It might be hard to believe, but we’re already halfway through the year. So far, 2019 has been a big year for cannabis in the US. Keeping up with the constant change throughout the industry can be exhausting. That’s why I’ve compiled the most important and impactful developments from the first six months of the year, in what I’m calling Simplifya’s 2019 Mid-Year Cannabis Roundup.

Click on your state for quick access:

Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Missouri, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania

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Arizona Cannabis Roundup

It may not be the first state that comes to mind when you think of the cannabis industry. However, the Grand Canyon State has had a functioning medical cannabis program since 2012. The biggest news out of Arizona this year was a ruling that settled the score on cannabis extracts. 

Extracts and Testing

This year, a unanimous decision by the state Supreme Court deemed extracts – including concentrates, vaporizer cartridges, and infused products – legal in Arizona. The decision came from a lengthy legal battle after an Arizona man was arrested and sentenced to 2.5 years in jail for possessing 0.05 of an ounce of hashish.

Arizona lawmakers also passed a bill this year that will officially require laboratory testing for pesticides, fungi, and other impurities by November 1, 2020. 

Program Oversight Woes

More recently, an audit of the medical cannabis program found several problematic issues with how the program is run. Among the issues, the report found that the Department of Health Services, which oversees the program, had failed to regularly inspect facilities and address noncompliance, did not inspect infusion kitchens according to Arizona food safety standards, and misallocated some of the program’s money.

Arkansas Cannabis Roundup

Despite having legalized medical cannabis in November of 2016, Arkansas has been slow to roll-out their medical cannabis program. The first legal medical cannabis in the Natural State wasn’t planted until January of this year. Since then, progress has been steady in Arkansas.

In February, regulators finally awarded licenses to 32 dispensaries across the state. A few months later, and two and a half years after voters approved the program, the first dispensary in Arkansas opened its doors to the public. Arkansans proved this market was viable within the first week, setting impressive sales numbers through the only two dispensaries that had yet to open.

As of this writing, the Alcoholic Beverage Control had approved four of the 32 licensed dispensaries to open for business. Arkansas will be a state to watch as the medical cannabis program unfolds over the coming months.

California Cannabis Roundup

The Golden State has had quite the wild ride on their legalization journey. Regulators hoped they would set the standard for successful cannabis regulation. Unfortunately, it has turned out to be a little more complicated than they imagined. Even though permanent rules went into effect at the beginning of the year, California is still struggling to stamp out the gray market.

The Licensing Headache

The state’s biggest problem this year has been a slow license approval process. Throughout 2018, nearly all licensed operators in California received temporary licenses. A massive backlog of annual license applications meant many operating legally under a temporary license were running out of time. To address the issue, legislators passed SB-1459 which created provisional licenses, and AB-97 further modified them. A business that has submitted an annual license application can now obtain a provisional license to continue operating until their annual license application is addressed.

However, the licensing woes didn’t end there. There is still a gap between expiring temporary licenses and the number of provisional licenses. This is leading some businesses to face the tough choice of shutting down, or continuing to operate on an expired license. SB-67 would address this issue and reinstate expired temporary licenses, but is still awaiting Assembly approval.

The state is so backlogged that there are now concerns about provisional licenses, which last for one year, expiring before annual license applications are addressed. This issue resulted in AB-97, which will extend the use of provisional licenses from 2020 to 2022, giving regulators more time to solve the licensing debacle.

Regulators Mounting Up

In addition to keeping legal businesses licensed, regulators are cracking down on unlicensed operators who are threatening the unsteady market. AB-97 also includes a $30,000 per day fine against unlicensed operators. Cities like Los Angeles are also imposing their own fines on businesses operating without a license. Regulators statewide are fighting back against unlicensed businesses in hopes that they can push consumers towards licensed operators.

Banking

Among other legislation focused on aiding the industry is SB-51. This bill would create state-chartered banks to provide banking services to an industry that currently operates almost entirely in cash. The bill has passed through the state Senate, and is making its way through the Assembly. California’s legislative session doesn’t end until September, and lots can happen in a few months. We’ll have to wait and see where the cards fall at the end of the summer.

Colorado Cannabis Roundup

Colorado legislators passed several bills this year that will have a big impact on business in the Centennial State. Among the changes, legislators have opened up investment to out-of-state interests and publicly-traded entities, approved a staggered rollout of delivery, and approved “tasting rooms.” These new rules will result in big changes for businesses and consumers alike in Colorado. 

