Untapped southern markets face an uphill battle

The South may be the final frontier for state cannabis legalization, but the region could be a boon for the industry once the floodgates open.

A report by cannabis consultancy Global Go suggests that Alabama, Georgia, Mississippi and Louisiana could offer value for entrepreneurs sitting on the sidelines of Florida’s limited vertical model — especially given Alabama’s approval of medicinal cannabis last May and further expansions in the other three existing states medical programs.

But the success has little to do with “overall political leanings (of a state electorate),” said Tom Adams, senior analyst and CEO of Global Go and author of the report “Georgia, Alabama, Mississippi, and Louisiana: A Second Shot at the profitability of Southern State Cannabis.”

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Instead, it “has everything to do with how liberally regulated medical programs are,” he wrote. Factors for this are:

• Restrictions on Acceptable Product Types.
• Qualifying Terms Approved.
• Rules for Prescribing Physicians.
• Store counting limits and local opt-out rules.

“Politics are absolutely important, but because they affect these factors that really determine how successful a market can be,” Adams told Green Market Report.

Access is crucial, in part because cannabis use is notoriously underreported. For example, more Oklahomans have signed up for their state’s laissez-fair medical cannabis program than admitted to using the product in pre-legal surveys.

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In Louisiana, participation in the medical program also increased after lawmakers passed legislation allowing more retail sales of flowers.

However, the lack of voting procedures in Alabama, Georgia and Louisiana remains a critical issue. Adoption and expansion of the programs depend on the will of state legislatures — and lobbying and education on the cannabis issue by elected social conservatives in the Bible Belt has proven sluggish.

growth potential

“Even if the region spends just $33.08 per capita in Missouri in 2021, just over half the level in Florida, the combined markets could quickly grow to nearly $800 million,” Adams wrote .

Andrew Livingston, director of business and research at Denver-based cannabis law firm Vicente Sederberg LLP, noted that the word “potential” is key when discussing growth stories.

“All states have huge potential,” he told Green Market Report. “They just need to either pass medical cannabis laws or expand their existing limited medical cannabis laws and widen them to allow patients to fully enter the market.”

Livingston pointed out that state-level medical cannabis laws help demonstrate the legitimacy of cannabis patients and businesses.

RELATED: This state will reconsider legalizing medicinal cannabis next year

“That legitimacy is changing the lives of state-level voters, and those state-level voters are putting pressure on federal lawmakers to evolve and recognize,” he added.

He believes that Mississippi, which allows flower sales and doesn’t limit the number of licenses operators can hold, “will show over time the potential of a market that will allow patients to truly fulfill their demand.”

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Print from Florida

Despite strained medical markets in the South, the possibility that Florida will introduce adult use next year could open the floodgates for cross-border travel and potentially persuade neighboring lawmakers to open their markets to capture those revenues for the Treasury, said Adams.

“Because boy, when Florida goes adult use and anyone from Alabama, Mississippi or Louisiana can go there and get cannabis, that’s just money that lawmakers in those states have on the table,” he said.

“The big step will happen when Florida comes of age and suddenly hundreds of millions of dollars in tax revenue are at stake.”