Despite stalled rescheduling efforts at the federal level, 2024 was a good year for cannabis markets in a handful of states. Several states launched new markets and inaugural licensing rounds, while others considered halts on new licenses as their respective markets approached saturation.
Ohio launches as other states start rolling
Licensing roll-outs in multiple states attracted legal challenges, but many were able to overcome them and move forward.
Despite strong Republican opposition after voters legalized adult use last year, Ohio successfully launched its market on Aug. 6, with over 100 medical dispensaries opening to the general public. The state currently has 129 active cannabis retail licenses that are permitted to sell both medical and adult-use products, according to the CRB Monitor licensing database. By the end of 2024, the Buckeye State registered over $242 million in adult-use sales.
New York proved to be a licensing success story in 2024 after a tumultuous 2023. In the beginning of the year, the Empire State was able to finally settle several lawsuits, allowing it to open the spigot on new licenses. By the end of the year, over 1,000 licenses were awarded and at least 269 adult-use dispensaries were open for business.
Maryland, Delaware and Kentucky all successfully held their inaugural cannabis license lotteries in their respective markets. The former two states licensed adult-use operators, while Kentucky awarded its first set of medical licenses.
Kentucky’s license applications got off to a slow start. But in the final days, thousands of aspiring operators flooded the state’s application portal. About 5,000 applicants landed in the state’s hands, competing for just 74 licenses across the Blue Grass State.
Missouri attempted to roll its social equity licenses, but many were revoked after the state discovered that out-of-state operators were attempting to subvert the social equity criteria by using a local face for their application while maintaining control of the business. The state has plans to hold additional lotteries in early 2025.
Minnesota was planning to award 217 social equity licenses as the state’s first round of new adult-use licenses, but days before the planned Nov. 26 lottery, two applicants that were deemed ineligible sued the state. The lawsuit, which currently remains in state appellate court, halted those efforts after a superior court judge issued a temporary restraining order.
Meanwhile, residency challenges appeared to be petering out in early in 2024. New lawsuits were filed in New York and Maryland, but both failed to hinder license issuance. A similar residency challenge also came to Rhode Island. All three lawsuits involved California-based attorney Jeffrey Jensen, who has emerged as a perennial legal opponent to residency requirements in cannabis licensing.
Maturing markets found new challenges
As new cannabis markets launched, established markets struggled.
Michigan’s market appeared to level earlier in the year, though financial difficulties persisted for cultivators in the state.
Vendor debt continued to be a problem for cannabis operators. The non-payment problem in Michigan became so commonplace that a social media group formed, Blacklist of MI, which specifically called out operators with unpaid bills. The state would ultimately enact new regulations that prevented operators from renewing their annual license if they had an outstanding court order for debt collection.
Massachusetts also saw a jump in debt problems, as a record number of operator licenses became inactive – ostensibly because more shops went out of business.
Much like many older markets, Oregon is facing market saturation. As a result, the state enacted a de facto moratorium on new licenses, with a new law that limits available licenses based on local population. Vermont also curbed new licenses, while Montana considered a pause.
New York even began considering a limit on new licensing moving forward, as it anticipates hitting a saturation point in mid-2026.
Meanwhile, hundreds of provisional licenses expired in California this year as licensees gave up on paying heavy taxes and regulatory costs.
MSOs make position plays
Companies continued to wait for some movement on the federal government’s proposal to reschedule cannabis. In the meantime, many multi-state operators spent 2024 shoring up their financial positions.
Trulieve took a bold tax position, announcing that it would no longer be recognizing the limitations of 280e when filing federal taxes. According to Trulieve, the cannabis MSO saved over $100 million, although it remains to be seen if the federal government will allow the company to keep those savings. Meanwhile, Ascend Wellness and TerrAscend also took similar tax positions.
Meanwhile, Trulieve was awarded two dispensaries in Ohio on the eve of that state’s adult-use market launch as part of a court settlement.
Another major MSO, Cannabist, pulled out of Florida and sold one of its Virginia licenses to Verano.
The track and trace market among legal cannabis states evolved over the year. Several states, including Colorado and Oklahoma, changed their regulations to no longer require RFID tags when tracking products. This change allows the state to consider track and trace companies other than Metrc, which continued its dominance.
Meanwhile, Metrc’s top competitors, BioTrack and MJ Freeway, merged as part of a larger deal with Alleaves.
