The marijuana market in the U.S. has become well-established, and Cannabiz Media is now tracking marijuana programs in 35 jurisdictions. 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. This includes both medical and recreational marijuana programs, 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 is This Happening?

The first thing that comes to most people’s minds when they look for the cause of a state’s marijuana program failing to thrive is likely state regulations, and they’re right. However, the better question to ask is 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?

When the dust settles, the biggest effect that regulations have relates to access, which includes the accessibility of cannabis for consumers to purchase in terms of location, product type, and price. Let’s take a closer look at some of the ways that regulations directly affect accessibility and thus, the success of a state’s legal marijuana program.

Six Key State Marijuana Program Growth Limitation Factors

Using data from the Cannabiz Media License Database, several 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, accessibility will be negatively affected and 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.

As a state’s program matures, regulations should allow the program to grow. Ideally, more licenses are granted, more conditions are qualified for medical marijuana, and prices stabilize, accessibility improves and the program has a chance to be successful.

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 marijuana program to have a chance for significant growth. 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 simply because more people will qualify.

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.

Consider New Jersey as an example. On March 26, 2018, chronic pain was added as a qualifying condition to the state’s medical marijuana program. NJ.com reports that between March 26, 2018 and July 23, 2018, 11,000 patients joined the program, and 53% of them qualified based on a form of chronic pain.

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 making it less accessible to them.

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. Some states are considering allowing statewide marijuana delivery to bypass local rules that limit medical marijuana accessibility to patients who need it, but the fact remains that in many states, local rules can hurt the success of a state’s marijuana program.

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. Physician Registrations and Dispensary and Retailer Licenses

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 January 17, 2019, the number of active retail licenses in each state that has legalized adult-use marijuana is:

  • Alaska = 82
  • California = 549
  • Colorado = 562
  • Massachusetts = 19
  • Nevada = 61
  • Oregon = 608
  • Washington = 455

The number of active medical dispensary licenses in each state as of January 17, 2019 is as follows:

  • Arizona = 120
  • California = 599
  • Colorado = 496
  • Connecticut = 9
  • Washington, D.C. = 5
  • Delaware = 3
  • Florida = 82
  • Hawaii = 8
  • Illinois = 55
  • Iowa = 5
  • Massachusetts = 52
  • Maryland = 71
  • Maine = 8
  • Michigan = 48
  • Minnesota = 8
  • Missouri = 2
  • New Hampshire = 4
  • New Jersey = 6
  • New Mexico = 75
  • Nevada = 64
  • New York = 25
  • Ohio = 5
  • Oklahoma = 743
  • Oregon = 4
  • Pennsylvania = 44
  • Puerto Rico = 44
  • Rhode Island = 3
  • Texas = 2
  • Vermont = 6

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. There is no doubt that this reduces sales overall and the success of the program.

Not All States are Alike

While the five factors discussed in this article directly affect the growth of marijuana industries in many states, they’re not the only factors in play, 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 1/17/19.