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Can Legal Cannabis Succeed in New York?

New York legalized recreational cannabis in 2021. Since then, the state has been establishing guidelines and preparing an infrastructure to ensure quality and collect taxes correctly. According to the new law, any adult age 21 and over can purchase and possess cannabis. They can also grow a small number of cannabis plants at home.

As of October 2022, the state still didn’t have any dispensaries selling recreational cannabis. The state legalized medicinal marijuana in 2016, so it already has a system to build on. The delay, and other factors, have led many people to wonder whether a legal cannabis market can succeed in New York.

New York has struggled to issue licenses for recreational cannabis dispensaries. The cannabis industry, however, was fully prepared to launch in 2022. A lack of licensing hasn’t held it back, especially in New York City.

New York City currently has ample bodegas selling cannabis products without requiring prescriptions. These unlicensed stores often look tacky, but they provide a service many New Yorkers have come to appreciate. One group says it operates nine cannabis stores in the city. NYC even has a “weed truck” selling diverse products on the go. Many residents say that it’s like the city has a weed bodega on every block.

Some of the business owners say they hope to qualify for licenses when they’re available. Until then, they plan to operate in a gray market and hope officials don’t crack down on violations.

Why Hasn’t New York Issued Cannabis Licenses Yet?

Plenty of states take a year to build the system needed to license businesses for recreational cannabis sales. The process in New York has seemed painfully slow, though, because it already had an existing infrastructure for these processes. Many dispensaries expected the state to add some requirements, list required taxes, and start distributing licenses quickly. After all, these dispensaries were already licensed to sell medical marijuana. Recreational sales should only add a few steps.

However, state legislators have spent a lot of time arguing about where tax revenues will go. Ongoing debates put the industry in a difficult situation, especially since the state has already licensed cultivators to grow crops to sell via recreational storefronts.

The state also said that it has been slow to issue licenses because it wants to focus on the needs of small- and medium-sized businesses. This requires a lot of redundant steps. Instead of licensing a large corporation and its individual storefronts, the state has chosen to license each shop individually. That approach might benefit the overall industry in years to come. At the moment, it has cannabis investors wringing their hands.

An unexpected delay occurred on November 10, when a US District Court Judge issued an injunction that halted the licensing process. The judge’s temporary block is the result of a lawsuit brought by the owner of Variscite, a cannabis retailer that wants to operate in New York. The owner was denied a license because of a previous cannabis-related conviction in Michigan.

Variscite wanted to open locations in five areas:

  • Brooklyn
  • Central New York
  • Mid Hudson
  • The Finger Lakes
  • Western New York

Technically, the state could start sending licenses to retailers outside of those areas. In reality, the legal challenge has encouraged cannabis regulators to take a pause and reevaluate their process. They still promise some retail stores will receive their licenses before the end of 2022. As time passes, that looks like an increasingly challenging goal to meet.

Cultivators Have Product to Sell… But Nowhere to Sell It

The disrupted licensing process in New York has very real economic consequences for the state. In late November, New York had issued enough cultivation licenses that businesses produced 300,000 pounds of the crop to sell. Without a legal market, though, cannabis flowers are left sitting in warehouses. Cultivators concerned about losing their crops and investments are doing everything possible to keep their products fresh. If quality drops, the legal market will likely reject it.

Cultivators risk losing about $750 million of cannabis. If those cultivators sell to the gray-market stores operating in NYC, they risk losing their licenses.

New York doesn’t expect that its legal cannabis industry will completely replace the black market. The sooner it can get stores open and selling, though, the more of an influence the legal market should have on businesses, consumers, and taxpayers.

November 26, 2022Comments Off
Cannabis Had a Good Election Night

Now that most states allow medical cannabis and nearly half of the states allow recreational cannabis sales for adults over 21, legalization doesn’t get as much media attention. When a state passes legal medical or recreational cannabis, it largely goes unnoticed outside of niche publications. The fact of the matter is that each state’s decision represents a critical step in reforming the nation’s stance on marijuana prohibition. The good news is that cannabis had a good mid-term election worth celebrating.

