on helping lawmakers craft forthcoming adult-use cannabis legislation.
Adobe Stock; Pennsylvania Senate
Pennsylvania Cannabis Hearings Only Presented ‘One Side,’ Left Out SAM
The Senate Law & Justice Committee hearings provided expert testimonies on adult-use legalization, but one body member said they weren’t enough.
Pennsylvania lawmakers attempting to exercise due diligence on crafting adult-use cannabis legislation have taken a one-sided approach, according to one legislator.
The state’s Senate Law & Justice Committee held a series of three hearings, each extending beyond two hours, when body members heard from a mixture of testifiers, including law enforcement officials during a Feb. 7 hearing; and individuals who played active roles in legalization efforts in other states during a Feb. 28 hearing.
In their concluding hearing held March 14, committee members heard from industry professionals and patient advocates with connections to Pennsylvania’s existing medical cannabis program.
Sen. Mike Regan, the committee’s chair and a former law enforcement officer who plans to introduce an adult-use bill in the General Assembly, said during the final session that it was important to hear from the medical cannabis regulatory oversight personnel in the state Department of Health.
“We’re fortunate to already have an established medical marijuana program in Pennsylvania, which has laid the basic groundwork for licensing, growing, manufacturing and selling cannabis through a state regulated system,” he said. “As we will hear today, our medical program is not without its faults. I look forward to learning about this so that we can help Pennsylvania’s 600,000 patients and caregivers while also formulating an oversight structure for adult-use marijuana that will be regarded for its desire and ability to work with the industry and advocate for its success.”
But at the conclusion of Monday’s hearing, Sen. Judy Ward called the hearings one-sided.
She said some of the stakeholders who were left out include drug and alcohol professionals, chiefs of police, the Pennsylvania Chamber of Business and Industry, and Smart Approaches to Marijuana (SAM).
Specifically, SAM is a prohibitionist organization that aims to create policies that decrease cannabis use. In 2013, SAM was co-founded by Kevin Sabet, a former three-time adviser to the White House’s Office of National Drug Control Policy.
“The thought of adult-use cannabis in the commonwealth is a huge policy shift and a process that needs thorough vetting,” Ward said. “This is an extremely complicated issue with many facets, and it deserves much discussion. We began the journey of medical marijuana in 2016, and we continue to work on that process even today. These hearings have been extensive, and I commend the chairman and his staff, but it’s only presented us one side of the argument.”
Ward added that she plans to use the Senate Aging & Youth Committee, which she chairs, to provide greater context to legalization through additional stakeholder testimonies. She encouraged other committee chairs to do the same.
Regan said written testimonies were not restricted to any certain group or groups, and that those would be made available to committee members.
Earlier in the March 14 hearing, Meredith Buettner, the executive director of the Pennsylvania Cannabis Coalition, said Pennsylvania is well-positioned to build a well-regulated cannabis program for adult use that should be grounded in the principles of safety, security and economic development.
PCC is a cannabis trade association that represents 75% of the medical cannabis operators in the state, she said.
“If the commonwealth has not developed and implemented its own adult-use program by the time cannabis is federally legal, we run the risk of having the federal government intervene and set up a program for us,” Buettner said. “Creating a comprehensive, regulated adult-use market based in best practices is imperative to a successful program.”
Buettner outlined three “critical” best practices when designing the regulating body for such a program:
The regulating entity must be empowered to oversee both a medical and adult-use program. Having two programs sit under separate entities makes it nearly impossible for a medical program to survive, she said.
The regulating body should be a newly formed commission or board dedicated solely to administering the programs. That body must include staff who understand licensing, science, compliance and security, she said.
The regulating body should create and maintain consistent and constructive feedback and information from stakeholders. The best-run programs in the country engage in frequent stakeholder feedback meetings, advisory group meetings and regulatory feedback sessions, she said.
Buettner added, “The PCC strongly recommends making this process part of the statutory framework for the new program so that there are no misunderstandings regarding the body’s responsibility to its stakeholder communities.”
Henryk Sadura | Adobe Stock
Georgia Lawmakers Consider Legislation to Redo Medical Cannabis Licensing Process
House Bill 1425 would scrap the licenses that the state tentatively issued last year and authorize a new request for proposals from companies looking to produce and sell low-THC oil.
Georgia lawmakers who have been searching for a way to jumpstart the state’s stalled medical cannabis program made progress March 14 when a House committee approved legislation that would allow regulators to redo the licensing process, according to Capitol Beat.
House Bill 1425, sponsored by Rep. Bill Werkhiser (R-Glennville), would scrap the current program, as well as the licenses that the state tentatively issued last year, and authorize a new request for proposals (RFP) from companies looking to produce and sell low-THC oil to Georgia’s registered patient base.
