By Anthony Hennen | The Center Square
(The Center Square) – As Pennsylvania weighs the legalization of recreational marijuana, it could take notes from New Jersey on how its legal program has gone.
For recreational cannabis to lessen the illicit market and raise tax revenues, two things stand out: the number of dispensaries and the importance of a functional licensing process.
As a recent report from online cannabis market Leafly noted, “some municipalities are (inadvertently) supporting the illicit cannabis market” by opting out of approving dispensaries within their borders.
“Fears surrounding local cannabis stores may prompt elected officials to prohibit cannabis companies in their towns. But adults in every community already purchase and enjoy cannabis, legal or not,” Leafly Senior Editor Bruce Barcott said in a press release. “The cities and counties that skip out on cannabis are essentially voting to keep their local illegal marijuana markets in business.”
Time is a factor as well: the report shows that the longer a state has had legal cannabis sales, the better it gets at reducing illicit sales. However, new states like Montana and New Mexico are already doing better than old states like California and Michigan, and there’s a clear correlation between more legal stores lowering the number of illegal sales.
Yet, while a new state like Montana has captured almost 80% of estimated legal sales in the state, New Jersey has only captured about 20% of the legal market since its program began in April 2022.
As Pennsylvania debates recreational marijuana, it can learn from New Jersey’s slow expansion of dispensaries.
With fewer options, and more municipalities opting out of the legal industry, marijuana users rely on the black market and the state loses more tax revenue. Without the growing of dispensaries across the commonwealth, illegal marijuana sales could remain illegal.
New Jersey cannabis businesses are optimistic about improvements, however.
“We think New Jersey will follow more the Colorado model,” said Edmund DeVeaux, president of the New Jersey CannaBusiness Association, a trade association of cannabis-related businesses.
Colorado is estimated to have 99% of its cannabis market in legal sales since approving recreational marijuana in 2012.
DeVeaux emphasized the appeal of legal over illegal products.
“People were eager for the cannabis industry to take shape primarily because they were saying … we don’t want to support the illicit market,” DeVeaux said. “Adults don’t want to buy cannabis from just anybody. They want to be responsible, they want their product to be safe, and they don’t want to support people breaking the law.”
The popular support for legal marijuana sales could drive change.
The early struggles of licensing could also get better as the state learns from its mistakes and improves the management of its Cannabis Regulatory Commission.
“The approval process has taken longer than many people had either anticipated or desired,” DeVeaux said. He noted that the CRC, which reviews and approves license applications, is not yet fully staffed.
Well-intentioned rules, such as prioritizing licenses for businesses that are owned by women, minorities, veterans or are in economically disadvantaged areas, have also slowed more dispensaries from appearing. Businesses that have the capital already raised, or a storefront ready to open, have experienced delays.
DeVeaux noted that the CRC is staffing up and working hard, but the backlog of licensing will remain an issue to be addressed.
“It’s still not enough, we definitely need to see growth in the market with respect to awarding license holders in the new recreational adult-use market so that they can get up and running,” DeVeaux said. “Patience is a virtue. You’ve gotta be patient.”
While there has been bipartisan support in Pennsylvania for a recreational marijuana program, some federal laws still complicate the issue, though legislators are keen to capture the tax revenue that otherwise flows into the illicit market or neighboring states’ legal markets.
