Everyone in the cannabis industry is keeping a close eye on developments in the northeast US. A lot of that is due to the major markets in New York and New Jersey opening up. But there are also a lot of interesting things happening in neighboring states, too, including the already fully legal markets in Massachusetts and Maine and the big medical marijuana markets in Pennsylvania and Maryland.
It’s always interesting to see how each state puts its own unique set of cannabis laws and regulations together and how these (along with the existing medical and illicit markets and other factors) go on to the shape the market. Each one is its own experiment in economics and government in a way.
Key Trends
Full Legalization Is Just a Matter of Time
All the 11 states in this guide have legalized medical cannabis, and recreational cannabis is pretty much a done deal in the northeast US aside from Pennsylvania. All states have legalized it or are currently in the process of doing so.
Of the states in the northeast that seem certain to legalize recreational cannabis in the next year or so, Maryland seems like it may be the last to go fully-legal since they plan to do it via a referendum in late 2022, while most of the other laggards seem poised to legalize via the legislature in early 2022.
Many Want Dispensaries in Their State, But Not on Their Street
Cities opting out of allowing recreational cannabis businesses continues to be a trend. 90% of cities in Maine, 71% in New Jersey, and 28% in New York have opted out of allowing either all cannabis businesses or dispensaries. Vermont, interestingly, works the opposite way – cities have to opt in through a public vote to allow cannabis businesses, which less than 10% had done by March 2021.
Making Room for Small Operators & Social Equity Applicants
All the new rec states are attempting to prevent MSOs from dominating their markets and giving more opportunities to small operators and social equity license holders. Most have caps on the total number of licenses each business or individual can hold.
Established Recreational Markets
Massachusetts
Current # of Dispensaries: 190 (December 2021)
Current Recreational Market Size: $844 million (first eight months of 2021)
The Massachusetts marijuana market has developed quickly, with medical sales being legalized in 2012 and then recreational in 2016, with recreational sales beginning in 2018. It’s a diverse market with a mix of MSOs and small and mid-sized operators. The state has a cap on the total number of licenses a business or individual can have. Like California, the Massachusetts market is limited somewhat by the ability of municipalities to set license caps or ban cannabis businesses outright.
One of the more unique things about Massachusetts are the “host agreements” that cannabis companies are required to sign with individual municipalities, forcing them to hand over up to 3% of their yearly gross sales plus “community impact fees” to the city, often costing the companies hundreds of thousands of dollars.
Maine
Current # of Dispensaries: 58 recreational, 5 medical (October 2021)
Current Recreational Market Size: $60 million (2020)
Current Medical Market Size: $250 million (2020)
Maine legalized medical marijuana all the way back in 1999, then legalized recreational marijuana in 2016, with sales finally beginning in 2020. There are concerns about market saturation. More than 90% of cities have opted out of allowing recreational sales.
New Recreational Markets
New York
Current Market Size: $250-$300 million (2021)
Current # of Dispensaries: 40 (December 2021)
Estimated Market Size: $2.3 billion (2027) (recreational only)
New York is the cannabis market that everyone’s watching aside from New Jersey, with New York being the fourth most populous state and New York City being the financial and cultural capital of the US. Medical cannabis was legalized in 2014, ultimately allowing 10 different vertically-integrated cannabis licensees to open a max of four dispensaries each. Most of these licenses are owned by a who’s-who of giant, multi-state cannabis companies, including Columbia Care, Curaleaf, Rise, MedMen, Acreage, Verilife, Sunnyside, and Vireo.
The state (with a big assist from Governor Cuomo trying to do something to distract from him being a creep, which almost seemed to work for a minute) finally legalized recreational weed in March 2021. Currently it’s estimated that retail sales will begin sometime in late 2022 or 2023. A lot of pressure is on New York to avoid allowing multi-state operators to dominate the market, as they have the MMJ market in NY and markets in other states. The NY law is written to favor smaller operators with social equity provisions and license caps per licensee.
One figures that NY will run into same issues that California in particular has struggled with – of a new private legal market with heavy regulatory and tax burdens being undercut by a strong, longstanding illicit market that law enforcement has minimal power and incentive to crack down on.
New Jersey
Current Market Size: $210-260 million (2021)
Current # of Dispensaries: 23 (December 2021)
Estimated Market Size: $1 billion (2024) (recreational only)
New Jersey was the first in the Tri-State area to legalize recreational cannabis back in 2020. It has has medical marijuana since 2010, with a total of 10-15 dispensaries operating in the state by 2020. The state is already starting to accept applications for cultivators and processors/manufacturers as of December 2021, and is set to start accepting retail licenses in March 2022. Like New York, its law has provisions favorable to small operators including social equity programs and license caps per licensee.
