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.

Buyer’s Club 2 in Hudson, NY

Buyer's Club by On The Revel in Hudson, NY last week was so good. I wish I had more clever words but that's it. The feeling I've had so many times over the past 5 years of "I can't wait until events like this happen in New York" came full circle. The only thing I have to wait for now is the next one.

With so much negative noise right now in cannabis (especially New York) my biggest take away from this event is that we have a strong group here in New York that is going to make this market happen. I am meeting people in the New York market I admire almost every week at this point.

Very important work that Lulu Tsui and Jacobi Holland are doing here in New York for years now. Really exciting to see how their platform is developing as we enter the next phase of our market.

Let's open some doors and then blow them off.

A Multi-Dimensional Regional Cannabis Market Landscape on the East Coast

Cannabis is personal. Each person experiences cannabis differently just as we experience our lives differently. Cannabis communities form as consumers seek those who have similar or desirable experiences with the plant.

For that reason, we envision a multi-dimensional regional market landscape on the east coast within the next 5 years. These regional and hyper-regional markets will be driven by consumer demands for products that fit their way of life and deliver the value they seek. Brands who are able to align their value they deliver with consumers’ desires at this regional level will establish a foothold in their respective region.

Here are some examples:
- Top Level Regions: NORTHEAST / SOUTHEAST
- Sub Regions: NEW ENGLAND, MID ATLANTIC, CAROLINAS, GEORGIA and FLORIDA
- DMAs: NYC, PHILLY, BOSTON, DC, ATLANTA, MIAMI

Which brands currently have a head start in these regions, sub-regions and DMAs?

MJ Unpacked 2023 Week in New York

It was a great week of meeting entrepreneurs, operators, investors and advocates in the New York cannabis and East Coast cannabis community. The feeling at the events in and around MJ Unpacked was telling.

EVERYONE has their gripe (or multiple gripes). Examples include...

1. Some are frustrated by the slow moving (and sometimes strange moving) progress in New York and New Jersey.
2. Some are frustrated with more Federal failure.
3. Some are frustrated with the absence and poor quality of options to raise capital.

But NO ONE is talking about throwing in the towel.
WELCOME TO NEW YORK.

Speaking of, the highlight of the week was the Welcome to New York Event hosted by the Cannabis Collective where members of the New York cannabis community convened to celebrate the opportunity we have ahead of us. As an executive member, it was a pleasure to see the focus and efforts pay off for Jeffrey Schultz, Andrew Lowitz, Kristina Adduci, Shahbaaz Kara-Virani, Sloane B. and Jes Feuer

If you're interested in joining as a community or executive member, click the link below.

Incremental Change in Insurance Reimbursement for Medical Cannabis

We in the cannabis industry are used to small, incremental steps towards normalization. We believe it’s these small steps that eventually compound and result in lasting changes in mindset. Insurance reimbursement for medical cannabis is one area where we are seeing this incremental change.

While adult use gets the headlines, the medical use case almost always comes first and builds the pathway for adult use. Once a market graduates to adult use, medical use usually drops off as medical patients no longer bother with certifying, seeing a doctor for recommendations and other key elements to a successful medical cannabis program. Why? Because they don’t see the benefit. They can go to an adult use dispensary, get a recommendation from a budtender and buy the same medicine. So even if I am medical patient, why bother? I would argue that adhering to the medical program and working with a physician is a good reason. But fair point, that’s a little weak for the everyday medical user. When a market legalizes adult use, we’ve seen a few ways that medical patients can and should receive priority in order to receive uninterrupted, frictionless access. Such as medical patient only store hours or priority access to specific pain focused products. But what if your medical cannabis was treated like other medicines and all of a sudden you could possibly get reimbursed for that medicine?

Many states are not waiting on federal action and are passing state-level statutes that require or enable insurance carriers to reimburse patients for medical cannabis expenses. Now before everyone with a medical card and “chronic pain” gets excited, most of these state level bills come with caveats to make sure the casual adult use weed smoker is not being reimbursed for medicine. For example, here on the east coast:

1. New York lawmakers approved a bill that would require public health insurance providers in the state to include medical marijuana as a covered prescription drug and authorize private insurers to do the same (so no guarantee for private insurers).

2. A Pennsylvania appeals court ruled that the state’s medical marijuana law does not prohibit insurers from reimbursing injured workers for medical marijuana in cases where the drug is used to treat accepted work injuries.

As we’ve seen medical cannabis can be a viable option for patients with various conditions, we believe as the New York bill states, “Access to medical marijuana should not be limited to those who can pay out of pocket.”

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.