Maryland and Missouri Ballot Measures Legalize Recreational Use

Maryland and Missouri asked residents to vote on ballot measures that would legalize recreational cannabis. Voters in both states approved the measures.

In Maryland, nearly 67% of voters favored Question 4, which directs the state’s legislators to pass laws and regulations and create an infrastructure for distribution and taxation. Starting July 2023, all adults over 21 can use cannabis without prosecution.

Missouri Amendment 3 (the Marijuana Legalization Initiative) didn’t receive as much support as the ballot measure in Maryland. Still, over 53% of voters approved passing a law that will expunge the records of people with certain marijuana convictions, legalize possession, delivery, consumption, and sales for personal use, and create a 6% sales tax for cannabis products. 53% might not sound like a huge win, but it means 126,787 more voters approved than disapproved of the measure.

Most Americans Approve of Cannabis Legalization

When put to the public, ballot measures usually pass and make cannabis legal. Delays most often happen when legislators try to pass (or not pass) state government bills.

It’s not surprising that ballot measures succeed so often. The majority of Americans approve of medical and recreational cannabis. Exactly how much they approve depends on the survey you look at.

Pew Research Center study from October 2022 shows that only 10% of Americans think cannabis should not be legal. 59% say they support medical and recreational legalization. 89% support medical use only.

In November 2022, Gallup released poll results showing that more Americans than ever support cannabis legalization. The Gallup poll didn’t specify between medicinal and recreational legalization. It simply asked, “Do you think the use of marijuana should be legal, or not?” Even with this broad question, 68% of Americans agreed that marijuana should be legal. That’s part of an ongoing trend that has seen increasing support for legalization. A decade ago (2012), 48% of respondents agreed with legalization. In 2002, only 34% thought cannabis should be legalized.

Interestingly, the Gallup survey breaks responses into demographics to show what different groups of people think about legalization. 51% of people who identify as Republicans prefer legalization. The only groups that didn’t exceed the 50% mark were “conservatives” (49% of whom support legalization) and “attend church weekly” (46% of whom support legalization).

The highest levels of support come from non-religious people who identify as “liberals.” Even among the most conservative groups in America, though, a near-majority want to make cannabis legal.

Political Opposition Remains

If it were up to voters, cannabis would be legal in the United States. Despite overwhelming support, state and federal lawmakers continue to oppose legalization. President Joe Biden is an excellent example of this. While he pardoned thousands of people with marijuana convictions and says he opposes jailing cannabis users, he does not want to legalize cannabis. More than 80% of Democrats support legalization, so he’s at odds with the vast majority of his political party.

Struggles also continue at the state level. When South Dakota voters approved a ballot measure that would legalize marijuana, the state’s governor, Kristi Noem, took the issue to court, where it was struck down. Disagreeing with the majority of voters seems like an odd political strategy. Regardless, Noem easily won reelection with 63.1% of the vote in the 2022 mid-terms. This likely suggests that residents of South Dakota want to legalize cannabis, but it isn’t a priority for them.

Is Federal Legalization Inevitable?

Cannabis had a good election in 2022, but it remains illegal at the federal level. That creates all kinds of problems for the industry.

Despite the federal status, it looks like legalization is inevitable. Federal agencies have revised their job applications to reflect “changing societal norms.” Having used cannabis no longer means you can’t get hired by most federal agencies.

President Biden has also signed a cannabis research bill into law. The bill passed the House unanimously. The new law will make it much easier for researchers to study cannabis to evaluate potential benefits and problems. Having more information should help voters and legislators make data-driven decisions about the future of cannabis laws.

Currently, we see a softening of laws around the country and at the federal level. Assuming this trend continues, it’s almost inevitable that the federal government will reform marijuana laws within the next decade or two.

