Observers have long noted that the issue of cannabis legalization does not rest on party lines. Despite historic prohibitions and a lack of direction towards interstate cannabis trade, the grassroots support and legislative scope of recreational and medical cannabis programs across the US is growing year after year.
[Related Reading: Cannabis Support is Growing – Why isn’t Federal Legislation Following?]
While states like Colorado, California, and Washington receive the lion’s share of media attention regarding their comprehensive programs and impressive revenues, there is momentum building for the new frontier of compliant markets: the cannabis market of Southern States.
The hesitancy of Southern States to move into a charged market is nothing new—it is the nature of their governments to slow processes down with lengthy reviews and legal challenges. In Georgia, for instance, access to oils was championed for medical patients in 2015 but saw enormous pushback from Sheriffs and Christian Coalitions.
In addition to protests, bureaucracy, and lobbying efforts, these hesitations have led to no new cannabis seeds being planted in this Southern Market despite the swift passing of legalization bills. Presently, there are over 20,000 registered medical marijuana patients in the state with no legal access methods.
Georgia may be exemplary in their legal stalemate; they are indicative of the more significant trend appearing in the Southern States—bipartisan awareness that the size and potential of these markets far overshadow any political hesitations that may be spearheaded by fundamentalists.
Virginia, for example, may have only a fledgling number of cannabis licenses when compared to a more mature market like Colorado. Despite this, their market cap is much higher, as their population is over 8.5 million compared to 5.7 million in Colorado. With Colorado boasting $2.1 billion in annual sales, it will take time before we understand the market potential of Cannabis in these populous Southern States, and many companies are already hedging their bets through ambitious acquisitions.
Speculations on the Southern Cannabis Market Size
While there are certainly complexities to navigate for medical consumers and retailers, there are even larger questions being asked by existing cannabis brands seeking expansion opportunities into new markets.
Companies headquartered near state lines often employ out-of-state partners, staff, and distributors to help in-state efforts. By acquiring licenses across state lines, they are offered the opportunity to connect their businesses in more meaningful ways and improve the lives of their staff. In addition to the profit motive, this connectivity has seen companies such as Truelieve purchase licenses across neighboring states.
With maturing markets seeing the need for expansion and growth, the Southern States will likely become a puzzling battleground for CEOs and investors who see the potential for increased sales as more important than the legal complications yet to come. Until interstate commerce is legalized (a long-term goal for many industry leaders), the strategy of hold-and-wait for licenses will likely increase in pace and scope.
Characteristics of Bills from the Southern States
While many states are left to finalize or even propose their cannabis licensing systems, a few common traits have appeared in federal-level propositions. A Republican-backed bill (proposed by Rep. Nancy Mace of South Carolina) promotes low excise taxes, state-level autonomy regarding sales and distribution, and equitable distribution of proceeds towards mental health and law services.
Despite stigma regarding conservative values, vocal support from organizations such as Americans for Prosperity (funded by the Koch Brothers) demonstrate that regardless of the Southern States and their disposition towards complicated legal processes, the innovation and market potential of cannabis is steadily overtaking the cult of apprehension.
The potential for a Republican-backed bill from South Carolina to finally end prohibition should be indication enough that the issue of cannabis legalization is not one that is fought only in the Southern States—but the war might just be won there.
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