Cannacurium #77: The Unlicensed Cannabis Market

July 17, 2023

Cannacurium #77: The Unlicensed Cannabis Market

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The U.S. unlicensed cannabis market is estimated to be worth about $60 billion in revenue — more than double the licensed market size of about $30 billion. As of late 2022, Cannabiz Media’s research team attempted to find these unlicensed companies and add them to the database. Being the industry’s database, we felt it was a gap that needed to be filled.

We assumed that the customers unlicensed businesses faced were very similar to their licensed counterparts in that they often had websites, phone numbers, and a social media presence. All that was missing was a license number, a regulator and a license expiry date. So far we’ve added 1,001 records and more are in the queue.

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Why are these useful?

Many Cannabiz Media clients use our license verification platform to ensure they are only working with licensed companies. Having unlicensed companies in place as a “knockout” file allows us to ensure our clients are compliant. Other Cannabiz Media clients are looking for leads and these unlicensed businesses also need goods and services. Therefore, this collection of information serves to bring buyers and sellers together.

We also anticipate that this data will be useful for regulators to flag trouble spots or recruit future license holders. Here’s the premier dispensary in New York City surrounded by unlicensed competitors:

How did we find her?

To scale and expand efforts, we focused on California, New York and Washington DC. Cannabis is all decriminalized in these regions, putting unlicensed entrepreneurs at less risk. We’ve also prioritized customer-facing businesses like delivery and retail companies, as they need to find customers just like their licensed competitors. The team found some unique markers that helped quickly identify these companies – here are just a few:

Selling quantities in excess of an ounce or even a pound of flower
Advertisement for “No Taxes”
We offer items not made in this state
Provision of deliveries across state borders
Enable credit card payments
offering illegal drugs

Additionally, we have relied on methods refined over the past decade to obtain this information and have been satisfied with the verifiable data from regulators, law enforcement and public complaints. So far we have uncovered 1,001 unlicensed businesses in 9 states. We have thousands more in the queue and will continue to add them as we review.

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types of companies

We found a mix of unlicensed companies along the cannabis value chain. However, the largest share of businesses are shops and delivery services.

retailers
Delivery
cultivator
Manufacturer
micro-enterprise

leaderboard

California provided the most unlicensed businesses in the data set. Given the size of the state and the long history of cannabis there, that’s no surprise. We recognize that this is a very small sample of the unlicensed market and that we will never cover all companies. However, it provides valuable context on the challenges faced by the new legal players in places like New York.

Important points

These records share many similarities with their licensed competitors. Noise NYC below has a storefront, a full suite of social media accounts, as well as a phone number, website, and email address:

Most notably, Noise NYC is a multi-store “chain” – like a single state operator:

Diploma

Here on the East Coast we see the enforcement effort in New York City – where it has been estimated that 1,500 unlicensed cannabis stores may exist. In other parts of the country we have seen shops with legal e-cigarette or tobacco licenses closed for selling cannabis. We are in the process of collecting these “licensing-related” records as well in order to paint as clear a picture of the industry as possible. If you are a provider or regulator and have lists of unlicensed companies please email them to me at ekeating@cannabiz.media.

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author

Ed Keating is co-founder of Cannabiz Media and oversees the company’s data research and government relations. Throughout his career he has worked with and advised information companies on compliance issues. Ed has led product, marketing and sales while overseeing complex, multi-country product lines in securities, corporate, UCC, safety, environmental and human resources.

At Cannabiz Media, Ed enjoys the challenge of working with regulators 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 Northwestern University’s Kellogg School.

Cannabiz Media customers can stay up to date on these and other new licenses through our newsletter, notification and reporting modules. Subscribe to our newsletter to get these weekly reports straight to your inbox. Or you can schedule a demo to learn more about how to access and dig deeper into the Cannabiz media license database yourself.

Cannacurio is a weekly column from Cannabiz Media featuring insights from the most comprehensive licensing data platform. Check out Cannacurio posts and podcasts for the latest updates and information.