November 26, 2022Comments Off
Cannabis Research Should Become Easier Soon in the US

According to the US federal government, cannabis is a Schedule I drug with high abuse potential and no currently accepted medical use. The government maintains this scheduling even though research shows that cannabis can treat a broad range of physical and mental health issues.

The Mayo Clinic, one of the country’s leading healthcare centers and medical research institutions, notes that cannabinoids, including THC and CBD, are used to treat conditions like:

  • Severe and chronic pain
  • Severe nausea or vomiting caused by cancer treatment
  • Glaucoma
  • Multiple sclerosis and muscle spasms
  • Epilepsy and seizures

Thousands of people also use cannabis to find relief for conditions like post-traumatic stress disorder (PTSD) and depression.

Researchers also acknowledge that using marijuana could cause adverse effects, including:

  • Increased heart rate
  • Impaired concentration or memory
  • Increased risk of heart attack and stroke
  • Slower reaction times
  • Dizziness

A fair amount of research has gone into reaching those conclusions. Still, researching cannabis is extremely difficult because scientists must get permission from the federal government. It’s a lengthy process that doesn’t always get approved.

That could change very soon now that President Joe Biden has signed the Medical Marijuana Research Bill into law.

Expanding Cannabis Research

A bipartisan group including Dianne Feinstein (D-California), Brian Schatz (D-Hawaii), and Chuck Grassley (R-Iowa) introduced the act to the Senate. They say that its goal “is to facilitate research on marijuana and its potential health benefits.” They expect it to make cannabis research easier by “streamlining the application process for scientific marijuana studies and removing existing barriers for researchers that frequently slow the research process.”

Some medical cannabis users might argue that enough evidence already exists to make marijuana a mainstream treatment. Perhaps that’s true for some health conditions. Still, it makes sense for scientists to continue studying the compounds in cannabis.

The human body has an endocannabinoid system that plays several roles in health. The system helps control hunger, reduce inflammation, and ease pain. Cannabis plants contain hundreds of chemical compounds that interact with receptors in the endocannabinoid system. Ideally, research will make it easier for doctors to treat medical cannabis more like they treat other medications. If researchers can pinpoint specific cannabinoids and what amounts trigger the desired response, the future of cannabis could include highly personalized products that improve health while minimizing unwanted side effects.

It’s possible that we’ve only scratched the surface of how cannabis compounds could improve health. Further research should reveal more applications and find safe delivery methods.

Data Could Lead to Federal Legalization

The federal government has already signaled its openness to accepting cannabis chemical compounds as treatment options for some health conditions. However, rescheduling marijuana will take a lot of effort and involve multiple agencies.

Advocates for ending marijuana prohibition need more data to convince agencies that rescheduling cannabis will benefit individuals and society. Plus, many of those agencies rely on prohibition to justify their budgets.

The DEA’s budget has grown annually since 1972. In 2021, the DEA’s budget exceeded $3.113 billion, a 15.2% increase from the previous year. Clearly, the DEA does much more than control illegal cannabis sales and cultivation, but it contributes significant time and assets to its Domestic Cannabis Suppression / Eradication Program. Rescheduling cannabis and making it legal for adults to buy from licensed dispensaries could interfere with the DEA’s budget and plans.

Of course, drug enforcement agencies will still have plenty of battles to fight. Cannabis legalization hasn’t eliminated black market sales. And much more harmful drugs deserve attention from agents.

However, the potential threat of a lower budget probably concerns agencies like the DEA. An abundance of data showing the benefits of cannabis could help persuade federal agencies that it doesn’t make sense to spend so much time and money pursuing people who break marijuana laws. Evolving laws might not even hurt their budgets. Instead, they could allow agencies to focus on much bigger concerns to public health and safety.

The Future of Cannabis Depends on Good Research

Streamlining the application process and removing barriers for researchers will only make it easier for the scientific community to learn more about the advantages and disadvantages of cannabis. Ideally, legislators, public opinion, and federal policies will follow the data.

