What will happen to state cannabis industries if regulations remain unchanged?
Humboldt Seed Company
Cannabis will continue to be diverted from licensed states where overproduction is an issue. For example, California produces a lot, and there are still many municipalities that have yet to embrace a licensed framework.
The market will remain volatile and subject to wild fluctuation until we get a true sense of American cannabis consumption. Until we have federal legalization, we also won’t know the true potential of the craft, organic and locally produced markets.
Firstly, the unchecked presence of unlicensed vendors operating outside the legal framework may cause an uptick in black market activity, posing a threat to the growth of the regulated market. Additionally, unlicensed sellers’ inability to enforce taxes on sales may result in a decline in tax revenue, limiting funding for industry development and public initiatives. Moreover, consumer safety could be compromised as unlicensed sellers might disregard the stringent safety standards imposed on licensed businesses. Lastly, the risk of underage cannabis access may increase, with unlicensed sellers being less vigilant about age restrictions, potentially exposing youth to cannabis products.
It’s difficult to say what will happen to state cannabis industries if regulations remain unchanged, simply because every state is different right now. However, what’s certain is that the industry won’t be able to evolve and mature in the way it needs to if companies must sort through a stack of state-specific regulations in order to expand. Ideally, change would come at the federal level, but absent that, legislators and regulators need to take a look at the current environment and determine which rules work and should become best practices, and which ones should be left behind.
Director of operations
An unchanged regulatory environment could lead to several effects that would impact how a brand develops and markets itself. Currently, brands need to tailor their messaging, packaging and product offerings to comply with state-specific regulations. If each state continues to operate and evolve in a bubble, it is possible that the differences will become more pronounced. Branding strategies will continue to be adapted to accommodate these isolated markets in addition to factoring in existing regional, demographic or psychographic factors.
Due to current regulations, state industries are struggling with access to traditional funding and limited investment opportunities. If this remains unchanged, markets will become dominated by corporations that can weather the financial storm and legacy operators will be lost to consolidation. Both start-up and existing brands will lack the ability to invest in their branding and marketing at a level to remain competitive.
It’s going to hinder the overall market and push the little guy out which only leaves room for the large multi-state operators.. The transport restriction across state lines limits the recreational market size to only sell in the region it was produced. Areas like Oregon and California are export states with many growers that can easily fulfill the currently limited demand. The CBD flower market is tougher to sell because it’s non-psychoactive, but the 2018 federal farm bill opens up shipping to all 50 states and to other countries and has friendlier banking solutions. Hopefully, we will see international cannabis sales soon. America is admired worldwide for high-quality cannabis. It’s time to capitalize on this and spread true medicine to people in need.
The Clark Law Office
There will always be a federal-state law conflict that will affect businesses. Businesses in the cannabis industry will continuously have a difficult time obtaining funding and accessing insurance. For one, financial institutions that are providing services to state-licensed cannabis businesses can find themselves subjected to criminal and civil liability under federal rules (Controlled Substances Act) and subject to regulatory sanctions under federal banking laws. This will significantly inhibit both financial institutions and businesses in the cannabis industry from having the ability to provide services as well as the ability to engage in core business activities. This can lead to losses in the cannabis industry.