Consumer Changes

For consumers, the biggest change will come in the form of delivery services. Beginning in January 2020, medical patients in Colorado will be able to have cannabis products delivered right to their door. However, recreational consumers will have to wait until 2021. Deliveries will only be allowed to residential addresses, and local governments can choose to ban the practice if they want. Additionally, the bill will allow third-party deliveries after the first year, which has been met with opposition from small businesses that are concerned about the competition.

Legislators also passed two bills expanding qualifying conditions to include autism spectrum and opioid use disorders. Doctors will now be able to recommend cannabis for autism, Asperger syndrome, and other developmental disorders, as well as for recovering opioid addicts. While more research is always needed, these conditions have shown promising results when treated with medical cannabis.

Business Changes

For licensees, the biggest change comes in the form of HB19-1019. The bill allows out-of-state and publicly traded interests to invest in the state’s industry. Until now, Colorado has outlawed this type of investment, and allowing so is already leading to big shake-ups. Within a week after the governor signed the bill, local businesses started to announce plans funded through opportunities the bill created. There is no doubt this change will have massive impacts on the Colorado cannabis industry as it continues to unfold.

Another big change for businesses and consumers alike is the passage of the so-called “tasting rooms” bill. The bill creates two new license types that could allow customers to consume cannabis on-site, with the difference lying in whether the business sells cannabis or just allow its use. Like delivery, this social consumption bill will require local governments to allow the businesses in their boundaries.

Florida Cannabis Roundup

The Sunshine State’s cannabis industry is one of the more restrictive in the nation, and is reliably entangled in one legal battle or another. So it should come as no surprise that much of the news out of Florida this year is surrounded in some sort of controversy.

Legal Battle Over Smokable Cannabis

Until this year, Florida patients could not access smokable cannabis. After a lengthy legal battle, newly elected Gov. DeSantis told legislators that if they didn’t end the ban, he would drop the state’s efforts to defend it. Legislators finally repealed the ban on smokable cannabis on March 18.

Shortly after they repealed the ban, legislators began trying to restrict the strength of cannabis flower. The attempt would have set a cap of 10% on THC levels in cannabis sold in the state. The measure didn’t gain enough traction to become law, but goes to show how hesitant legislators in the state are about the industry.

Home-Grow

Florida is also fighting a legal battle over patients’ ability to grow cannabis at home. One Florida man has been fighting for his right to grow his own cannabis after his doctor recommended a juicing treatment using live plants to help prevent his lung cancer from reappearing. The man is now asking the state Supreme Court to hear his case after an appeals court declined to reconsider a previous decision barring him from doing so. However, the court does not have to take the case, and has not commented on the man’s request.

Dispensary Cap

More recently, cannabis companies in Florida have challenged the state’s cap on the number of dispensaries a business can operate in the state. After granting permission to Trulieve, which operates the largest number of dispensaries in Florida, to surpass the cap of 35 dispensary locations, other operators are seeking the same opportunity. The cap is currently set to expire in April 2020, and only time will tell whether the state will allow other companies to expand beyond the cap before then.

Vertical Integration

This week, Florida’s 1st District Court of Appeals handed a win to businesses challenging the state’s licensing scheme. The court ruled Florida’s current model unconstitutional for capping licenses and forcing companies to vertically integrate. The distinction lies on the change of an “or” to an “and” when defining medical marijuana treatment center activities between the original amendment and the bill passed by legislators that regulates the industry. The court says the statute amends the constitutional definition and goes against the voters’ will by forcing vertical integration. 

While it’s not clear whether the state will appeal the ruling, the court’s interpretation has the governor’s support. He has previously gone on record as calling vertical integration a “cartel” that needs to be broken up. Several other state and federal Florida legislators have also voiced support of the ruling. They argue that vertical integration is “ripe for abuse” and restricts an open market. The court is asking the Department of Health to develop a different regulatory structure that addresses the court’s interpretation of the law.

Medical Marijuana Advisory Committee

In more positive news, Agricultural Commissioner Nikki Fried recently named 18 members to the newly formed Medical Marijuana Advisory Committee. The committee will address issues such as product safety, patient access, and affordability. The members will meet every two months, and will make recommendations to the legislature and the Office of Medical Marijuana Use on ways to improve the state’s approach to the industry.