At this point, cannabis advocates should see the new rules as a massive success. It doesn’t immediately change how the federal government treats cannabis sellers and consumers. But it does create a clearer path toward full legalization.

November 26, 2022Comments Off
Kentucky Takes a Small Step Towards Cannabis Legalization

The majority of states in the US have legalized medical cannabis sales and possession. Currently, only 12 states don’t allow laws and infrastructure that let patients purchase cannabis. Kentucky is one of those dozen states. However, it recently took its first small step toward joining the majority of the country. The new law will go into effect on January 1, 2023.

On November 15, 2022, Governor Andy Beshear signed an executive order that will allow Kentucky residents with severe medical conditions to possess cannabis purchased from licensed dispensaries in other states. The executive order comes with several requirements. Still, it’s a sign that the state might be heading in a direction that appeals to the vast majority of residents.

Conditions Covered by Kentucky’s Executive Order

Kentucky’s executive order will only legalize medical cannabis possession for people who have at least one of 21 conditions. Those conditions include:

  • Cancer
  • Epilepsy
  • Parkinson’s disease
  • Multiple sclerosis
  • Sickle cell anemia
  • Severe and chronic pain
  • Severe arthritis
  • Muscular dystrophy
  • HIV or AIDS
  • Fibromyalgia
  • Post-traumatic stress disorder (PTSD)

Anyone with a terminal illness can also possess and use medical marijuana.

Requirements for Possessing Medical Marijuana in Kentucky

Governor Beshear’s executive order includes a long list of requirements for anyone possessing medical cannabis. To avoid legal repercussions, medical cannabis users must:

  • Have a receipt showing when and where the medical cannabis was purchased.
  • Own no more than eight ounces of cannabis at a time.
  • Have certification from a doctor licensed to operate in the state of Kentucky.
  • Be at least 21 years old or have a guardian’s approval.

Essentially, Kentucky residents cannot get prescriptions for medical cannabis or purchase cannabis within the state. However, they can carry permission slips from doctors that let them own medical cannabis purchased in other states.

States with medical cannabis that border Kentucky include:

  • Illinois
  • Missouri
  • Ohio
  • Virginia
  • West Virginia

Other nearby states where Kentucky residents could purchase legal medical cannabis include:

  • Alabama
  • Arkansas
  • Michigan
  • Mississippi
  • Pennsylvania

Nearly All Kentuckians Support Medical Cannabis Legalization

Before signing the executive order, Governor Beshear had a panel study the topic and collect comments from Kentuckians. The results show that nearly all Kentuckians (between 90% and 98.6%) support legalizing medical marijuana. The report also shows that many Kentucky residents already cross state lines to purchase cannabis legally. However, they fear legal repercussions when returning home.

Some public health experts in Kentucky see legalizing medical cannabis as an essential tool in fighting the opioid epidemic. Kentucky experienced a surge of opioid overdoses and deaths during the pandemic. The number of overdose deaths in the state grew by nearly 50% between 2019 and 2020.

Many hope that the pain relief cannabis offers will give more people an alternative to addictive drugs like heroin and fentanyl.

Legislators Push Back Against the Governor

Despite the overwhelming approval for legalizing medical cannabis, Kentucky’s legislators have failed several times to reform the state’s laws. Twice, bills have passed the House and died in the Senate. Currently, Republicans hold a supermajority in the House and Senate. They say that the governor, a Democrat, is exceeding his authority by signing the executive order. Even Louisville Republican Jason Nemes, a House Representative who introduced a bill that would legalize medical marijuana, disagree with the governor’s action.

The governor’s office says it has the authority to enforce the order because it acts as a peremptory pardon. The governor has the authority to pardon anyone who violates Kentucky laws.

At some point in the near future, the Kentucky Supreme Court will likely determine whether Beshear’s argument has a legal standing. The state’s Attorney General, Daniel Cameron, plans to argue that the governor does not have the authority to change laws. The AG tweeted, “Kentucky’s General Assembly is the sole and final policy-making body of this state, and they must be allowed to have their say.”

