In part 2 of our series on the Key Cannabis Stories of 2022, we look at the industry at large. It was a big year for cannabis policy at the state and federal levels of government. At the top of the list sits the three states that enacted laws legalizing adult-use cannabis marketplaces and possession: Maryland, Missouri and Rhode Island. We spoke to these achievements back in Episode 6. With these three states coming on line, we now have 21 states, and close to half of the US population, with access to a legal cannabis marketplace.
On December 29th, 2022, a significant moment occurred in New York as the first legal cannabis sale took place at Housing Works, a non-profit organization in Manhattan’s East Village. Profits generated at Housing Works will support the organization’s mission of providing housing, healthcare, and vocational training for New Yorkers impacted by the War on Drugs. Despite this historic milestone, New York, like many other states, faced the challenge of a robust illicit market operating alongside the regulated market. The existence of illegal storefronts nearby and the prevalence of illegal cannabis activities in public spaces highlighted the difficulties licensed operators face in competing with the illicit market. Additionally, high tax rates, including taxes based on THC content, contributed to the average price of an eighth of flower reaching approximately $75—an unsustainable price point. The industry will closely watch how New York tackles these challenges moving forward.
In contrast to the growth in New York, Massachusetts saw its first retail store permanently close since the market opened in 2018. The closure of The Source+ in Northampton was attributed to oversupply and plummeting prices. The average price for a gram of flower reached an all-time low in October 2022 at $7.76, nearly half of what it was in June 2021. This trend of declining prices and oversupply is not limited to Massachusetts and could potentially impact Vermont businesses as well. Lower prices in neighboring states may entice price-sensitive consumers to seek cannabis products across state borders.
Inflation and Cannabis Prices
While many goods and services experienced inflation in 2022, the cannabis industry remained relatively untouched. In fact, cannabis prices experienced a decline due to oversupply, increased competition, efficiency improvements by large operators, and the enduring presence of the illicit market. According to The Urban-Brookings Tax Policy Center, 2022 marked the first year that any state recorded a decline in tax revenue from cannabis sales, with five states experiencing this trend in their relatively mature markets.
Federal Actions and Significant Cases
At the federal level, there were notable developments that signal progress for the cannabis industry. President Biden issued pardons for individuals with simple cannabis possession charges, urging governors to do the same at the state level. In response, several states, including Oregon, Colorado, and Connecticut, granted mass pardons and expungements, totaling over 100,000 cases in 2022. Furthermore, President Biden signed the first cannabis-specific legislation in over 50 years, which eases the process for clinical trials, drug development, and assessment of cannabis as a Schedule 1 drug. These actions indicate a positive shift in federal attitudes toward cannabis.
The Britney Griner Case and Prisoner Swap
The detention of WNBA star Britney Griner in Russia highlighted the complex intersection of cannabis, politics, and cultural divides. Britney, a BIPOC, gay woman who consumes cannabis for pain management, was detained in Russia for possessing vape cartridges containing less than 1 gram of cannabis oil. Her detention and subsequent release through a prisoner swap orchestrated by President Biden sparked discussions on the treatment of low-level, non-violent cannabis offenders in the United States. The case underscored the need for continued work in addressing cannabis-related criminal justice issues and the disparities that persist.
The Safe Banking Act, a crucial piece of legislation to facilitate access to capital for cannabis entrepreneurs, faced roadblocks in Congress, primarily due to Senator Mitch McConnell’s opposition. Despite passing in the House of Representatives multiple times, progress on the bill stalled. This leaves many businesses in the industry struggling to secure funding. Additionally, some retailers lost access to cashless ATM services, exacerbating the cash-based nature of the industry and posing challenges in terms of security and convenience.
Scientific Advancements and Therapeutic Benefits
A positive trend in 2022 was the increase in scientific research and publications related to cannabis. According to NORML, The National Organization for the Reform of Marijuana Laws, over 4,300 scientific papers highlighting the therapeutic benefits of cannabis were published. This shift signifies a departure from previous studies focused on proving potential negative effects and reinforces the growing body of evidence supporting cannabis as a plant-based medicine. This trend brings hope for further advancements in understanding the medicinal properties of cannabis.
The cannabis industry experienced significant developments in 2022, from the expansion of legal adult-use marketplaces to federal actions and scientific advancements. However, challenges such as the thriving illicit market, oversupply, and legislative hurdles remain. As the industry moves forward, it is crucial to address these challenges while continuing to advocate for equitable policies, criminal justice reform, and scientific research that supports the therapeutic potential of cannabis. You can learn more about the stories discussed here by tuning into Episode 10 of the High Fidelity Podcast. If you enjoy what you hear, please like, follow, share and leave a review. Thank You!