After years of regulatory limbo that allowed registered patients to legally possess—but not purchase—the oil, which can contain no more than 5% THC under state law, lawmakers approved legislation in 2019 to legalize the production and sale of the oil in the state.
A new regulatory body, the Georgia Access to Medical Cannabis Commission, then licensed six companies in July 2021 to produce and sell the oil to the state’s patients, but 16 unsuccessful applicants challenged the licensing process, which has delayed the rollout of the program.
Last month, Georgia Rep. Alan Powell (R-Hartwell) introduced House Bill 1400 to allow regulators to grant licenses to those 16 companies in an effort to revive the program.
Now, Werkhiser’s bill aims to go a bit further by authorizing a complete do-over of Georgia’s medical cannabis program.
“We’ve got patients we’ve been trying to get [cannabis] oil to for at least four years,” he told members of the House Judiciary Committee, according to Capitol Beat.
H.B. 1425 aims to finally get the oil into the hands of Georgia’s roughly 20,000 registered patients by putting the Department of Administrative Services in charge of overseeing the new RFP in partnership with an independent third party, the news outlet reported.
New medical cannabis licenses must be issued by the end of December under the legislation, according to Capitol Beat.
In addition, H.B. 1425 would expand the number of licenses by two for every increase of 50,000 patients, the news outlet reported.
March 15 is the Crossover Day deadline for bills to pass at least one chamber of the Georgia Legislature to remain alive during this year’s legislative session, according to Capitol Beat.
Texas Democrat Beto O’Rourke may be trailing two-term incumbent Gov. Greg Abbott by seven points in a recent poll, but the challenger has continued to push a pro-cannabis stance as one means to gain ground.
O’Rourke, who served as a U.S. representative for Texas from 2013 to 2019, and was a candidate for the Democratic presidential nomination in 2020, has said that if he’s elected the governor of Texas in the November 2022 election, he’ll work to legalize cannabis in the state.
He reaffirmed that position March 12 during the South by Southwest (SXSW) Conference in Austin, suggesting that the state’s Republican-controlled Legislature would back him on the issue, the Austin American-Statesman reported.
“I’ll let you in on a secret: Republicans like to get high just as much as Democrats,” O’Rourke said, speaking during a SXSW panel.
Cannabis legalization has become a popular political platform in recent years amidst growing public support, and Texas is no exception. According to a November 2021 survey from the University of Houston and Texas Southern University, 67% of Texans support legalizing adult-use cannabis.
But O’Rourke began backing and advocating for reform before it was popular.
In January 2009, as a member of the El Paso City Council, O’Rourke sponsored a resolution calling for the repeal of ineffective cannabis laws. He asked his colleagues to “support an open national debate on ending the prohibition of narcotics.” While the council was unanimous in support of that resolution, it was vetoed by then-Mayor John Cook.
In 2011, O’Rourke co-authored the book, Dealing Death and Drugs: The Big Business of Dope in the U.S. and Mexico, which in part argues in favor of legalizing cannabis. This notable political stance was highlighted by The Dallas Morning News in his 2018 U.S. Senate run against Texas incumbent Republican Sen. Ted Cruz.
Also during his unsuccessful 2018 U.S. Senate campaign, O’Rourke called for expungements for those with arrests records and sentences related to small possession amounts of cannabis.
Along his current campaign trail for governor, O’Rourke recently said, “Legalizing marijuana is the right thing to do. We can stop locking Texans up for a substance that’s legal in much of the rest of the country and allow police to focus on violent crime.”
Abbott also has shown support for reform, specifically signaling that he favors decriminalization policies during a January campaign stop in Edinburg.
Under current Texas laws and penalties, possessing 2 ounces or less of cannabis is a misdemeanor punishable by up to 180 days of incarceration and a max fine of $2,000, according to advocacy group NORML.
While O’Rourke indicated Saturday at SXSW that he’d have Texas GOP backing for adult-use legalization, a recent expansion of the state’s medical cannabis program showed a more conservative approach to reform from current state legislators.
House lawmakers intended on raising the THC limit for medical cannabis from 0.5% to 5% last year, but Senate lawmakers lowered that increase to 1% in the final version of House Bill 1535, which Abbott signed into law in June.
That program expansion, which added cancer and post-traumatic stress disorder as qualifying conditions, went into effect in September 2021.
Today, Texas is one of 13 states remaining in the U.S. that has yet to fully legalize medical cannabis without low-level THC restrictions.
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Tony Lange
Melissa Schiller