It currently limits the total number of cultivation licenses to 37 (though this number doesn’t apply to microcultivators). None of the other licenses have caps currently, though the cap on cultivation obviously caps the total supply of weed in the state.
Connecticut
Current Market Size: $110 million (2020)
Current # of Dispensaries: 18 (December 2021)
Estimated Market Size: $2.3 billion (2027) (recreational only)
Connecticut legalized recreational cannabis in 2021, having legalized medical cannabis back in 2012. Retail sales are expected to begin in late 2022. There are currently about 18 dispensaries in the state, a mix of MSOs like Curaleaf, Acreage/Botanist, and Trulieve and smaller operators. We expect a maximum of about 200 dispensary licenses to be made available in the state, if all municipalities end up allowing retail sales. Final rules for cannabis businesses are still being put together as of December 2021.
Vermont
Current # of Dispensaries: 5 (December 2021)
Estimated Recreational Market Size: $225 million (2025)
Medical marijuana has been legal in Vermont since 2004, and they legalized recreational marijuana via legislature in 2020. The recreational market is scheduled to open in October 2022, with retail license applications expected to be available the month before. The state is expected to heavily favor small operators with a cap of one license per type per person and limiting cultivation to microcultivators of 1,000 square feet to start with (which Bob Kinzel of VPR helpfully described as one-quarter of a basketball court).
Pending Recreational Markets
Pennsylvania
Current # of Dispensaries: 131 (August 2021)
Current # of Patients: 630,000 (August 2021)
Current Market: $910 million (2020)
Pennsylvania legalized medical cannabis back in 2016, began sales in 2018, and is already one of the biggest cannabis markets in the world. The state may be some years away from legalizing recreational marijuana, with its House Republicans in opposition. MSOs have been extremely active in acquiring cannabis companies in Pennsylvania in 2021, with Verano paying $115 million for one cultivation and processing facility and $110 million for a three chain dispensary, Cresco paying $90 million for three dispensaries, and Trulieve and TerrAscend each paying $60 million for three dispensaries.
Maryland
Current # of Dispensaries: 97 (December 2021)
Current # of Patients: 106,000 (July 2020)
Current Market: $450 million (2020)
Maryland is quietly one of the most mature medical marijuana markets in the country, with over 100,000 registered patients and nearly 100 licensed dispensaries in the state. The legislature is currently considering a bill to put recreational legalization on the ballot as a referendum for the 2022 election, which means that a recreational market probably isn’t likely until 2024 or so.
New Hampshire
Current # of Dispensaries: 7 (December 2021)
Estimated Cannabis Users: 130,000
Estimated Tax Revenues for Recreational Program: $19-$31 million
New Hampshire legalized medical marijuana back in 2013. They currently have a total of seven dispensaries in the state out of the eight maximum allowed (two per each of the four designated zones), and about 10,000 registered patients. The three cannabis companies in the state are vertically integrated and are relatively small operators. Delivery isn’t currently allowed. The state used to have one of those laws requiring patients to buy their cannabis at only their designated dispensary, but this restriction was removed in 2021.
Multiple bills legalizing recreational marijuana have been put forward in the legislature in 2020 and 2021, but none of them have been passed into law so far. One of the proposed bills in 2021 would end the vertical integration requirement and limit licensees to only 3 licenses of each type, and would allow municipalities to ban cannabis businesses.
Rhode Island
Current # of Dispensaries: 3 (with 5 more expected in 2022)
Current Market Size: $60 million (2020)
Current # of Registered Patients: 20,000 (2020)
Rhode Island legalized medical marijuana in 2006. Its legislature is currently discussing a recreational legalization bill that seems extremely likely to pass soon, with details such as the total number of dispensaries and expungement still being worked out. In 2021 the state held a lottery for five additional medical dispensary licenses to join the three existing dispensaries. Each medical dispensary is required to pay a $500,000 yearly licensing fee.
Delaware
Current # of Dispensaries: 7 (December 2021)
Current # of Patients: 20,574 (July 2021)
Medical marijuana has been legal in Delaware since 2011. Recent attempts to legalize recreational marijuana hasn’t succeeded primarily due to disagreements over social equity provisions. The legislature is expected to reconsider the issue in early 2022.
Get Help Opening a Cannabis Business in the Northeast US
Need help setting up the tech or managing your existing IT for a cannabis business in the northeast US? Cure8 can help. If you’d like to have a chat, we’ll be at booth #446 at CannaCon in NYC in January and at the NECANN shows in Boston in March, in NYC in May, and New Jersey in September. Feel free to reach out at any time at [email protected].
