Cannabis in 2022: Rising Tide Outlook & 12 Months Post-Election Recap

Lisa
December 27, 2021

2022: Never a Better Time to Jump into Cannabis

What happened in 2021 after the flurry of cannabis elections and legislation we saw in 2020?  What transpired in the cannabis industry despite the looming threat of COVID-19? How does all of this development impact the opportunity for cannabis entrepreneurs in the coming year? Our cannabis consulting experts give a comprehensive view from the perspective of a team that has now worked in 33 states and internationally.

2021 Cannabis Recap: Post-2020 Heavy Election Cycle

The year 2021 has been marked by reconsideration and growth. November 2020 feels simultaneously like yesterday and ages ago, so it’s easy to forget the slew of cannabis wins that came in that election—and the wins did not stop at the ballot box, as legislatures continued to bring new programs into the fold in 2021. Some you might well have been forgotten because they actually have yet to come to fruition. Let’s take a look at what happened in Cannabis in 2021, and what’s to come in the new year. 

Voters Believe in Cannabis

Last year we saw Arizona, Montana, New Jersey, and South Dakota pass adult-use cannabis. We also saw South Dakota and Mississippi pass medical. (Note that wasn’t a typo, South Dakota became the first state to pass both simultaneously.) How these have played out, though, has been far from what voters expected.

Legislatures Continue the Cannabis Tide

Voters weren’t the only ones hot on cannabis, as state governments also got in on the fun. New Mexico, New York, and Connecticut passed adult-use cannabis programs in 2021, and Alabama passed a medical program. (Virginia did something weird with adult use that will almost certainly change, and with so much else going on, we’re not going to dive into that headscratcher.)

How It’s Going—Arizona (with a stop in Rhode Island)

Arizona had a medical expansion, an adult-use licensing round, and is gearing up for a social equity adult-use licensing round. These were/will be administered by lottery, sadly—lotteries may seem at first glance like a neutral way to give out licenses and avoid lawsuits, unfortunately in practice they accomplish neither of these goals. Lotteries are racist and classist, as they only allow those with the disposable income available to gamble to submit.

Holding lotteries also have not stopped lawsuits (see Illinois below); indeed, Rhode Island struggled in 2021 to even find a company willing to hold a lottery, due to the specter of litigation, and ended up doing it themselves in a somewhat bizarre visual display. They awarded a long-overdue five additional medical licenses, adding to the three that have been in the state for seven years already.

Arizona adult-use sales began in January — from existing medical operators — and the new operations in both states are now in the process of setting up.

How It’s Going—Montana

Montana’s adult-use sales are set to start January 1, 2022, and it looks like they’re going to get the regulations in place right under the wire. It has been a long year of regulators trying to get it right, while the legislature isn’t making it easy on them, it also looks like they’re not going to put the kibosh on it either. Meanwhile, the medical program continues to grow, with new operators opening all the time.

How It’s Going—New Jersey

The Garden State is getting greener. New Jersey began accepting adult-use applications on December 15, 2021. This means a likely start to sales in the first half of next year (it’s supposed to start in February, but doubts abound whether regulators will actually allow sales to begin then). A federal court finally lifted the hold on the state granting 2018/2019 medical round licenses, adding four vertically integrated licenses, ten cultivations, and 30 dispensaries.

How It’s Going—South Dakota

You can’t understand South Dakota’s cannabis situation without knowing Governor Kristi Noem is against it. Governor Noem did not agree with 54% (225,260 people) of her constituents who voted for adult-use cannabis, and her state supreme court agreed. On November 24, 2021, that body issued an opinion affirming that the voter referendum violated the single-issue rule. Basically, they ruled that voters should have independently voted on if cannabis should be legal for anyone over 21, if it should be taxed, if it should be regulated, and if hemp should be regulated, an illogical unprecedented approach. 

On the other hand, South Dakota’s medical program has been allowed to proceed. Without state license caps, cities and counties are currently offering licenses to applicants. South Dakota’s medical program will likely be a strong market, with allowed but-not-required verticals, an expansive variety of products including flower, and a large list of qualifying conditions.

How It’s Going—Mississippi

How’s Mississippi going? Worst ever for a medical program.

The state’s supreme court overturned the law in one of the most fantastically ridiculous rulings in modern legal jurisprudence. To sum it up, the state’s part of the constitution that allows voter referendums was written when there were five congressional districts in the state, and it required that the qualifying signatures come from the districts equally, that is, 20% from each. Due to a decreasing population, the state lost a congressional district, so that there were only four. The medical cannabis initiative did get at least 25% from each of the four districts, but they didn’t get signatures from five districts—because five districts no longer exist. The state supreme court overruled the voters, saying that this—and all other voter initiatives essentially from this point forward—were unconstitutional.

