East Coast Cannabis Weekly

East Coast Weekly

Cannabis is coming and the East Coast is exploding. There is a steep learning curve to an industry still being created and being an early mover doesn't have to be expensive and painful. Call a consultant and talk about your place in the emerging mid-Atlantic space.

May 12, 2022

BREAKING: The Delaware State Senate just passed HB 371, a simplified bill legalizing cannabis in Delaware, by a margin of 13-7-1!!!

New Jersey

AYR Wellness, a New Jersey medical cannabis operator previously denied the conversion to adult-use sales at their Union, Eatontown and North Woodbridge dispensaries will be presenting their plans for parking, patient access, etc at the next CRC meeting: Tuesday, 5/24/22 at 1:00pm

Also potentially discussed at the 5/24/22 CRC meeting could have been Ascend Wellness and their Montclair dispensary’s ability to begin adult-use sales there. The problem is that the township still has yet to release their application form. They’ve made changes to their ordinance and may adopt it only after a second reading on 5/17/22. That pushes the final vote to Montclair’s 6/14 meeting, so the best case scenario for Ascend’s adult-use sales there is 6/15/22.

The oversight hearing concerning the significantly delayed opening of the adult-use market will be held today, Thursday, 5/12/22 at 1:00pm and can be streamed live. In addition to monitoring the CRC’s handling of the rollout, the bipartisan legislative committee spearheaded by Senate President Nick Scutari will also monitor pricing as well as investigate what can be done to increase supply and reduce the cost of medical cannabis.

NJ is just now finishing it’s 3rd week of adult-use sales with very little publicized sales data.

(MAP of the dispensaries now serving the general public )

New York

Cannabis from the 88 approved conditional cultivators will be available for sale in the fall.

Turnkey dispensaries are coming! Preselected storefronts for the first 150 - 200 social equity licensees including 10-year loans to cover opening costs. The Dormitory Authority of the State of New York (DASNY) will be the facilitator of the loans according to CEO Reuben McDaniel III, who is also on the NYS Cannabis Control Board.

The package will include a fully built-out retail and the licensee will have some control of customization and branding of the facilities.
6% to 8% is the expected interest rate with a max of 11.5%
10,000 potential zones have been identified and will be pared down to 225 zones.
These 225 zones are being scouted and hopefully narrowed down to 100-125 available retail spaces.
These 100-125 retail spaces are anticipated to be 3,000-3,500 square feet in high traffic areas.
The first 100 applications should open in mid-summer and close in early fall.
So far, the state has been working with CBRE and RFPs will be issued in the coming weeks for other portions of the initiative.

The loans will come from the $200 million fund announced by Governor Kathy Hochul back in January as part of her 2023 Executive Budget and will consist of $50 million from the state with the remainder to be raised via private investors by August. [Under the program, called the Seeding Opportunity Initiative, the first adult-use retail licenses in the state will be made available to individuals with prior cannabis-related offenses that also have a background in owning and operating a small business. Hochul has said that giving the first licenses to the social equity cohort “takes a major step forward in righting the wrongs of the past.”

Vermont

Sadly, none of the top-priority applications (social equity applicants and small outdoor cultivators) are complete and cannot be approved for licensure just yet. Items missing include:

Good standing documentation from the Tax Department
Cultivation site diagrams
Banking and insurance information
Background checks
Licensing fee payment

Other delays are due to staffing and the current staff of four will expand after a bill was passed by the legislature allowing such. They do not have a dedicated licensing or compliance staff at this time, but have received over 200 applications and are confident these roles will be filled soon..

Existing medical cannabis license holders were theoretically allowed to begin selling adult-use on 5/1/22 but none of the three current operators have yet to apply to do so.

Retail sales seem hard pressed to begin 10/1/22.

Rhode Island

Another legislature that adjourns 6/30/22, Rhode Island is still expected to pass a legalization bill this session.

Lawmakers introduced a pair of identical adult-use legalization bills in March

(S 2430 and H 7593) as part of a negotiated agreement among key legislators.

The Senate Judiciary Committee and House Finance Committee held public hearings on the bills, but committee votes haven’t been taken.

Gov. Dan McKee has proposed his own recreational marijuana proposal as part of his fiscal year 2023 budget.

The state’s 60-plus existing medical cannabis cultivators would control the market for at least the first two years.

The legislative measures envision 24 retail licenses, with six going to social equity applicants and another six to worker-owned cooperatives. A 10% retail excise tax would be imposed in addition to the current state sales tax of 7%, plus a 3% local excise tax.

Under the governor’s proposal, 25 retail licenses would be issued per year for three years, with at least 20% set aside for minority-owned businesses. McKee also proposed a 10% excise tax in addition to the current 7% state sales tax.

Delaware (Legislative Deadline 6/30/22)

HB 371

Strong momentum in the First State with just weeks left in the legislative session as HB 371 passed the House of Representatives 23-14 last Thursday 5/5/22 and was voted out of the Senate Judiciary Committee yesterday 5/11/22. It will now go to a full Senate vote and is highly expected to pass.

Governor John Carney is unlikely to stand in the way and may just let it become law after 10 days by doing nothing (“pocket veto”). If he does try to veto, there are already enough votes for the ⅗ majority needed to override.

Charlie Megginson’s informative Town Square Live piece goes into the particulars:

The bill would amend state statute by eliminating penalties associated with the possession of up to one ounce of marijuana by adults 21 and older.

It would further add a section stipulating that adults 21 and older could share up to an ounce of cannabis “without remuneration.”

That section clarifies that marijuana could not be “gifted” as part of a contemporaneous “reciprocal transition” or if the gift is contingent on a separate transaction for non-cannabis products or services. (Eliminating the gifting gray market in places like Washington DC)

HB 372

? Where will it come from though ? Republican Senator Ruth Briggs King, who unilaterally opposes cannabis reform, acknowledged that “this stuff doesn’t fall from the heavens.” Perhaps the divine nature of the cannabis plant and its healing properties will be revisited when the 60 potential cultivation licenses are negotiated in HB 372 .

This bill will initiate the regs for the Delaware adult-use market cleared one House committee and is expected to get a full House vote in the coming weeks.

North Carolina

Yet another 6/30/22 deadline, but there is technically still time.

The North Carolina Compassionate Care Act , Senate Bill 711 , moved through several committees last year before being placed on the back burner in favor of more critical state budget and redistricting issues.

The legislation is seen as having a chance of passing this year and would create 10 medical cannabis operators with “supplier” licenses that would allow them to open up to 4 dispensaries with at least 1 in an economically disadvantaged county. MSOs are cheering!

South Carolina (Legislative Deadline 5/12/22)

The Compassionate Care Act (CCA), an extremely restrictive medical cannabis bill that passed the State Senate earlier this session ,was declared unconstitutional on 5/4/22 because it imposes a 6% tax and didn’t start in the House of Representatives.

Longtime sponsor Representative Tom Davis is scrambling to see if he can get something done before legislators adjourn today, but possible attachment to an existing pharmacy-related bill that has already cleared the House will likely just result in the attachment being ruled out of order.

Numbers

$1.3 to $1.4 billion, expected 2022 revenue of Trulieve, an East Coast dominant MSO with dispensaries in Connecticut, Massachusetts, Maryland, Pennsylvania and West Virginia in addition to their stronghold on Florida