AG Cameron has expressed interest in running for governor in 2024. Cameron has challenged many of Beshear’s actions since the two took their offices in 2020. He previously argued that the governor did not have the authority to issue public health mandates during the Covid-19 pandemic. The Kentucky Supreme Court sided with Cameron even though governors across the nation exercised similar authority to protect residents.

Cannabis Legalization Begins With Tiny Steps

Kentucky remains one of the few states that does not let its residents purchase medical cannabis. The executive order doesn’t resolve this issue, but it does take a tiny step toward ensuring patients have the right to treatment. Regardless of what the Kentucky Supreme Court decides, a step toward legalization has been made.

This scenario has played out in several states. The path to legalization tends to require small movements. As more people see that legalization contributes to public health, a better economy, and more personal freedoms, state legislators often change their positions or give voters the opportunity to make their voices heard.

Kentucky’s General Assembly has blocked medical cannabis legalization at least two times. While the executive order may seem like a small win, it’s a win nonetheless.

November 26, 2022Comments Off
2022 Was the Toughest Year for the Cannabis Industry—What’s in Store for 2023?

Anyone outside of the legal cannabis industry probably assumes that companies generate massive profits. After all, the number of reported cannabis users has grown steadily for more than two decades and governments have increasingly passed laws allowing medicinal and recreational cannabis sales.

Despite these positive trends, 2022 was a tough year for the legal cannabis industry. Many companies are struggling to survive. What makes the industry so challenging right now, and can investors expect more success in 2023?

Factors That Contribute to the Cannabis Industry’s Struggles

Several factors aligned in 2022 to make the legal cannabis industry extremely competitive. Some of the biggest challenges include:

  • Falling cannabis prices caused by overproduction and competition;
  • Supply chain disruptions that started during the pandemic;
  • Labor shortages;
  • Inflation;
  • Lack of access to capital needed to fund growth; and
  • Excessive taxes and licensing fees.

To make matters even worse, most US financial institutions refuse to work with businesses in the cannabis industry. States can change their laws to build legal, regulated cannabis industries. However, banks and other financial institutions in the United States must follow federal law. As long as the federal government considers cannabis a Schedule I drug with no medical use and a high potential for abuse, banks will not work with the industry.

2023 Could Bring Some Relief to the Cannabis Industry

Business owners and investors shouldn’t expect to see the cannabis industry change radically by the end of 2023. However, they could see some significant shifts in policy that make it easier for them to profit.

The US Government Is Finally Taking Cannabis Seriously

President Joe Biden could become an unlikely hero for the legal cannabis industry. As a member of Congress, Biden helped establish minimum sentences for drug offenders. Decades later, he seems to have a more informed perspective. That could mean big changes for the cannabis industry.

The Biden Administration has already pardoned felons convicted of simple marijuana possession. The White House has also started making moves towards rescheduling cannabis. A memo from the Executive Branch correctly states that cannabis is in “the same schedule as… heroin and LSD, and even higher than the classification of fentanyl and methamphetamine.” Finally, a US President has acknowledged that the current law doesn’t make sense and causes more harm than good.

Rescheduling cannabis would make it easier for Congress to legalize or decriminalize products. It could even open the door for financial institutions to work with licensed cannabis businesses. That change would eliminate massive fees and inconveniences that hobble today’s industry.

California Reconsiders Its Cannabis Taxes

States often adopt laws legalizing medicinal and recreational cannabis because they want the tax revenues the industry can generate. Unfortunately, many states have set such excessive taxes and licensing fees that legal cannabis companies can’t stay in business. Perhaps even worse, the high taxes make buying legal, regulated cannabis much more expensive than black-market cannabis products. As long as the financial burden remains high, legitimate companies will struggle and black market sellers will thrive.

California has started to recognize the problems created by high taxes and fees. During the summer of 2022, Governor Newsom signed a bill that eliminates taxes for cannabis cultivators. Previously, cultivators paid $161 per pound of flower.