Illinois Cannabis Roundup

Legalization of Adult-Use

The Prairie State has made headlines this year by becoming the 11th state to legalize cannabis, and the first state to fully legalize cannabis through the legislature. If you want to get technical, Vermont legalized cannabis through the legislature first, but their system does not tax and regulate the sale of cannabis to consumers like Illinois has done.

The more than 600 page act will go into effect January 1, 2020 and will allow adults over 21 to purchase, possess, and use cannabis in Illinois without a doctor’s recommendation. Money raised by the program would first go towards automatically expunging the records of nearly 800,000 minor cannabis-related convictions. Among many other things, the act also grants an exemption to the Smoke-Free Illinois Act. However, it leaves discretion to local officials to decide whether they want to allow cannabis consumption in public spaces. 

Social Equity

This is a big step for cannabis legalization, and some legislators are already claiming Illinois will set the gold standard for a regulated market. One big difference from other legalization measures is the act’s focus on social equity within the industry. Applicants with prior convictions for offenses that the act legalized, or who are from areas that are heavily impacted by the war on drugs will have an advantage when applying for business licenses. The act also sets aside $30 million for a low-interest loan program designed to help social equity applicants enter the industry.

The act doesn’t give regulators much time to implement the program. Consumers will be able to buy cannabis at existing dispensaries within six months, with additional licenses becoming available next summer.

Maryland Cannabis Roundup

The Old Line State has established itself as a contender in the medical cannabis market. In its first year, Maryland racked up more cannabis sales than Illinois, Massachusetts, and New York’s first years combined. In May, the governor signed a bill into law to legalize the sale of edibles in Maryland’s dispensaries. Access to a greater variety of products will no doubt help grow revenue figures throughout 2019.

After a very slow start, Maryland is also working on getting their market fully operational. 102 dispensaries were meant to be operating by December 2017, and while many have opened their doors, there are still a few stragglers left. Regulators issued a bulletin this year that gave dispensaries until September 30 to begin operations or risk losing their pre-approval. The state is also issuing more licenses for cultivators and processors in an attempt to promote diversity in the state’s cannabis industry, despite a lawsuit by Curio Wellness seeking to prevent them from doing so.

Massachusetts Cannabis Roundup

Adult-Use Rollout

It’s been about eight months since recreational stores opened in Massachusetts, and the market has been steadily increasing ever since. There are now 20 recreational dispensaries open in the Bay State, and more are expected to open throughout the year. Notably, there are still no recreational dispensaries open in Boston, which is by far Massachusetts’ largest city.

As more businesses continue to open, the state has set aside 123 licenses for equity applicants. However, as of last month, only 10 people have applied. This is partly a failing of regulators to prioritize equity applicants at the local level and partly due to the high cost of entry to open a business in the industry. State and local regulators are working to improve these statistics by pushing businesses with enough capital to help equity applicants through training and financing programs.

Deliveries and Cafes

Massachusetts’ Cannabis Control Commission has also been working on rules for delivery services and cannabis cafes this year. The proposed plan would allow small microbusiness, craft cooperative, and social equity operators to make deliveries or operate cannabis cafes. After two years, unless things change in the meantime, any company could apply for those activities. The Commission is expected to approve rules as early as September, once the public comment period is over, and could begin accepting delivery applications shortly after that. 

However, cannabis cafes are a little further off. The current rules only allow for a pilot program where cafes would open in only a few cities. This would give regulators time to monitor the effects of the program before expanding it state-wide. Additionally, state law would need to change to give local regulators discretion to allow cafes before the pilot program could begin.

Michigan Cannabis Roundup

Regulators in the Great Lakes State have had their hands full. Just this year, the state has faced a number of lawsuits, launched delivery services, and changed the industry’s governing body. All of this comes on top of laying the groundwork for an adult-use market. 

Licensing Lawsuits

Since last year, the state has been trying to close a large number of unlicensed operators; operators who argue that the only reason they aren’t licensed is because the state has not processed their applications. 

The licensing board was only meeting once a month, and applicants have criticized it for moving too slowly. This year, a judge ruled that those dispensaries can stay open until their applications are processed. The ruling came just as the Marijuana Regulatory Agency took over the licensing process. The MRA has greatly increased the number of applications they have reviewed each month. I’m sure this is great news to operators and regulators alike, who seem ready to put the conflict behind them.

