After Ohio Legalizes, How Many Americans 21 and Over Have Access to Legal Cannabis?

Congratulations to Ohio for joining the right side of history. There are a lot of stats being thrown around regarding what percentage of Americans now have access to legal cannabis. I took a look at some basic data from the US Census to arrive at some estimates of my own.

Raw Numbers

Question: After yesterday’s Ohio win, How many adults aged 21 and over in the US live in a state where cannabis is legalized for recreational purposes?
Answer: 132M adults 21+

Question: How many adults aged 21 and over live in the US in total?
Answer: 246.8M adults 21+

So this means 53.5% of adults 21+ now live a state where cannabis is legalized for recreational purposes. The “Just over half” statements check out…initially.

Enter Nuance

Look what happens if we change the definition to those adults 21+ who actually have access via a regulated commercial market. To do this you have to pull out Ohio and Virginia as neither groups of adults 21+ actually have access. We also have to give many other states a haircut as these states allow cities and counties to prohibit cannabis businesses, like retail. We limited CA, NY and NJ by the percentage of population where retail is open by county and NJ by municipality. So that meant reducing CA by 63%, NY by 33% and NJ by 60%.
When we take into account this nuance we’re left with:

Question: After yesterday’s Ohio win, how many adults aged 21 and over in the US have access to legal adult-use recreational cannabis?
Answer: 89.6M adults 21+

So this means 36.3% of adults 21+ now live a state where they have access to legal adult-use recreational cannabis. The “Just over half” statements start to crumble.

I’m going to keep running scenarios with this dataset and other population datasets to see what other interesting insights emerge.

Celebration at a Cannabis Control Board Meeting in NY

Celebration at the Cannabis Control Board meeting today was so great to see.

"New York Needs You To Run Successful Cannabis Businesses"
- Chris Alexander

Plenty of work to do but it's safe to say the market is working out the kinks and heating up.

1. Expansion of CAURD retail licenses bringing the total to 463 licenses.
2. Grower Showcase is happening! This has been quite the 3 month rollercoaster but it's back on. Details needing to be ironed out, however this is a very exciting development.
3. Universal application process to be presented in September
4. Research and medical Cannabis Program advancements
5. Addressing and adjustments to the Cannabinoid Hemp Regulations.

Participating in the Regulatory Process in New York’s Cannabis Industry

Yesterday we submitted our first comments to proposed adult use cannabis regulations as an investment firm. Admittedly, being acutely focused on finding outsized investment opportunities in cannabis on the east coast, we have not spent much time in the regulatory framework process. After speaking with trusted advisors who helped us recognize the magnitude of the moment here in our home state of New York, we decided to submit comments to the OCM with respect to proposed adult use regulations. The regulations, as proposed today, create substantial roadblocks to those of us who wish to deploy growth capital for the New York adult use cannabis market. This was the right time for us to participate however there were a few byproducts of the process that we wanted to share.

1. Connecting with others in the space who were reviewing the proposed regulations and opining in parallel sharpened our pencil and gave us a more well rounded understanding of how regulations effect different stakeholders in the industry.

2. As we worked through our recommendations, it was surprising how often it was difficult to come up with a sound recommendation. For example, we could come up with a solution that would fit our investment model, however in working through the ramifications of the solution we would find that it would create a block for different investment models. Creating useful comments that thread the various needles in this industry is not easy.

3. We were under the impression that there were better parties than Receptive Capital to submit comments. So we initially decided to offer our support to others who were organizing comments to be submitted through an organization or group. We thought that this was a sound strategy to make our voices heard as these groups are better connected to the regulators than we are. Almost every group we connected with were happy to have us, but also strongly encouraged us to submit comments independently. “The more the regulators hear from us on the same points, the better.” This was a good learning moment for us as a firm.

A big thank you to Jeffrey Schultz and Bruce Sterman for encouraging, informing and leading.

If you are reading this and you have an opportunity to participate in the regulatory process, we highly recommend it.

Confusing the Customer in New York

A legal adult use cannabis market is not possible in New York if the illicit retailers can operate in plain sight and confuse the consumer without consequences. Identifying over 1,300 shops suspected of selling cannabis illegally is a clear warning signal to the regulators and law enforcement that if this is not addressed, the legal market will not have a chance to grow to a size that could convince some of these operators to leave the illicit market and join the legal market.

This is important work and another example of an East Coast market with a "clear as day" lesson to learn from cannabis markets out west.

While we strongly believe this issue needs to be addressed, we don't see the upside in punishing those who are operating a non-compliant retail location. A simple order and warning mechanism to cease operations for the time being. We need more legal retail locations before any strong action is warranted. We need to solve the product availability and consumer confusion problem first.