Why are so many communities opting out of the adult cannabis marketplace in their state?
By Andrew Ward
Although 16 states and Washington, DC have legalized adult cannabis, numerous communities, cities, and towns are opting out of their state’s legal marijuana programs. One of the results of these opt-outs is that residents who need or want cannabis are required to travel to the surrounding areas to obtain it.
While opt-outs are nothing new, they also affect large markets like California, where only 161 of the state’s 482 communities opted for the adult use program that began in 2019.
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In Michigan, over 500 cities have banned cannabis operations since the state voted for legalization in 2018. Additionally, Detroit is embroiled in a lawsuit over a controversial 15-year social justice claimant residency agreement that could result in Motor City saying no to cannabis sales.
Motivation varies depending on legal experts and executives of several cannabis companies.
Michael McQueeny, Attorney at Foley Hoag‘s cannabis practice refined in New Jersey.
Municipalities are required to decide their cannabis status within 180 days of a legalization law coming into effect, and some fear lawsuits against local police, citing laws that increase the risk of police liability for cannabis arrests .
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McQueeny noted that several New Jersey cities are open to the idea of growing and manufacturing, but not pot shops and pharmacies. “They operate under the false belief that banning pharmacies will reduce police involvement in pot ownership issues.”
Douglas E. Mains, partner at Detroit Honigman LLP, said advancing laws and lawsuits could hold some communities in Michigan back. His law firm is part of the Detroit lawsuit.
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While many people in Michigan support marijuana legalization, “the same people may not necessarily want cannabis stores next to the coffee shop they go to or on the same street as the school their children or grandchildren go to,” Mains said. “I think there is a high level of NIMBYism too.”
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Though Mains sees the idea of opt-outs changing as regulation takes shape and municipalities see the financial benefits of selling cannabis.
Dina Rollman, SVP for Government and Regulatory Affairs for Green Thumb Industries Inc. (OTC: GTBIF) pointed to a persistent education gap.
“More education is needed so communities can change their thinking and see the positive effects of a pharmacy,” Rollman said.
David Farris, VP of Sales and Marketing for Planet 13 Holdings Inc. (OTC: PLNHF) said a city’s decision to opt out could have financial implications. “Depending on where your city is in terms of jobs and finances, [opting out] puts them in a position where they really need to look at it closely. “
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The loss of income for the municipalities could fluctuate. Data compiled by The Motley Fool said legal adult markets had sales of over $ 23 million (Alaska) to over $ 1 billion (California) in 2020.
Corporations bear the brunt of the ban, explained McQueeny, who noted that at least 51% of operations must be located in the city where the company is to operate in order to receive a business license.
Cities that choose ours added, “Often times, local entrepreneurs have taken the opportunity to take advantage of this particular class of license, which is designed for newer and smaller entrants.”
Cannabis will support 321,000 full-time positions, according to 2021 Leafly Job report. Although cities and towns often benefit from cannabis sales, the budget impact is likely to be more negligible, according to Mains. He noted that taxes often benefit government projects, including infrastructure and K-12 education. “As more municipalities allow cannabis companies to operate, sales are likely to rise, which means these pots of money will grow,” he said.
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Mains noted that each Michigan license application includes a $ 6,000 fee and that annual fees range from $ 4,700 to $ 28,000 for medical operators and $ 3,000 to $ 50,000 for adults.
Will it take?
Sources say it’s too early to say whether municipal opt-outs will remain an option for reluctant municipalities, and many aren’t sure how to shrug them off in the future.
“I would guess it’s always some kind of opt-out,” he said Cresco Labs Inc. (OTC: CRLBF) Jason Erkes, Chief Communications Officer.
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Erkes emphasized that the Cresco stores highlight hiring standards, marketing and other parameters that demonstrate the viability of the market. “All of these things reflect a normalized and professionalized cannabis industry.”
However, some cities could remain as long as the opt-out remains an option.
Rollman of Green Thumb called the situation a mixed bag.
“Some churches just want to wait for other churches to solve the problem and then they choose to,” she said.
This article originally appeared on Benzinga and was republished with permission.