Planning for Adult-Use

Back in November, voters approved a measure that would legalize adult-use cannabis. Regulators have spent most of their time this year working on making that a reality. Earlier this year, they formed working groups of nearly 60 people to provide input on how the market might look. A few months later, the attorney general created another work group to review and analyze the state’s cannabis laws. 

Regulators are also surveying potential adult-use applicants to make sure they have the staff necessary to handle the application process. More recently, the governor signed a bill dedicating $5 million to help implement the adult-use program. The Great Lakes State seems to be making a strong effort to avoid some of the problems they’ve encountered with their medical program. Regulators released emergency rules for the adult-use program in early July, and will start accepting applications in November.

Missouri Cannabis Roundup

The Show-Me State has made a lot of progress since passing a medical marijuana initiative in November. In the months since, regulators have been hard at work drafting rules for the industry, securing a contract with METRC for the statewide track and trace system, and developing an application process for both businesses and patients alike. 

Patients can now file applications for their registry cards, and businesses will be able to do so by August. Regulators will also license a relatively large number of businesses across the state. Unless they move more quickly than expected, regulators won’t issue business licenses until the end of the year, which means patients can hopefully expect to walk into a dispensary in the Show-Me State by Spring 2020.

Nevada Cannabis Roundup

From various lawsuits over licensing, to the will-they-or-won’t-they back-and-forth over consumption lounges, to a brand new cannabis compliance board — there have been a lot of developments for Nevada’s cannabis industry in 2019.

Licensing Lawsuits

The biggest news from the Silver State this year has revolved around the lack of transparency in the licensing process. When the state awarded adult-use licenses last year, they did not reveal the winners’ names, which resulted in a number of lawsuits claiming the licensing process was the perfect storm for corruption and demanding transparency. 

The losing applicants are not the only ones concerned about the transparency of the state’s licensing award process. Legislators passed a bill this year aimed at improving transparency as well. Shortly after the governor signed the bill, the Department of Taxation released a ton of information on the applicants, and the process in general. The information dump might make Nevada’s licensing process the most transparent in the nation.

However, that hasn’t stopped the lawsuits from moving forward. Businesses are still claiming the process was unfair and are seeking to prevent the state from issuing the new licenses. Records show that the 61 available licenses were awarded to just 16 companies. Some of the companies suing the state are seeking financial damages, while others are looking for a do-over. The state is arguing that while the process was not perfect, the results were fair. Lawsuits are still ongoing, and some expect them to go to the state Supreme Court before all is said and done.

Cannabis Compliance Board

The other big news out of Nevada this year is the creation of the new Cannabis Compliance Board. After an executive order established a similar advisory panel at the beginning of the year, the legislature passed a bill officially creating the new compliance board which will be modeled after the gaming industry. The seven-member board will take over most regulation of the industry, while the Department of Taxation will remain responsible for collecting taxes. 

The bill also creates a Cannabis Advisory Commission, to be made up of experts from marijuana and other related fields. The commission will address various issues, such as inclusion, addiction prevention, training programs, and other important aspects of the industry. 

An unfortunate result of the new compliance groups is that consumption lounges are now delayed until 2021. After initially looking like a very real possibility this year, the bill that created the board and commission also prevents local governments from issuing consumption licenses for two years. Many expect the new groups to explore and regulate the lounges in the meantime.

North Dakota Cannabis Roundup

This year is shaping up to be a big one in North Dakota. After voters legalized medical cannabis in 2016, the Peace Garden State saw its first dispensary open at the beginning of March. To date, only two storefronts have opened, but at least six additonal locations expected to open by the end of the year. The state only has 683 registered patients as of this writing, but some estimates predict upwards of 4,000 patients within the next two years.

This year, the legislature passed a number of bills in an attempt to improve the framework of the industry. Bills like HB 1519 added 12 new qualifying conditions for patients, while others such as SB 2210 removed the 1,000 plant cap set on cultivators and allows them to grow an amount that is sufficient to meet patient demands. Other notable changes include removing restrictions for patient applications and increasing patient access to cannabis products, among other administrative changes.

While North Dakota’s medical cannabis market is just getting off of the ground, some are already looking towards the future. After failing to receive enough votes in the 2018 election, some North Dakotans are eyeing another push for adult-use legalization. Legalize ND recently revealed the new version of the ballot measure they want voters to support in 2020. The measure is currently under review, and organizers hope to have petitions available by August.

