Maryland's newly-minted adult-use cannabis industry could sell $1 billion worth of legal bud in less than two years, analysts predict.
This prediction comes from a detailed report on Maryland's legal weed industry that was recently published by the Massachusetts-based Cannabis Public Policy Consulting (CPPC) firm. Analysts collected data for their report by anonymously surveying around 2,100 Marylanders last November, shortly after the state overwhelmingly voted to legalize weed.
Respondents told the firm that price is the most important factor influencing their decision to purchase legal weed. The safety of regulated products came in at a close second, though. Half of those who answered the survey said they planned to use weed to relax, and most said that they never get high before, during, or at work. These respondents also said that they did not plan to start getting high at work just because weed is legal.
At least 50% of respondents said that they would be willing to travel up to 20 minutes to shop at a legal dispensary. Marylanders also said that although they already spend around $49 a month on black market bud, they would be willing to cough up an average of $56 a month to cop some legal weed. The analysts believe that the willingness to pay more for legal products “further validates our predictions of favorable demand and early shifts to adult use sales upon its implementation.”
“People are pretty hyped about getting cannabis in the adult-use market,” said Michael Sofis, director of research for CPPC, to Maryland Matters.
To meet this impressive demand, the state's adult-use industry will need to supply 1.8 million pounds of weed, or 824 million grams. About 148 million grams, about 22% of this total, is expected to be purchased by tourists. Cultivators will need to grow 1.5 million cannabis plants during the first year of operation in order to produce that much flower, though. And to sell all that weed, the state will need to open at least 199 adult-use stores in addition to its existing 101 medical marijuana dispensaries.
If the state's legal weed industry can successfully rise to meet the demand, CPPC analysts predict that cumulative adult-use sales will top $1 billion just 20 months after sales begin. The report recommends an optimal cannabis sales tax of 15 to 20%, since higher taxes will encourage consumers to stick with cheaper illegal bud. If the state were to choose a 15% tax rate and open 100-250 dispensaries, analysts predict that the black market would shrink to 44%. With a 10% tax rate and 260-500 stores, the illicit market could shrink to 36%.
But before the state can start raking in that weed tax revenue, officials will first need to finalize retail sales regulations. Maryland's adult-use law phases out the state's prohibition laws over the course of 2023 in order to give lawmakers time to develop these regulations. The first phase, which started on January 1st, decriminalizes the possession of up to 2.5 ounces of weed. The second phase, which starts on July 1st, fully legalizes the possession and private use of up to 1.5 ounces.
The state legislature is currently prioritizing the debate over adult-use regulations, and lawmakers hope to finalize them before July. It took Maryland four years after legalizing medical marijuana to actually open its first dispensaries, though, and a similar delay could completely derail this promising new industry. In most adult-use states, regulators have dragged the start of legal sales out for years, but other states kickstarted their industries by allowing medical dispensaries to start selling recreational pot. Maryland lawmakers have yet to indicate which of these directions they will take, though.
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