Cannacurio #66: Regional Summary 2022

After sharing the trends of new licenses issued in 2022, we wanted to review the new licenses issued by region and activity. For example, what is the ratio of licenses granted for cultivation, manufacture, and sale/sale in different regions? How big is the Northeast really in terms of new licenses?

Important Findings

The ratio of cultivation, manufacturing, and retail/dispensary licenses varied widely across regions:

1. 79% of new licenses in the Southeast region were for pharmacies/retailers.
2. 71% of licenses issued in the West were for cultivation – the Northeast is right behind at 69%.
3. Nationwide, 58% of the 9,853 newly issued licenses were for cultivation.

In 2022, we tracked 9,853 licenses issued across three categories across the country. Cultivation licenses accounted for nearly six out of ten licenses issued (58%). Retail/pharmacy licenses accounted for 28%, while manufacturer licenses accounted for 14%.

Given the cited cannabis glut and calls for moratoria in a variety of markets, it’s surprising that they’re still available. Perhaps the September-December ski slope below indicates a rightsizing market.

regions

Cannabiz Media divides the US into the following regions: Northeast, Southeast, Midwest, Southwest, and West. In 2022, 72% of newly granted licenses came from the Southwest and West. Oklahoma and
California was the driver in each of these regions. The charts below are all organized by region and show what types of licenses were issued in 2022.

Middle West

The 12-state Midwest region issued 1,399 new licenses in 2022, 83% of which are from Michigan. Other Midwestern states that issued licenses included Illinois, Missouri, Ohio, and South Dakota. 54% was for cultivation, 14% for manufacturing and 31% for pharmacies/retail. Emissions rose sharply mid-year, mainly due to the 707 new cultivation licenses in Michigan.

Northeast

We wrote about the “Beast in the East” with new markets coming online. The Northeast is made up of nine states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

What we’ve seen is that Rhode Island and Connecticut have issued a small number of licenses, along with cultivation licenses in Vermont and New York. By our count, the region issued 872 licenses last year, 69% of which were new growers. These New York cultivation licenses were largely granted to existing hemp farmers. Connecticut hemp farmers immediately began lobbying for the same privilege.

South East

The Southeast consists of sixteen jurisdictions: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, Virginia and West Virginia. Only seven of those states issued licenses last year, but in a unique way.

It’s all about pharmacies as the region is full of limited-license medical programs. Cultivation licenses account for only 17% of new licenses, manufacturing 3% and retail/pharmacies 79%! The peaks in July and August were driven by pharmacy licenses in Mississippi and Puerto Rico.

southwest

Only two of the four states in the Southwest issued new licenses in 2022: Oklahoma and New Mexico. The Oklahoma program was the source of much controversy and concern for law firms that favored the issuance of ghost licenses and a licensing moratorium that began in late August.

Inexplicably, the number of newly issued licenses in Oklahoma rose after the moratorium, although the total number of licenses appears to have stagnated. September’s big spike is in new cultivation licenses in Oklahoma.

west

Our final region is the West – home to many ancient markets: Alaska, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming. Of the 2,833 new licenses in the West, 71% were for cultivation, which is surprising given Oregon’s often-cited oversupply and the fact that Oregon has a licensing moratorium.

Manufacturing accounted for 11% of licenses while pharmacy/retail accounted for just 19%. The cultivation “mountains” came from California cultivation licenses in June and September.

activities

The following three graphs show regional differences in the types of licenses issued.

cultivation

The West is still leading – even if growers complain about an oversupply that leads to low prices and few retailers to sell their produce. But the Northeast, moving from a medicinal-only region to an Adult + Rec region, is shaping many new cultivation licenses. This will create challenges as states like Massachusetts grapple with falling prices due to oversupply.

manufacturing

This activity is always difficult to quantify. In some states, this activity is sub-licensed to others and is very difficult to trace. In other states, regulators have vertically integrated this activity with cultivation or the entire stack. Oklahoma’s low $2,500 license fee puts the Southwest region on top.

Pharmacy/Retail

The Southeast, with no license caps in Florida or Mississippi, is all about the pharmacies. These medical states with limited licenses (in some cases) but no restrictions on business create a real estate race to establish a presence. Mature regions like the West add the fewest stores.

author

Ed Keating is co-founder of Cannabiz Media and oversees the company’s data research and government relations efforts. He has spent his career working with and advising information companies on compliance issues. Ed has led product, marketing and sales while overseeing complex, multi-jurisdictional product lines in the securities, corporate, UCC, security, environmental and human resources markets.

At Cannabiz Media, Ed enjoys the challenge of working with regulatory bodies around the world as he and his team gather corporate, financial and licensing information to track the people, products and companies in the cannabis economy.

Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.

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