The measure also creates new tax incentives for cannabis businesses in California.

No one knows whether these changes will have the required impact. Other states are certainly paying attention to California to find effective policies that steer cannabis users toward the legal market instead of black markett sellers. If lower prices can attract enough consumers, California might discover that it can generate higher tax revenues by cutting tax rates. That might encourage other states to lower their tax rates.

More Governments Are Changing How They View Cannabis

Many industries can rely on international markets that help them make money from consumers around the world. That approach doesn’t work for cannabis, though, because nearly all governments have strict rules that criminalize cultivation, sales, and possession.

What happens when more countries liberalize their cannabis policies by legalizing or decriminalizing products? Some investors hope it could lead to international trade.

Countries with legal recreational cannabis currently include:

  • Canada
  • Georgia
  • Malta
  • Mexico
  • South Africa
  • Thailand
  • Uruguay

Even among these countries, though, the laws vary significantly. Some laws make it legal to grow and use cannabis, but businesses cannot sell cannabis products to consumers. None of the countries allow exporting or importing cannabis.

That could change as more countries consider changing their laws. Germany looks poised to legalize recreational cannabis in the near future. If that happens, other European countries would likely change their laws to keep up with Germany. Just as a state like Ohio loses tax revenues to cannabis consumers crossing the border to Michigan, France would lose money as people traveled to Germany to purchase legal cannabis products.

The Future Is Uncertain, But There’s Room for Optimism

It’s impossible to predict how the cannabis industry will evolve over 2023 and the upcoming years. As more governments reconsider their strict laws and hefty taxes, though, everyone interested in the industry’s success has reason to feel optimistic.

October 27, 2022Comments Off
International Cannabis Markets to Watch in 2023

Only a handful of countries (including Canada, Uruguay, and Mexico) have legalized cannabis possession. Even among countries that allow cannabis possession and cultivation, many do not have legal markets where adults can purchase products. For instance, you can get a permit to cultivate marijuana in Mexico, but you cannot sell what you grow.

Despite some reluctance, new cannabis markets are emerging throughout the United States and around the world. Some researchers believe the global market will reach $197.75 billion by 2028. Currently, the global cannabis market has a value of about $28 billion. With rapid growth on the horizon, it pays to know where investors and entrepreneurs should concentrate their efforts.

Germany Takes Cautious Steps Toward Legalization

In 2021, all three of Germany’s ruling parties agreed they wanted to legalize recreational cannabis soon. Some confidently stated they could reach that goal by 2023. More recently, the German government has sounded less optimistic about that goal. It still wants to pass laws that legalize cannabis for adults, but it needs to consider how doing so might infringe on other laws within the European Union.

A strategy has emerged that would make cannabis sales and consumption legal in private, preventing cafes, restaurants, and similar businesses from reaping financial benefits. Still, it’s a short-term approach that might help Germany make cannabis more accessible without attracting anger from other members of the EU.

A legal market might not come to Germany by the end of 2023, but the government is focused on doing what it can as soon as possible. That makes Germany an attractive option for anyone evaluating emerging cannabis markets.

Mexico Has a Complicated Landscape for Legalization

Cannabis became legal by default when Mexico’s Supreme Court ruled that prohibition violates the country’s constitution. Currently, individuals can get licenses to cultivate cannabis. They can also possess cannabis for personal use. They cannot, however, sell it. That essentially means that Mexico doesn’t have a legal market where anyone interested in cannabis products can legally buy products.

What’s preventing the country from moving forward? So far, the federal government just hasn’t developed policies that would regulate a legalized cannabis industry. The result of this regulatory failure isn’t surprising: consumers buy cannabis products from black market dealers who operate without any oversight.

Mexico’s federal government has shown some willingness to work toward a regulated industry that gives consumers accurate information about the items they buy. A law hasn’t been passed yet, but you can expect several bills to emerge over the next few years.

