Every time a new state goes recreational, you get to win…
It was Tuesday, November 8, 2016 – Election Day.
Voters in every state across the country fell in line at the polls. In four of those states, they saw adult-use cannabis on the ballot.
And on that crisp November day, voters in Nevada, California, Massachusetts, and Maine made history by passing recreational cannabis legalization in their states.
Fast forward to today, and you can see strong recreational cannabis sales in three of those states – collectively bringing in billions of dollars in new revenues.
One state, on the other hand, has yet to see a single dollar. Only just last week did Maine issue its first business licenses to finally get its program up and running nearly four years later.
These four states may have all passed recreational legalization on the same day, but each had a completely different program implementation.
And each of these states’ roll-outs shows the next state to legalize cannabis how to bring in even more sales.
So, today, I’m going to show you the state that “won” the race…
Category 1: Time From Legalization to First Cannabis Sale
If all goes to plan, cannabis consumers in Maine can purchase adult-use products on October 9, making it the first state to have a recreational roll-out during a pandemic.
That will mean it took Maine 1,431 days from passing legalization to its first legal sale.
But Massachusetts was twice as fast. After legalizing on the same day, it saw its first legal recreational cannabis sale on November 19, 2018, 741 days after the 2016 vote.
California was even quicker out of the gate, rolling out its legal program in 419 days.
And Nevada managed to get there the fastest, making its first legal recreational cannabis sale at midnight on June 30, 2017 – 235 days after legislation passed.
There’s no question that the time it took these states to roll-out directly affected their tax haul. So, let’s take a look at how these states fared in their first year of sales.
Category 2: First-Year Sales and Taxes
We know Maine racked up $0 in recreational cannabis sales. That means a big goose egg in taxes, putting Maine in last place.
But Nevada, California, and Massachusetts are another story.
Massachusetts saw $393.7 million in legal recreational cannabis sales in its first full year, bringing in approximately $63 million in taxes.
Nevada raked in $425 million and about $70 million in taxes.
And California pulled a jaw-dropping $2.5 billion in sales in its first full year, bringing in $397.1 million in taxes. That’s more than Massachusetts managed to generate in sales.
Now, on the surface, California won.
But in reality, it’s impossible to be able to directly compare each of these states’ sales since they vary so drastically in size and population count.
So, let’s change how we look at it a bit.
Let’s compare the number of dispensaries in each state to its adult buying population.
Category 3: Access to Recreational Cannabis
Maine not only lagged out of the gate, but it dragged its feet on dispensaries, too.
In fact, in its first round of licenses issued, only 2 dispensaries made the cut – one in Northport and one in South Portland. Even with a mere 1.1 million adults in the state, that’s just one dispensary per 539,000 potential customers. Not even one dispensary per 100,000 adults.
California, with 30.1 million adults and 910 licensed retailers, had one per 33,049 potential customers, or about 3 dispensaries per 100,000 adults.
Per dispensary, Nevada looked about the same. With 2.25 million adults and 69 licensed adult-use retailers in the state, Nevadans found one dispensary per 32,585 potential customers or, again, 3 dispensaries per 100,000 adults.
But Massachusetts, with 5.45 million adults and 241 licensed marijuana retailers in the state, could choose from one dispensary per 22,615 potential customers. That gave them 4.4 dispensaries per 100,000 adults – taking the cake for the most dispensaries per capita.
And the Winner Is…
These four states may have all legalized cannabis on the same day, but they had four totally different experiences.
And the real winner from that experience is you.
That’s because, as an investor in cannabis stocks, you get to win every single time another state goes recreational.
For one, more people buy cannabis today than in 2016.
Perceptions about cannabis have also changed. People shy away from sharing their experiences with it. Everyone from soccer moms to senior citizens talk about how they use cannabis as a part of a wellness routine.
Lining up at a dispensary no longer comes with a “bad person” stigma.
And each state roll-out brings more product choices than ever before. Back when Colorado first legalized cannabis, your only product was what you could smoke.
Today, you can find a ton of different ways to consume cannabis: CBD-infused beverages, oils, tinctures, and balms, just to name a few.
And with so many successful examples in places like Nevada and Massachusetts, Illinois and Michigan had even more data and information at their fingertips to get a successful program up and running.
That means soon-to-go-recreational states like New Jersey, Arizona, and Pennsylvania – or states like Maine – have blueprints in front of them so they can hit the ground running as soon as voters pass legalization and generate more sales than ever before.
Finally, with the CEOs I talk to, they all talk about the importance of training and education with their staff.
Also known as “budtenders,” these individuals help those walking into a dispensary to find precisely what they need. Whether they want help falling asleep or want something to help with social anxiety, a skilled budtender will direct them to the right solution.
That’s why, even though Maine moved slowly, they didn’t lose the opportunity going forward: we know that going recreational can boost a state’s cannabis market three to five times.
Big operators now want in the state, like Curaleaf Holdings Inc. (OTC: CURLF), which recently got its Select brand products into medical dispensaries ahead of the recreational roll-out.
With the incredible amount of sales filtering into legal and regulated markets, anyone not invested in cannabis stocks will take notice.
And as a NICI Membership subscriber, you could be sitting in the front row with the best cannabis stocks in hand.
Don Yocham, CFA
Executive Director, National Institute for Cannabis Investors
6 responses to “A Visual Guide to Recreational Cannabis Programs (and Profits) in the U.S.”
September 14 2020