The Next Five States to Turn Cannabis-Friendly With Recreational Cannabis Legalization
States tend to take two steps forward and one step back to arrive at cannabis legislation that can win broad approval. However, lawmakers in Arizona, Florida, New York, Pennsylvania, and Vermont listened as voters have been voicing their increasing support for recreational cannabis legalization.
From the Arizona desert to the maple-leaved hills of Vermont, each state’s cannabis laws reflect its unique landscape of prevailing politics, budget, population size, demographics, and more. States with medical markets may have an advantage in creating a functional adult-use plan, but there are always fresh challenges.
How many licenses should be awarded? What agencies will need to be involved? Who can buy what, where, and when are questions states around the country are (gradually) asking and answering for themselves.
There’s also the quandary of whether or not to allow personal cultivation and how to find the sweet spot for taxation. Plus, of course, how do you reassure parents and protect kids?
As new states pave the road to recreational cannabis legalization, you need to be ready to put your pedal to the metal when the race to apply begins. We have some advice to help you start mapping out a route now to secure a license when the light turns green.
State Legislation & the Social Equity Tour
California created the first legal cannabis market way back in 1996 with medical cannabis legalization. The industry has grown over the last two decades to include markets in 33 states, presenting immense opportunities for entrepreneurs.
Unfortunately, access to those opportunities has been out of reach for many.
Many states have begun working to create a more equitable path forward for groups including women, minorities, and veterans. Some of them are flipping the script in a major way by welcoming people with prior cannabis convictions into the industry and expunging their records.
Social equity implementation may include allotting extra points, lowering fees for qualifying applicants, or providing training. Prioritizing certain applicants is another mechanism. Non-social equity candidates may gain points by way of social equity application components or by including social equity candidates in their plans.
To make the most of your push into the cannabis industry, you’ll need to understand how these plans may benefit you first-hand or indirectly.
Arizonans will vote on recreational cannabis legislation on their November ballot this year provided that enough signatures supporting the “Smart and Safe Arizona Act” are collected by July.
The initiative was refiled to add measures expanding previous parameters for the expungement of cannabis criminal records.
The state also added slots for 26 dispensary licenses not limited to those with current medical licenses and aimed at social equity applicants from communities disproportionately impacted by cannabis laws.
The Make it Legal Florida bill didn’t make it to the 2020 ballot. New bills have been filed, including one that proposes expungements for low-level cannabis offenses and does away with the “vertical integration” requirement that makes licensees responsible for every operation from “seed-to-sale.”
Individual cultivation licenses could be awarded to local farmers. At the same time, vertically integrated applications are so costly that they’ve created barriers to business entry. There may be a push for legalization through the legislative process so that voters don’t have to wait for a 2022 ballot measure.
New York recreational cannabis legalization is tied to the Empire State’s desire to create an exemplary social equity protocol. The state is innovating and fleshing out the best of what is and isn’t working elsewhere.
New York plans to prioritize members of communities determined to be disproportionately impacted by cannabis criminalization that earn less than 80% of the area median income.
Additionally, minorities, women-owned businesses, and low-income farmers would receive priority licensing over other applicants. Expungements and release from prison for certain cannabis offenders are also on the table.
There is a massive opportunity on the table for New Yorkers, even despite the recent challenges with the coronavirus. According to recent news reports, Gov. Andrew Cuomo still plans to pursue cannabis legalization despite COVID-19’s impact on the state, giving small-business owners hope in these challenging times.
Provisions within Vermont Senate Bill S.54 establish a priority system for businesses that are minority- or women-owned and have plans to recruit minorities and women. Priority will be given to those disproportionately impacted by cannabis prohibition, as well.
Equitable plans will promote a fair geographic distribution, if all goes according to plan. The bill also includes additional notable priority provisions for small farmers.
Pennsylvania Senate Bill SB 350 is being called the “gold standard” of cannabis legalization. The bill might not make it through the Senate this year, but there is optimism that it can pass by the spring of 2021.
The bill would create training for growing and processing cannabis, compliance, and starting and running a small cannabis business. Plus, individuals with a cannabis-related criminal conviction and a household income below $80,000 – who satisfactorily complete the program – may apply for state grants and interest- free loans to start their own cannabis businesses.
In Pennsylvania’s last medical licensing round, 10% of all potential application points were awarded to those who addressed diversity in management, contracting, and employment – something to keep in mind as you fill out your next application in the Keystone State.
Cannabis Application Test Drive
Each state’s application sections and requirements will differ slightly, and some of them will be unique to your vertical (i.e., cultivation, infusion, dispensary, or transportation). In most states that we’ve seen and worked with consistently, applications contain the following sections, at minimum:
- Operating plan
- Recordkeeping plan
- Employment and training plan
- Security Plan
- Health and safety plan
- Labeling and packaging plan
- Cultivation plan
- Facility layout
- Social Equity or diversity plan
- Advertising restrictions
The key to success in winning a license is mastering the highly technical language needed to convey that you can launch quickly if you win a license, operate with environmental efficiency, have team members with cannabis operational experience, and demonstrate that you thoroughly grasp quality assurance and compliance issues.
Exploring the States: Different Views of Licensing
You wouldn’t visit Arizona for its coastline or find a saguaro cactus in New York. When it comes to each state’s cannabis legalization and licensing laws, you’ll notice they reflect distinct differences, too.
For instance, Vermont is giving preference to smaller cultivators of no more than 500 square feet. In Arizona, application boards do a rigorous review of pesticides used in cultivation.
Vermont requires that you secure approval from the municipality in which you plan to operate and exhibit a strong focus on agent training. Additionally, you must obtain your real estate, operator, investors, and entire team – and build a compelling narrative within a 30 day application window, which is about 1/3 of the time most states provide.
If you’re lucky, the state might extend its application period, but you can’t count on it. A month goes by in the blink of an eye in the cannabis industry. It’s imperative to work with a consulting team that can assure that you don’t experience a failure to launch in the state of your choosing.
Questions to Determine if You’re Road-Ready
Do you have cannabis experience or know an operator who does? What exactly is meant by “operator”? What is your financial capacity? How should you structure your team? Should you lease or own your property – and what about hold letters?
All of these are things my team and I at Higher Yields Cannabis Consulting help our clients work through, from full-service application consulting to a readiness assessment to help you identify your strengths, weaknesses, and how to prioritize the giant cannabis business “to-do” list.
To maximize the strength of your application, we suggest that aspiring cannabis entrepreneurs complete an assessment well in advance of an application round.
In fact, the application period doesn’t start when the application is released from the state. The application period starts now with proper preparation and strategy. Your competitors are gearing up now. If you’re not, you’re already behind.
Keep your ear to the ground for the latest updates from the states where you’re thinking of pursuing a license. Stay informed about the industry at large and what the trends are. Above all, get ready now for the long haul now.
Reach out to us at Higher Yields Cannabis Consulting for a consultation.