All Eyes on New York as Legalization Looms: Cannabis Weekly
(Bloomberg) -- New York’s recreational marijuana market is poised to begin with a big splash -- and it’s one that may well ripple around the world, according to speakers at a packed “Business of Cannabis: New York” conference last week.
The state’s industry, which is expected to begin licensed sales around 2023, will see revenue of $1.1 billion within the first year, said Cy Scott, chief executive officer of cannabis data company Headset Inc. Initially, sales will be driven by regular cannabis consumers jumping into the legal market from the thriving illicit one, he said during a presentation at the Rainbow Room in Manhattan.
“Then, normalization will drive other consumers -- the soccer moms will come in,” Scott said, speaking to an audience that mixed beards, buffalo plaid and baseball caps with business casual.
Within a few years, Headset forecasts $3 billion in sales with New York likely surpassing Canada and becoming the world’s second-largest legal market after California, which currently has around $5 billion in annual sales.
This will mean plenty of jobs and tax revenue. Yoko Miyashita, CEO of marketplace platform Leafly Holdings Inc., told me she expects 20,000 full time jobs to be created in the first 18 months of legal sales and around 60,000 within five years. Leafly’s forecast is for annual sales to reach $3.5 billion in the five years after legalization, meaning the state would see about $450 million a year in tax revenue.
Beyond revenue and jobs, however, doubts remain about New York’s pledge to address its history, including the disproportionate arrests of Black people for marijuana possession. The state plans to do so in part by granting half of its cannabis business licenses to so-called “social equity” applicants who have been affected by the convictions, and by investing in communities that were affected. Several speakers at the event expressed concern that these efforts won’t be enough.
“Just because we have access, doesn’t mean we have accessibility,” said Ruben Lindo, founder of Blak Mar Farms LLC, a Black-owned cannabis company based in Buffalo, New York. Lindo said the state needs to make sure that minority applicants get proper training so their businesses don’t fail.
But if New York succeeds in helping communities move past the racial legacy of the war on drugs, the impact will be felt in other U.S. states and beyond, panelists said.
“New York is our last chance to build a just and equitable cannabis industry,” said Steve DeAngelo, founder of the Last Prisoner Project, a nonprofit group that advocates for the release of those imprisoned for cannabis-related crimes.
“It didn’t happen in California,” DeAngelo said, referring to efforts to help those most hurt by drug policies. “And I can guarantee if it doesn’t happen in New York, it’s not going to happen in Texas.”
NUMBER OF THE WEEK
- 9%: The cost of capital that cannabis companies are seeing now, as opposed to the 15% rates in the recent past, according to Cantor Fitzgerald’s Pablo Zuanic, speaking at the conference.
QUOTE OF THE WEEK
“There’s been $16 billion raised by the top 15 U.S. multistate operators on the CSE over the last five years. That’s not chump change, even in Canadian dollars,” said Richard Carleton, CEO of the Canadian Securities Exchange, in remarks during last week’s event.
WHAT YOU NEED TO KNOW
- The House Judiciary Committee passed the MORE Act with a bipartisan vote on Sept. 30, spurring more hope for final action that could remove cannabis from the list of controlled substances in the U.S.
- Listed Funds Trust is planning to create an exchange traded fund known as the B.A.D. ETF, which will track betting, alcohol and drugs companies, including those in the cannabis space.
- Mississippi Governor Tate Reeves said he was willing to call a special legislative session to revive the medical cannabis program scuttled by the state Supreme Court.
- Canopy Growth was downgraded by BofA, which sees an increased risk to the company’s near-term profitability outlook.
- Aurora Cannabis shares rose after the company reported first-quarter results that were not as bad as some had feared.
- A.G.P.’s Virtual Fall Consumer Cannabis Conference.
- Cantor Fitzgerald hosts a fireside chat with Jushi Holdings Inc.
- Lytham Partners Fall 2021 Conference includes presentations from Khiron Life Sciences Corp. and Delta 9 Cannabis Inc.
- Tilray reports first-quarter results before the market opens.
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