🎙️ 30 Adult-Use States by 2025?
Hirsh Jain breaks down Ohio's adult-use market potential, Florida's Amendment 3, how/what it means for the Cannabis industry to get to 30 Adult-Use States by EOY 2025, and more..
💭 This is Hirsh’s second time on the podcast (link here if you want to how some of his predictions turned out from 18 months ago). He’s typically my go-to on the legislation / strategy front so I thought it would be good to get the podcast back to a more active state (3-4x/month) + send these podcast interviews out over emails again.
💭 Any/all feedback is greatly appreciated. If there are any future guests you think I should have on, please let me know.
First Day of Sales in Ohio. Impact on neighboring states in Midwest / Appalachia; Ohio's impact on "Red America"
98 were ready to go (not all opened on Day 1, ~85 were opened on Day 1); 126 Ohio Dispensaries now have Provisional Licenses for Adult-Use Sales out of 134 Medical Dispensaries
170 stores opening up to Adult-use
State telegraphed in April/May that Adult-use sales were going to be starting in mid-June; ended up happening 6+weeks later on August 6th
State intentionally bunched the 98 COO approvals together to limit confusion
Intentional launch on a Tuesday to have a slow roll-out and went well. Cresco said one of its store saw ~1,000 customers, Curaleaf saw line outside the door from opening to close, Trulieve did 5x sales from prior Tuesday, AWH sold same amount on Tuesday that they would in a week
Ohio’s $3B Market Potential.
$600M Medical Market today ($50M/month), weak medical market means there’s a huge delta to increase
Starting in Q4, that monthly number go up to $150M/month ($1.8B run-rate)
With incremental increase in sales, should see $200M/month in mid-2025 ($2.4B run-rate). Believes it will reach $3B market size in 2026
Sales estimates methodology: population, neighboring states (how many are within a 2-3 hour drive), tax structure, pricing (relative), retail density, robust retail options (convenient retail within 5 miles drive sales)
How those factors evolve over time
Comparable States: Missouri with 6M people; half the size of Ohio, borders prohibition states, MO has low tax rate (10%), a lot of similarities between the two markets. MO is $1.5B market; similar size that benefits from Out-of-State consumers, market should be $3B (will be awhile before retail density peaks); MO had 200 dispensaries on Day 1 of Adult-use sales Michigan: ($286.3M in July 2024) Pricing, 20% less population at 10M, 700 retailers spread across the State, retail density. Licensing structure is not as open, pricing parity will take several years to reach; possibly in 6-9 months; pricing will meaningfully come down
Euclid officials address sudden halt of recreational cannabis sales; Nectar resumes sales, citing state law
Best Ohio location
Cincinnati (#3 in population after Columbus, Cleveland, AWH in downtown Cincinnati seems like its well positioned)
How long will it take to see pricing get competitive (4x price in OH medical market vs. MI recreational market)
Minnesota. Unique state approach, a "laboratories of democracy"
How Tim Walz VP choice impacts things
States have the latitude to innovate on their own policy
MO shut down intoxicating hemp beverages at liquor stores; MA has also restricted intoxicating hemp sales at liquor stores
Estimates 600-700 dispensaries when opened, any city with more than 12,500 residents need to have a dispensary; Will look more like MI
Lack of MSOs who have entered: TerrAscend has 20 dispensaries in MI
4 bordering States (ND, SD, IA, WI)
Florida. 5-7 reasons Florida is likely to pass in November. $6B market potential; impact on neighboring states in Deep South; Florida's impact on "Red America"
How Ken Giffin impacts Amendment 3 with his $12M contribution
FL is similar to OH in Republican consciousness; FL will be voting on abortion rights and Cannabis which are freedom issues
Polling: Many polls but important to pay attention to who is doing the polling (University of North Florida, Fox News have support at 64-66%); Polls that people pay attention to that are robust
Medical Vote in 2016: 71% voted in favor for Medical Marijuana; higher than any ballot measure in FL history, a demonstration that FL is more freedom-oriented than most people think. Not 15% swing in voting but electorate looks very different in a presidential election; nervous about
11 ballot measures; 10 has passed; only AZ failed in 2016 (narrowly);
900,000 medical out of 12M people who vote is another good sign
Abortion is a big driver of voter turnout
Harris is a big driver of young voters; Barrack won Florida twice
Free-rider problem with Trulieve leading Safe & Smart Florida ($66M raised to date)
# of dispensing locations as of August 1st, 2024 (Trulieve 142, MÜV 77, Ayr 65, Curaleaf 62, Parallel 45, Eaze 38, FLUENT 35, Cresco 33, Planet 13 26, GTI 19, Cannabist 14, Sunburn 14, Insa 10, Cookies 10)
Pennsylvania. Why PA is unlikely to pass AU in 2024 and 2025 is more likely
Missed inclusion in 2024-25 budget (July 2024)
One other opportunity in Fall legislative session which heats up around Labor Day and goes until late November, technically possible but unlikely to happen in the Fall session; PA is one of the biggest swing state
GOP won’t hand Shaprio a win going into Presidential Election
Optimistic in 2025 because of OH and FL going adult-use
November 2024 Ballot initiatives / Predictions.
Florida AU (State #25)
South Dakota AU (State #26)
54% passed in 2020 (precedent); failed in 2022 (47% of the vote); shows that in midterm elections, the electorate is vastly different
Sen. John Thune (R–SD) as next House Leader; passing Adult-Use in his home state would help move legislation forward
North Dakota AU (State #27)
North Dakota voters previously rejected legalization measures in 2018 (41% supported) and 2022 (45% supported)
Believes in 2024, Cannabis has been more normalized; turnout boost with it being an election year to get to 51%
Arkansas Medical Marijuana Expansion Initiative (2024)
Medical expansion initiative; expand medical program to make sure any medical professional can prescribe cannabis; AR GOP has routinely lined up against Cannabis
Nebraska Medical Marijuana Legalization Initiative (2024)
Would mean closer to 40 States with Medical Marijuana; Pete Ricketts 'If you legalize marijuana, you're going to kill your kids”; Republican voters repudiating their politicians
2025 States to Watch
Indiana: OH going online; every person in IN is within a 2 hour drive to MI, OH, IL (surrounded)
Wisconsin
Hawaii: Got closed each time, got close this year; not big market but important to get closer to 30 states with legalization
New Hampshire: Got closed each time, got close this year
Events/Conferences
The 2024 California State Fair in Sacramento, California had an estimated 649,000 attendees, which was a 10% increase from 2023
MJUnpacked (also happens to be during Election Day)