Not all new marijuana markets offer the same business opportunities for cannabis cultivators. The Nov. 3 election opened doors for marijuana growers in five states, potentially generating over $2.5 billion in medical and recreational cannabis sales annually by 2024. However, the appeal of these new markets varies significantly due to factors like location, size, and the overall friendliness of business regulations.
State Overview
New Jersey and Arizona stand out as prime options, bolstered by existing medical marijuana programs and large populations. Conversely, Montana and South Dakota, both of which legalized adult use, present limited opportunities. Mississippi, having legalized medical marijuana, holds potential as a dark horse, contingent upon local governmental responses to the new program.
Geographically, New Jersey’s recreational market benefits from a favorable outdoor growing climate, aligning with its “Garden State” nickname. In contrast, the other four states will likely depend on indoor and greenhouse operations due to extreme temperature fluctuations, while more conservative states may restrict outdoor cultivation.
“Any new market is good,” remarked Nic Easley, a cannabis consultant based in Colorado, highlighting the beneficial trend of nationwide legalization for the industry.
Arizona: A Mixed Bag of Opportunities
In Arizona, the market presents varied opportunities. Sara Gullickson, CEO of The Cannabis Business Advisors in Arizona, ranks it among the top in business potential, particularly for cultivators and processors. With a population exceeding 7 million and existing large-scale greenhouses, Arizona is projected to generate $760 million in annual recreational sales by 2024.
However, Easley noted a significant hurdle: “If you’re not licensed already, you’re not in the game.” While Arizona’s setup favors established operators, it includes 26 social equity licenses aimed at entrepreneurs from communities disproportionately affected by the war on drugs.
Mississippi: A Promising Yet Cautious Landscape
Mississippi’s lack of licensing caps suggests a market poised to resemble Oklahoma’s booming MMJ market. However, the possibility of local control over the MMJ industry raises concerns about bureaucratic obstacles. “Even though it’s legalized, there’s going to be pressure and pushback,” Easley stated.
Doctors can recommend medical marijuana for over 20 conditions, and if allowed to serve out-of-state patients, Mississippi could offer significant revenue streams. Projections indicate annual sales of $800 million by 2024, but analysts do not expect a quick rollout of the program.
Montana: Limited Growth Potential
Montana’s recreational cannabis regulations include 10 cultivation tiers, but existing medical marijuana businesses will have first access to enter the recreational market. This creates a challenging environment for new entrants. Gullickson sees Montana as a “very small opportunity,” as some areas already feature dominant producers. Projections estimate adult-use sales to reach $234 million by 2024, but a few dominant brands are likely to control the landscape.
New Jersey: Optimistic Projections
Industry experts express the highest optimism for New Jersey, partly due to its proximity to New York and a population of around 20 million. Projections suggest New Jersey could reach annual recreational sales nearing $1 billion by 2024. With existing medical marijuana businesses positioned to capture early demand, the market appears ripe for growth.
However, existing lawsuits over MMJ licenses could pose significant delays for new growers. Both Easley and Mayes expressed concerns about potential disruptions stemming from ongoing litigation affecting market entry.
South Dakota: A Cautious Outlook
Although South Dakota was the first state to legalize both recreational and medical marijuana simultaneously, the outlook is less favorable compared to other states. Mayes ranked South Dakota last for business opportunities, underscoring delays in licensing and program development. Projections for medical marijuana sales are modest, at $10 million to $12 million by 2024.
Gullickson refers to South Dakota’s market as “kind of a question mark,” emphasizing uncertainty in managing concurrent MMJ and recreational programs. Easley predicts that this market will evolve slowly, making it a long-term commitment for interested investors.