How Did Maine Get Legal Weed Right, While California and Others Struggled?
Colorado has had the most success with legalized cannabis. They reduced the black market, provided reasonable taxes that made products competitive for the consumer sand the capped income, so people feel they get a “deal”. Comparatively, California has been the cookie monster of greed – creating havoc in the industry and hurting small businesses and the equity players they say they want to help. NYC’s failed rollout has paved for the way for over 1,500 unlicensed stores run by quick-thinking entrepreneurs selling products at a premium. Maine, known for its no-nonsense common sense, seems to be setting an updated example of how to run a successful program.
Maine’s rugged individualism complements an emerging industry. Governor Janet Mills appointed John Hudak. He comes to Maine from the Brookings Institution, where he served as Deputy Director of the Center for Effective Public Management and as a Senior Fellow in Governance Studies. For the past decade, John has led Brookings’ research into cannabis policy, regulation, implementation, and politics. Hudak, highly respected, in the industry has had the opportunity to review how states have rolled out their programs.
Legal sales of recreational marijuana soared 94% in 2022 over 2021. And the illicit market has dropped 64%.
Hudak and this team are taking a holistic approach to legal marijuana in the state. In comparison, California saw legal marijuana as a pure revenue opportunity and didn’t look at how to build another thriving industry. Granted they had some iffy players like MedMen, the majority are small businesses trying to take advantage of the largest US market. Oversupply of flower coupled with high taxes has brought the industry to its news. New York, a rival in market size to California, couldn’t decide what they want and at the last minute scrapped all plans and rolled out a partial plan, at a significant loss to existing legal retailers. Now weed is expensive in the over 1,500 unlicensed retailers in New York City alone. Rather than fix the underlining problems, NYC instead “raids” and shuts down retails until they can open a day or two later. Green Market Report said “Following a new push by New York Gov. Kathy Hochul to crack down on unlicensed cannabis sellers across the Empire State last week, few in the legal industry expressed optimism that the policy would have the intended effect, with several predicting that the unregulated market would simply pivot instead of giving up.”
An early success is the Maine Office of Cannabis Policy (OCP) amended its contract with the Adult Use Cannabis Program’s (AUCP) inventory tracking vendor, Metrc, to implement batch tracking for cultivators.
Seed-to-sale tracking of cannabis serves as the foundation for state regulation. It allows a safe supply chain that prevents both diversion (product from the regulated market being sold in the illicit market) and inversion (illicit supply entering the regulated market). It also allows the state to take strides in protecting public health and safety. OCP took these important aspects of inventory tracking into consideration while examining the potential challenges and benefits to a batch tracking system.
Hudak shared his thoughts on where they are going “Cannabis regulations should be designed to provide safe, reliable, and consistent cannabis for patients and consumers. However, those regulations need to be as efficient as possible to meet public expectations about the supply chain, public health, and public safety. At the same time, regulations and taxes on cannabis cannot be so overburdensome that the legal, regulated market cannot compete–and outcompete–the unsafe, unregulated illicit market. Tension will exist between regulators and the regulated, but honest, well-intentioned, and good faith conversations among regulators, industry, and other interested stakeholders must work together to find (what can sometimes be a difficult) balance.”
(Article first appeared on The Fresh Toast, reprinted with permission)