New Year, New Cannabis Business Rules

Cannabis legalization continued to expand this year in the United States and nascent markets are maturing. Here are a few intriguing updates that could open up new opportunities for entrepreneurs.

Weed On Wheels in California

Beginning Jan. 1, 2023, in California, cannabis delivery vehicles will be able to carry $10,000 of cannabis, up from the current amount of $5,000. In addition, the entire inventory can be “un-ordered,” that is to say, not set aside for a specific customer. That’s a loosening of current California regulations which stipulate that no more than $3,000 of a total allowable $5,000 of inventory carried can be unordered. “This is a massive opportunity” said Chris Violas, chief executive of BLAZE which specializes in providing the software for the cannabis retail industry, including delivery vehicle tracking and management.

Carrying inventory that’s not spoken for is also called the “ice-cream truck model” said Violas. But that doesn’t mean the delivery vehicles are branded as rolling weed stores, because the driver carries cash and cannabis which could attract thieves. Instead, a retailer might send notifications to interested customers that the vehicle in in their neighborhood if they want to buy from the inventory it’s carrying. That’s more efficient for the retailer and can result in more sales than a delivery truck returning to base between deliveries.

Nevada, Massachusetts, Michigan, Oregon, and Colorado are the only other states that allow recreational cannabis delivery, but they use “The pizza delivery model,” according to Violas, where a customer pays for a purchase online and it gets delivered.

Consumption Lounges in Nevada

While Las Vegas tourists have been able to buy cannabis since 2017, there have been few places to legally smoke or vape it. That will change soon with the introduction of the state’s newly-licensed consumption lounges. The Nevada Cannabis Compliance Board granted licenses to twenty recipients that would allow them to build new facilities and sell product from other cannabis companies. Half of those licenses were designated for social equity applicants. An additional set of licenses was issued to existing retail operators that wanted to add a consumption space.

Alcohol and nicotine will not be allowed to be sold in cannabis the lounges. The new consumption spaces though, will put cannabis sales on a more equal footing with alcohol sales which can take place in bars. The newly-licensed lounges are expected to begin opening early in 2023.

Missouri Goes Legal – Will Neighbors Notice?

Missouri voted in November to legalize recreational cannabis, gaining a new source of sales tax revenue. The recreational roll-out comes just two years after medical marijuana was allowed there. Missouri is bordered by Kentucky, Tennessee and Kansas, three states whose residents don’t have access to recreational cannabis because it is illegal to bring it across state lines. Will consumers ignore the law and make that drive anyway? Will the neighboring non-cannabis states want in on the taxes and legalize it too? Stay tuned.

Federal Moves in 2023

The billion-dollar question of course is: will cannabis be legalized at the federal level, or at least removed from the list of Schedule One substances. The plant’s place on that list means companies that grow, process, test or sell cannabis legally according to state law, still generally can not access banking services and can not deduct typical business expenses from their federal taxes.

No one knows how far cannabis laws will loosen, but there has at least been a bit of forward movement from the Biden administration. A new law has made it legal to do research on cannabis, including its benefits, and to grow cannabis for this purpose. Previously, the only place that could legally grow cannabis for research was the University of Mississippi. It could only grow one genetic strain and research undertaken had to study the plant’s negative effect on health.

More than 150 million Americans live in a place where cannabis consumption is legal so the research could have wide-ranging implications.