As more states approve medical and recreational cannabis sales, the number of licensed cannabis retailers and dispensaries continues to grow. So far in 2019, cannabis retailers and dispensaries have been at the crux of rapid growth and change.

Let’s take a closer look at some of the key things affecting marijuana shops as the first quarter of 2019 inches closer.

Crackdown on Illegal Sales

If projections from New Frontier Data are accurate, the legal cannabis market in the U.S. will grow from $12.9 billion in 2019 to $20.4 billion in 2022. During the same time period, illicit sales will grow from $27 billion to $28.1 billion.

Clearly, illegal sales of cannabis products will continue to be a significant problem in the foreseeable future.

As a result, states’ law enforcement agencies will continue to focus on stopping illegal sales. By doing so, more money will flow through the economy and more people should get safer products.

For example, it’s estimated that hundreds of illegal marijuana shops are operating in Los Angeles, California where both state and city cannabis retail licenses are required to sell cannabis products. This month, the Los Angeles City Council authorized its Department of Water and Power to disconnect utilities at unlicensed marijuana shops. It’s a creative way to put unlicensed sellers out of business.

Additionally, the Los Angeles Sheriff’s Department shut down an unlicensed cannabis retailer this month, Space Lounge, and seized $438,776 of cannabis products.

Unlicensed delivery companies have also been the subject of police enforcement in California. Last month, the Davis Police Department seized $854,812 of cannabis products from Mary Jane Finder, an unlicensed cannabis delivery service with locations in Sacramento, California and Davis, California.

Interest from Big Box Retailers and Big Retail Brands

It’s not surprising that as the cannabis industry grows, big box retailers and big retail brands take greater interest. When it comes to cannabis retail and dispensing, some big retailers are on board while others are taking a more cautious approach.

Last month, Whole Foods CEO John Mackey told an audience during an appearance at an event hosted by The Texas Tribune that there is a good chance Whole Foods stores will sell cannabis products when government regulations allow it.

Whole Foods isn’t the first big retailer to show an interest in selling cannabis products. Walmart Canada has been investigating selling cannabis products for some time. While the official statement from the company is that it has no plans to sell cannabis products (including CBD products) at this time that position could certainly change as the industry continues to evolve. It’s safe to assume that Walmart is watching the U.S. industry closely as well.

Expansion Creates Intellectual Property Problems

For cannabis businesses, having a solid trademark strategy is critical to protecting their brand names and the equity that comes with a well-established brand. This is a lesson that Harvest, a San Francisco, California-based cannabis dispensary with two locations in the Bay Area, is learning as it fights against Arizona-based Harvest Health and Recreation Inc. for the right to use the Harvest brand name.

According to KQED’s reporting, Harvest Health and Recreation Inc. recently opened its first retail location in California and wants to open more. The case appears to be headed to litigation, so we’ll have to wait and see what the courts decide. This isn’t the first cannabis-related trademark dispute, so the lesson to learn is this – protect your cannabis company’s intellectual property as soon as you can.

Key Takeaways

Like cannabis cultivation and cannabis manufacturing in early 2019, cannabis retail stores and dispensaries are growing rapidly, and with growth comes change. Licensed retailers and dispensaries are facing competition from illegal sellers, but some efforts to reduce illegal sales could help keep more money in legal business’ hands and safer products in consumers’ hands.

At the same time, small retailers and dispensaries need to be aware of growing industry interest among big box retailers, big retail brands, and even big pharmacies. If or when the day comes that these companies can sell cannabis products, the entire industry will experience a massive shift with no way to turn back the clocks.

And speaking of turning back the clocks, you can’t turn back time and take the necessary steps to protect your intellectual property, so take those steps now. Your cannabis brand has the potential to gain significant value, but only if you protect it.