With Cannabiz Media now tracking marijuana programs in 34 jurisdictions, the country’s marijuana market has become well-established. However, that doesn’t mean that all states are equal in terms of the success and growth of their marijuana programs.

The reality is that some states’ marijuana programs are lagging behind, which means medical patients aren’t getting the marijuana they need, local economies aren’t benefiting from the added revenue that cannabis businesses can bring, and states are missing out on a lot of potential license fee and tax revenue. Why?

Of course, the first thing that comes to mind is state regulations, but specifically, how do those regulations affect a state’s marijuana industry? What is it about those regulations that allow one state’s marijuana industry to thrive and another state’s to falter or stall?

Six Key Growth Limitation Factors

Using data from the Cannabiz Media License Database, a few primary factors can be attributed to the growth, breadth, and depth of a state’s medical marijuana program. If a state is lagging in one of these areas, the growth potential of the program will undoubtedly be limited:

1. Age of Program

The longer medical and/or recreational marijuana has been available in a state, the larger the market in that state is likely to be. This is common sense. A program that has been around for a short time hasn’t had time to grow and mature. For example, the programs in Minnesota and New York are very new compared to the programs in California and Colorado.

2. Medical Conditions Covered

In Cannabiz Media’s research, four key conditions were identified as needing to be covered in order for a state’s program to have a chance to grow significantly. If a state covers all of these conditions, its medical marijuana program has a much greater chance of thriving than a program in a state that covers one, two, three, or none of these conditions.

These four conditions are chronic pain, muscle spasticity, spinal cord injuries, and post-traumatic stress disorder (PTSD). However, the most important condition that must be covered is chronic pain. Across the country, 59% of medical marijuana patients were registered for chronic pain in 2017.

3. Local Rules

Rules set by counties, cities, and even neighborhoods can affect the potential growth of a state’s marijuana program. For example, in many states, municipalities are allowed to ban marijuana businesses from operating within their borders. When this happens, patients and consumers have to travel further to get marijuana products.

As a result, legal marijuana businesses cannot bring revenue to the municipalities and consumers might choose to purchase through the black market rather than through the state’s legal marijuana market.

4. Program and License Structure

Some states require extreme restrictions related to marijuana licenses for growing, manufacturing, and dispensing. For example, some states require that a single license holder controls the marijuana from seed to sale. Cannabiz Media refers to these as “stacked licenses” – where a single license holder must control cultivation, processing, and dispensing.

Stacked license structures make it much easier for states to monitor activity in the industry, but the structure also limits competition and market growth. New York and Minnesota are two of the states that require stacked licenses. California and Colorado both allow partial stacking of licenses.

5. Caregiver Growing

When caregivers are allowed to grow medical marijuana and provide it to their patients, it increases access to the marijuana. Naturally, there is a greater chance for market growth when access increases (you can read more about access in #6 below).

Both California and Colorado allow caregivers to grow marijuana for a certain number of patients. Contrast this to other states that don’t allow caregivers to grow marijuana at all, and it’s clear that caregiver growth plays an important part in the growth potential of a state’s marijuana program.

6. Access

Again, people need to have access to a product in order to buy it. If they can’t buy it, the market can’t grow. In some states, there are far fewer doctors registered to recommend medical marijuana then in others, and it can be difficult to find participating doctors in many states. Furthermore, some states have licensed very few medical marijuana dispensaries or retailers, which means patients and consumers might have to drive hours to purchase marijuana products.

Based on data from the Cannabiz Media License Database on April 4, 2018, the number of active retail licenses in each state that has legalized adult-use marijuana is:

  • Alaska = 65
  • California = 316
  • Colorado = 543
  • Nevada = 60
  • Oregon = 533
  • Washington = 483

The number of active medical dispensary licenses in each state is as follows:

  • Arizona = 114
  • California = 370
  • Colorado = 508
  • Connecticut = 9
  • Washington, D.C. = 5
  • Delaware = 2
  • Florida = 29
  • Hawaii = 5
  • Illinois = 53
  • Massachusetts = 29
  • Maryland = 39
  • Maine = 8
  • Minnesota = 8
  • Missouri = 2
  • New Hampshire = 4
  • New Jersey = 5
  • New Mexico = 71
  • Nevada = 62
  • New York = 21
  • Oregon = 16
  • Pennsylvania = 19
  • Puerto Rico = 28
  • Rhode Island = 3
  • Texas = 2
  • Vermont = 5
  • Washington = 432

To put these numbers into perspective, think of it this way. Minnesota is 87,000 square miles. There are eight active medical marijuana dispensary licenses in the state. That means there is one license for every 10,000+ square miles (if the licenses were evenly spread across the state, which they’re not). Bottom-line, in many states, patients and consumers need to travel very far distances to access marijuana products.

Not All States are Alike

While these six factors directly affect the growth of marijuana industries in many states, they’re not the only factors, nor are they impacting every state. This is an industry filled with state-by-state nuances, and it is absolutely safe to say that no two states are alike.

To stay up-to-date on all of these nuances, subscribe to the Cannabiz Media newsletter.

Originally published 9/9/16. Updated 4/6/18.

Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.