2017 Reflections / 2018 Looking Forward
“We wish for a wide-open market where the best people have the opportunity to get involved. Then, let the cream rise to the top. That’s the only way a robust industry develops — and its the American way.”
2017 was an extraordinary year for Canna Advisors and for the cannabis industry, both nationally and internationally!
Coming out of the 2016 elections, we were thrilled that 8 of 9 ballot initiatives passed. But the change in our federal administration gave some people pause and concern. Twelve months later, the cannabis industry outpaced most people’s predictions for growth.
2017 proved to be far better than we all anticipated. 2018 is set to be even better!
How Far We Came in 2017
After the ballots were cast for legalization in many states, 2017 was a year of execution, achievement, and success in ending prohibition in some states and bringing the cannabis industry mainstream. In some cases, however, it was also a year of small tumbles and major implosions as businesses rode the learning curve; state-by-state.
Here is a quick review:
2017 saw the creation of the California adult use cannabis program. Anticipated to be one of the largest cannabis programs in the world, adult users joyfully rang in the New Year in 2018 with legalized recreational cannabis now available.
There is a long way to go in California, however. The current industry has been built over the course of 25 years with very little regulation or licensing. It’s been the wild west there for a long time, and will take many years for a stable, responsible industry to take hold. There are concerns about the turnover process of licensed medical dispensaries obtaining recreational licenses, cultivation permitting and county regulations still in flux, and moratoriums on local licensing. High taxes may continue to support a strong black market.
While California has a long way to go, the good news is that the professional operators with access to capital will have many years of opportunities with an estimated $5 billion industry by 2020.
Despite an overwhelming 71% vote in 2016 in favor of a broad medical cannabis program, Florida politicians have yet to implement the will of the voters. The current program in Florida limits licenses to only a dozen organizations, most of which have little experience with cannabis and have yet to begin serving the patients of Florida. With the state legislature back in session, we can only hope they will get this program moving.
Nevada’s roll-out on July 1, 2017 of its adult use program was a strong example of success. Despite ongoing supply issues, still undetermined state-regulated distribution processes and a few technology glitches, Nevada has been a shining star in the cannabis industry. With $33M in the first month of sales in 2017, Nevada is looking forward to a $550M annual sales forecast.
In November 2012, the voters in Massachusetts passed a vertically-integrated medical cannabis program and in 2016 voted to legalize adult use cannabis. Like the medical cannabis program, the roll-out of the new adult use program has not been easy. Legislation immediately passed a 6-month research period to develop laws, increase taxes from 12% to 20% and allow for communities to ban the businesses. The politicians have been slow to respect the will of the voters. With an adult use licensing program rolling out in 2018, the program does appear to be heading in the right direction. Bottom line: the cannabis industry in Massachusetts will take some time to find its place, but there is no doubt of the success and revenue it will bring in long-term.
Arkansas’ medical marijuana use program has shown to be extraordinarily promising! Voters passed the ballot in November of 2016 and by the following summer, applications were authorized for 5-8 cultivation licenses and 32 dispensary licenses. We look forward to the results of that application process in early 2018.
Despite voting to legalize cannabis in 2016, Maine’s cannabis industry has been hampered by its governor’s negative position and sustained veto of the bill that was passed by the Senate and House. Governor LePage based his veto primarily on the position of the federal government’s prohibition of cannabis, which sadly was reinforced by the DOJ revocation of the Cole Memo. Regardless, citizen support of recreation cannabis in Maine remains strong and an amended cannabis law has been scheduled for January 2017.
The good people of Montana have been through many ups and downs regarding their legal cannabis industry. They were one of the first states to have a patient-caregiver medical cannabis program, passing their law in 2004. Prohibitionists were successful in rolling back the program in 2011.
The people spoke during the election of 2016, and Montana has recently released proposed licensing rules for cannabis businesses. While clarification and approvals are anticipated in 2018, there is still much to be finalized in Montana.
Despite nearly 64% of voters’ approval in November 2016, the medical cannabis program rollout in North Dakota has been very slow. No license application has been released to date, but we do expect one out in the first or second quarter of 2018.
Nationally, 2017 further showed us how simple errors in compliance can create big, even cataclysmic problems. Take for example the very successful Colorado franchise that thought they had a solution to ambiguous regulatory language which allowed them to remain within the law but cater to client demand; 26 licenses lost and 10 employees facing criminal charges.
Regulatory compliance is a key to standards and success.
2017 also showed how the emerging cannabis tech industry must be carefully qualified and vetted, as we saw with the hacks of one major software platform which caused chaos for over 1,000 retailers in 23 states; even bringing down the entire state of Nevada for a short period of time.
Now the work begins!
We have just begun to build the foundation for what this industry is going to be. It is a time for careful, thorough, and detailed planning while at the same time sustaining rapid growth.
Business owners are going to be extremely challenged to find the trained talent they need to grow their business without sacrificing their business integrity.
Of course, the repeal of the Cole Memo has cast more uncertainty about how the clash of federal law and state law will impact the cannabis industry. For many of us who have been involved in the industry before there were even any state regulations, we are not swayed by the lack of support federally. In fact, many believe this action will cause congress to act with bipartisan support, to end the state and federal conflict.
The general thought is ‘business as usual’, however much the uncertainty of the future is called into question. One thing is certain. We must pull together as an industry to continue to the fight against prohibition and our unified voice is more important than ever. Canna Advisors will continue its efforts with being active in lobbying, both federally and locally, and being active supporters within the industry.
Now is the time to let our voices be heard.
Additionally, Canna Advisors is looking forward to new states joining the legalization movement with New Jersey, Texas, Delaware, Vermont, Rhode Island, Kentucky, Virginia, West Virginia and Oklahoma in position to make changes to their cannabis programs or positions in 2018. We’re also looking at expansion of the programs in Ohio, Michigan, and Pennsylvania. Canna Advisors is also active internationally with clients in Canada, South America and Europe.
One thing is certain in 2018 – the cannabis industry will continue to be smoking!
-Jay & Diane Czarkowski