In an interview with Yahoo Finance’s Alexis Christoforous, Cannabiz Media’s Vice President of Government Affairs, Ed Keating, shared some of the strangest marijuana laws on the books across the 29 states that have legalized medical and/or recreational marijuana. You can watch the full interview from Yahoo Finance Video below.
As Ed mentioned during the interview, regulations can make it difficult for marijuana-related businesses to operate profitably. Not only are regulations often difficult to comply with, but they also change frequently.
In the Cannabiz Media Marijuana Licensing Reference Guide: 2017 Edition, the many factors that affect marijuana business growth were synthesized into five main categories:
- Volatility in rules and regulations
- The trickle-down effect of rules and regulations
- Rules and regulations limit innovation and growth
- Rules and regulations directly affect competition
- Rules and regulations limit accessibility
Each of these five categories is discussed in more detail in the free Reference Guide Overview, which you can download here, and of course, all details are included in the complete Reference Guide. After analyzing all of the data in the Cannabiz Media Database, the Cannabiz Media research team discovered that these five categories aren’t just affected by state laws.
The Business Burden of State and Local Laws
Local laws and even rules passed at the neighborhood level (e.g., the Office of Neighborhood Involvement in Portland, Oregon) can impact a marijuana business’ ability to operate. For example, seven states that allow medical marijuana also allow local municipalities to fully ban all medical marijuana operations. That means a business could have a state-approved license but still cannot operate in specific municipalities.
In terms of fees, the costs to obtain and maintain a marijuana business license can be exorbitant. As you’d expect, those high costs are passed down from cultivators, processors, and dispensaries to customers who are forced to pay higher prices for medical marijuana. Making things worse for marijuana businesses are the additional high fees that local towns are allowed to charge in some states such as Massachusetts.
Innovation and growth are limited by state laws that only allow certain product types to be sold (such as concentrates only) as well as by laws that create such high barriers to market entry through high license fees that only a small number of players can participate.
As you’d expect, fewer players, high fees, and volatile regulations also lead to reduced competition. This is exacerbated by the fact that it is challenging for marijuana-related businesses to expand across state lines.
State and local rules and regulations not only cause inflated costs to consumers, but they also limit patient access to medical marijuana. As mentioned above, many municipalities can ban marijuana businesses while others can set restrictive zoning requirements or other rules that make it nearly impossible for a marijuana business to operate within those borders. Ultimately, patients suffer because they can’t get (or can’t afford) the medical marijuana they need.
As Ed discusses in the interview with Yahoo Finance, some regulations are good, but when regulations get too specific and just too strange, they can do more harm than good. For example, some laws seem unnecessarily restrictive, such as limiting font choices to 80-point Times New Roman or Arial in Oregon or charging $2,500 to change the name, address, or location on a marijuana business license in Arizona.
The key to a successful marijuana program in any state is ensuring the businesses that enable the program to operate can actually generate profits and stay in business. That’s not always easy in the marijuana industry.