The cannabis industry scales up as more states move to legalize

“Mature” cannabis markets are plateauing, but newly-legalized states could present major opportunities for the US cannabis market.
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· 4 min read

On Tuesday, voters in five states—Arkansas, Maryland, Missouri, North Dakota, and South Dakota—will cast ballots to legalize marijuana recreationally (or not).

Newly legalized states present a major opportunity for companies across the industry to grow their business, but on the ground—in states and jurisdictions where cannabis is already legal in some capacity—dispensaries and cultivators are making headway to stand out from the rest of the pack.

Last month, Green Thumb Industries (GTI) struck a deal to open 10 RISE Express dispensaries adjacent to select Circle K locations in Florida. While the Florida department of health has not approved the deal, it still marks a potential milestone in the cannabis industry.

  • Under the deal, if approved, Green Thumb Industries would sell products out of the leased RISE Express locations to Florida patients with a valid medical-marijuana identification card starting next year.
  • GTI founder and CEO Ben Kovler told Retail Brew in an email that more than 88% of cigarettes are sold at convenience stores and gas stations, while 0% of cannabis products are distributed through that channel. It’s a big opportunity for the industry.

“Convenience stores are one of the fastest growing shopping verticals and we’re excited to meet cannabis consumers where they are,” Kovler said. “We believe the holistic benefits of cannabis should be accessible to everyone.”

In Q3, GTI’s revenue increased 12% YoY to $261 million, and year-to-date, the company has seen revenue bump up 17% to $758 million compared to the first nine months of 2021. GTI operates in 15 state markets for recreational and medical use, and the company plans to expand its cultivation and manufacturing capabilities across its footprint.

Flower to the people: But the e-commerce cannabis space is also making strides. Software company Jane Technologies recently introduced a new app that bridges the gap between brands and retailers and consumers. The app allows users to discover cannabis products “based on local inventory, verified reviews, feelings and effects, and personalized recommendations” according to a company release.

  • For cannabis retailers, Jane’s app allows them to manage their storefront within the app so users can shop in real time and schedule a delivery or pickup.
  • “For cannabis brands, the Jane app presents an opportunity to get in front of new customers directly,” according to the company.
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CEO Socrates Rosenfeld likened the app’s function to Amazon—but with some major caveats.

“Unlike Amazon that owns everything and cuts everybody else out of the equation, [we’re] creating the Amazon experience,” Rosenfeld told Retail Brew. “We’re funneling all that value down to the local retailers and…instead of cutting out the brands, undercutting them,  withholding data, we’re inviting them into this ecosystem.”

The big picture: The US cannabis market is expected to grow from $25 billion in 2021 to $42 billion in 2026, which will account for 75% of the total global cannabis sales, according to market research firm BDSA. But the aforementioned states that may vote to legalize will be key to that growth.

That’s because mature markets—such as California, Colorado, Washington, and Oregon—have plateaued and even dropped in sales due to declines in retail prices and broader economic conditions, Roy Bingham, CEO of BDSA said.

“There are some advantages for retailers in being first movers, especially in limited-license markets, where just owning a license is a very valuable asset,” Bingham told Retail Brew. “However, it can be very challenging to find an approved specific location and you can burn a lot of capital due to regulatory delays. Once up and running, first-mover locations can be very profitable, but always face the threat of emerging competition.”

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