February 13, 2023
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After sharing the trends of the new licenses issued in 2022 – we wanted to review new licenses issued by region and activity. For example, what are the ratios of licenses issued for cultivation, manufacturing, and dispensing/retail across different regions? How big is the Northeast really in terms of new licenses?
The ratio of cultivation, manufacturing, and retail/dispensary licenses differed greatly across regions:
In 2022, we tracked 9,853 licenses that were issued nationwide in three categories. Cultivation licenses accounted for almost six out of 10 licenses issued (58%). Retail/Dispensary licenses were 28% with Manufacturer licenses at 14%.
Given the glut of cannabis that is cited and the pleas for moratoria in a variety of markets, it is surprising that they are still available. Perhaps the September to December ski slope below points to a rightsizing market.
Cannabiz Media divides the US into the following regions: Northeast, Southeast, Midwest, Southwest and West. In 2022, 72% of the new licenses issued came from the Southwest and West. Oklahoma and
California, respectively, were the drivers in those regions. The following graphs are all by region and show what types of licenses were issued throughout 2022.
The Midwest region, comprised of 12 states, handed out 1,399 new licenses in 2022 with 83% of them coming from Michigan. The other Midwest states that issued licenses included Illinois, Missouri, Ohio, and South Dakota. 54% were for cultivation, 14% for manufacturing, and 31% for dispensary/retail. Issuance spiked midyear largely driven by the 707 new Michigan cultivation licenses.
We have written about the “Beast in the East” with new markets coming on line. The Northeast has nine states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.
What we have seen is Rhode Island and Connecticut issuing a small number of licenses along with cultivation licenses in Vermont and New York. By our census – the region issued 872 licenses last year – with 69% being new cultivators. Those New York cultivation licenses were largely given to existing hemp growers. Connecticut hemp growers started lobbying immediately for the same privilege.
The Southeast is comprised of sixteen jurisdictions: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, Virginia, and West Virginia. Only seven of these states issued licenses last year but did so in a unique way.
It is all about dispensaries as the region is full of limited license medical programs. Cultivation licenses only account for 17% of new licenses, with manufacturing at 3% and retail/dispensaries at 79%! The peaks in July and August were driven by dispensary licenses in Mississippi and Puerto Rico.
Only two of the four states in the Southwest region issued new licenses in 2022: Oklahoma and New Mexico. The Oklahoma program has been the source of a lot of controversy and concern with law firms abetting the issuance of ghost licenses and a license moratorium that started in at the end of August.
Inexplicably, the number of new licenses issued in Oklahoma went up after the moratorium though total licenses appear to be flat. The big spike in September is for new Oklahoma cultivation licenses.
Our last region is the west – home to many legacy markets: Alaska, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington, and Wyoming. 71% of the 2,833 new licenses in the West were for cultivation, which is surprising given the oversupply that is often cited and the fact that Oregon has a license moratorium.
Manufacturing accounted for 11% of licenses with dispensary/retail accounting for only 19%. The cultivation “mountains” came from California cultivation licenses in June and September.
The following three graphs show the regional disparities in terms of types of licenses issued.
The West still leads – even though growers complain of an oversupply leading to low prices and too few retailers to sell their products. But the Northeast, as it morphs from a medical-only region to one with adult + rec is minting many new grow licenses. This will create challenges as states like Massachusetts deal with dropping prices from oversupply.
This activity is always challenging to quantify. In some states, this activity is sublicensed out to others and is very hard to track. In other states, the regulators vertically integrated this activity with cultivation or the whole stack. The low $2,500 license fee in Oklahoma puts the Southwest region in the lead.
The Southeast, with no license caps in Florida or Mississippi, is all about the dispensaries. These medical states, with limited licenses (in some cases) but no limits on stores, is creating a real estate race to build out a footprint. Mature regions, like the West, are adding the fewest stores.
Ed Keating is a co-founder of Cannabiz Media and oversees the company’s data research and government relations efforts. He has spent his career working with and advising information companies in the compliance space. Ed has managed product, marketing, and sales while overseeing complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental, and human resource markets.
At Cannabiz Media, Ed enjoys the challenge of working with regulators across the globe as he and his team gather corporate, financial, and license information to track the people, products, and businesses in the cannabis economy.
Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.
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