Ohio Cannabis Roundup

The Ohio legislature legalized medical cannabis in 2016, and in January 2019, the first four dispensaries opened to the public. Patient demand was so high that stores capped the amount of cannabis patients could buy to manage their supply. Sales at those dispensaries reached more than $500,000 in the first few weeks of operation.

Patient Participation

Those numbers come despite the fact that many registered patients are not buying cannabis. Only about 28% of the 20,000 registered patients purchased cannabis in the first three months after dispensaries opened. The main explanation from patients is the high cost of cannabis in the Buckeye State. 

We’re now half way through the year and only about 19 of the 56 businesses that obtained licenses have opened. The state has registered more than 42,000 patients, yet only half of them have made a purchase. The small number of dispensaries also means many patients have to travel a long way to purchase their medication. 

High Prices

Prices in Ohio have fallen about 15% since the beginning of the year, but some patients admit that they still buy from illegal dealers, or drive to Michigan where prices are much cheaper. Many expect prices to continue falling as more dispensaries open, but it seems a long way off before they reach affordable prices. Just last month, the average price per ounce of cannabis was still more than twice as much as it is in Michigan. With only a handful of processors in operation as well, prices for infused products are also very high. We will have to wait and see how much prices change as additional operators come online over the coming months.

Oklahoma Cannabis Roundup

The Sooner State has been very busy this year. After passing medical marijuana by voter initiative last June, regulators have been issuing licenses left and right. The numbers change regularly, but roughly one year after voters approved the program, Oklahoma has issued 5,907 business licenses and 146,381 patient licenses. 

That is enough to give Oklahoma the most patients per capita of any state with a medical program. As you would expect with numbers like that, business is booming. Sales figures have grown each month since dispensaries opened last fall. Because the majority of the businesses granted licenses are not yet open, we are still waiting to see the full strength of the Oklahoma cannabis market.

In addition to issuing thousands of licenses, regulators in Oklahoma have been working to provide more guidance for the businesses operating there. Legislators passed the Unity Bill back in March, which will more than double the number of regulations for the state’s cannabis industry. The bill is set to take effect in August and includes additional rules covering inventory tracking, testing, and advertising, among other things.

Oregon Cannabis Roundup

The Beaver State was one of the first states to legalize cannabis way back in 2014, and since then has become the most well-known throughout the industry for over-production. Oregon is now home to the cheapest cannabis in the country. The anecdotal figure is that the state currently contains enough cannabis to supply the population for at least six years.

It is no surprise that Oregon legislators have been working to address this problem. This year, legislators have passed bills allowing regulators to deny license applications on the basis of supply and demand, and that would allow Oregon businesses to export cannabis to other states (only after federal approval of interstate commerce, of course). Only time will tell whether these attempts to address the state’s oversupply will be effective.

Additionally, after a report released earlier in the year, regulators have placed a greater emphasis on enforcement. Among the findings of the report: the state was failing to conduct regular inspections, regulators are not doing enough to prevent diversion into the black market, and the state’s testing system was found to be inadequate. In an attempt to address some of these shortcomings, the Oregon Liquor Control Commission (OLCC) is considering increasing the penalties for non-compliance. No word yet on how the state will address the other findings in the report, but with such serious issues, we certainly expect more action to be taken.

Pennsylvania Cannabis Roundup

This year marked the close of Pennsylvania’s first full year of medical cannabis sales. When the first anniversary came around at the start of the year, the state had produced some impressive numbers. The first year saw sales total $132 million, and shortly after that, the state’s patient count reached over 100,000 patients. Despite these relative wins for the Keystone State, the rollout has been a controversial one. 

A recent report published last month identified several “errors and irregularities” in the scoring process for business applicants. The report found that some members of the scoring committee ignored the standardized scoring rubric in lieu of internally created scoring guides. In other cases, some members had untrained colleagues help them in evaluating applications. The licensing issues have resulted in over 200 appeals, and while no one has received a permit after an appeal, an appeals officer did rule that at least one company was entitled to a new application review. The rescoring has yet to happen.

While the licensing issues are still being addressed, Lt. Gov. Fetterman traveled around the state on a “marijuana listening tour.” Between February and May, he visited all 67 of the state’s counties seeking feedback from residents. One of the big themes he noticed on the tour was that, by his estimate, around 65-70% of Pennsylvania residents are ready for full legalization. With that level of voter support, it could just be a matter of time before adults 21 and older can walk into a store and legally buy cannabis in the Keystone State.