How It’s Going—New Mexico

After calling a special session, the governor signed an adult-use bill in April. The Commission has been meeting or beating their deadlines, and putting out regulations. Unlike their medical program, the adult-use program has far more local control, so municipalities have been working on their own processes. April 1, 2022, is slated to be the beginning of adult-use sales, and all signs point to that deadline being hit, though it will likely take several years for the entire program to get set up, as different localities will be doing licensing for some time to come.

How It’s Going—New York

After years of getting close, the Empire state finally passed adult-use cannabis. Though the program has not rolled out with the speed some hoped, it promises to be a massive market that should launch in the second half of next year, or perhaps early 2023. Delays have come from a variety of places, from needing the legislature to reconvene in order to pick government officials, to a switch of governors, to the realization that the program did not get an allocation for staffing. The next step is the release of regulations, currently penciled in for March 2022.

How It’s Going—Connecticut

Connecticut’s governor signed a bill in June that legalized adult-use cannabis. It has a heavy social equity focus, however, it has been the subject of quite a bit of scrutiny. Ultimately in December regulators ended up delaying the application process, so stay tuned in 2022 as we watch them iron out the details.

How It’s Going—Alabama

Alabama surprised many when the governor signed a medical cannabis bill, and overall a well-written one at that. Applications are scheduled for September 2022, with a tight 60-day grading window after that. The state’s medical board recently released their proposed regulations, and the Commission has been appointed and staff hired, as they work on their duties under the new law. Though the allowed products are limited, there are social equity set-asides for both individual license types and vertical licenses.

Oh, Illinois

No cannabis review of 2021 could be complete without a sojourn down the winding road of dismay that Illinois is.

Applications for adult-use dispensaries were due January 2nd, followed by Craft Growers and Infusers, after several delays. Excellent reporting has revealed that the state shadily hired KPMG to grade, who turned around and hired a remote army of non-cannabis experts to grade a staggering amount of content in very little time. Predictably to everyone but those just mentioned, this led to inconsistent grading, which led to the first of oh-so-many lawsuits. The response from the state was to allow most, but not all, applicants—thus more lawsuits—the opportunity to fix their grade months after submission. This was handled so poorly it led to multiple rounds of these deficiency notices.

The next step was to hold lotteries, which did not follow their own rules. Well, the state said they were lotteries, yet more excellent reporting has brought a healthy dose of doubt over that likelihood. The lawsuits continue, many recently consolidated into a ‘super-suit’ of aggrieved applicants, and dispensary licenses have yet to be issued, as a court has put a stay on releasing them that will last at least into March 2022.

While all this mess continues to putrefy, previously existing medical operators in the state now allowed to sell to everyone over 21 have had a wonderful 2021.

Existing States Expand

In addition to Rhode Island mentioned above, Ohio also had a medical expansion round. States that have no cap on licenses at the state level continued to welcome cannabis businesses at the municipal level. Michigan, California, and Colorado all saw new municipal licenses get granted.

The Federal Government Makes No Moves

Stories abound opining on what Congress does in regard to cannabis, but we’ll sum them up in a word—nothing. Talk sure, democratic and republican bills sure, action? Zilch. SAFE banking has a shot in 2022, but anything further seems unlikely.

The Outlook for 2022

Above we’ve covered all the approved programs that should be beginning sales in 2022, which we’ll be celebrating as each occurs. The cannabis tide will inevitably continue to rise, however, as we guess more states will join the ranks of sane, sound cannabis policy. 

Three states with existing and well-functioning medical programs are eyeing adult-use cannabis, namely Ohio, Pennsylvania, and Maryland. 

Ohio almost had adult-use years ago, but the law was declined by voters once it was publicized that it would create just a small number of owners, that being the group who backed the initiative. After that recent expansion of the medical program, the state is again exploring the approach, and this time everyone—specifically democratic lawmakers, republican lawmakers, and citizens gathering signatures—all have their own approach. 

Pennsylvania is overdue for adult-use legalization, with a successful medical program in place for years, and adult-use states popping up all around them. 

Maryland is in a similar boat as Pennsylvania, with a bipartisan panel currently working on creating a program. Rhode Island may budge too in 2022, as they are the last New England state without a program. 

The November 2022 ballots will likely include Arkansas, Florida, Idaho, Mississippi, Missouri, Nebraska, and North Dakota, though whether they all actually get there remains to be seen.

In these uncertain times, take comfort and place your bets on the stability of cannabis marching ever forward, bringing relief, relaxation, and reduced arrests into the new year and beyond.

So raise a joint this New Year’s Eve to what promises to be a great 2022 for cannabis!

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