Thailand Shifts Its Position Dramatically

Not long ago, Thailand had some of the world’s most oppressive cannabis laws. At the same time, anyone walking through a Bangkok entertainment corridor would smell marijuana smoke. The laws were strict but enforced randomly. It was a confusing legal landscape for residents and tourists.

Now, those same corridors bustle with legal cannabis vendors selling edibles, pre-rolled joints, and flowers by weight.

This is potentially just the beginning of Thailand’s role in the legal cannabis industry. A large percentage of the country’s residents rely on making money from agriculture. The climate also makes Thailand an excellent place to grow cannabis outdoors.

Thailand could easily produce more cannabis than the country can use, creating the potential for it to emerge as a major exporter. Right now, no country allows international cannabis sales. If that changes, Thailand is positioned to become a major player in the world market.

Near the beginning of 2021, Malta passed laws that decriminalized cannabis possession and expunged the records of citizens with possession charges. By the end of the year, Malta had taken a much bolder move by allowing adults medicinal and recreational cannabis sales. The only catch is that the law only lets non-profit clubs sell cannabis to consumers.

Will the government maintain this restriction? It seems to have worked well, but the industry is just starting. Over time, the government could find that it makes sense to privatize the industry.

Perhaps even more importantly, Malta is the first European country to legalize cannabis fully. This will inevitably put pressure on other countries to follow its lead.

Italy Now Allows Medicinal Cannabis Sales

Italy has decriminalized cannabis possession for personal use. It also has a regulated industry for medicinal marijuana. However, it has not passed laws that would make recreational sales legal.

Not surprisingly, some members of the Italian government want to create a legal industry for recreational cannabis. Many of them recognize that Italians already consume cannabis illegally—often without legal consequences. Why not collect taxes that would help fund federal initiatives?

Look for more activists and politicians to push for these changes in the near future, especially as the public gets used to medical cannabis.

It will take some time for these countries—and the U.S. states that recently legalized cannabis—to create the infrastructures and policies needed to keep consumers safe, fund government projects, and ensure companies remain profitable. Keep your eyes on these locations. Each development takes them closer to legalization and opportunities to generate revenue from legal marijuana.

October 18, 2022Comments Off
How Much Cultivation Land Do You Need?

You know that you want to start a cannabis cultivation business that earns excellent profits by selling high-quality flowers and plant material to clients. Wanting to get your business started (or to expand your existing business) is a great first step. Before you can create a successful business, though, you need to answer several questions. “How much cannabis cultivation land do I need?” sits right at the top of the list.

To answer this question accurately, you will need to think more carefully about what you want your business to accomplish and what goals you can realistically reach. It isn’t an easy question to answer, but you can decide approximately how much cultivation land for sale to look for when you break the big question into several smaller parts.

Do You Want to Grow Hemp or Cannabis Flowers?

Hemp and cannabis are different varieties of the same plant, Cannabis sativa. Hemp grows very quickly and has a wide range of uses. Cannabis has the same uses. The biggest difference between the plants — especially when it comes to the law — is how much THC they contain. Hemp cannot have more than 0.2% THC.

Why does this matter? Because it influences what you can grow in your state.

The U.S. federal government legalized hemp through the 2018 Farm Bill. Cannabis, however, remains illegal at the federal level. A growing number of states allow cannabis cultivation for medicinal and recreational use, which is great news for personal liberty and entrepreneurs.

Whether you want to grow hemp or cannabis, you will need to get a permit from your state. That’s where the bad news comes in. Overall, there are fewer cannabis cultivation permits than hemp cultivation permits. That may change in the future. Right now, though, you need to know your state’s laws, whether you can get permission to grow hemp or cannabis, and where you can grow the crops.

You can make more money growing luxurious cannabis flowers. If you don’t live in a state with legal cannabis, though, you might only have a chance to explore hemp land for sale. You still have great opportunities with hemp farmland for sale. You can’t expect to make as much money from it as you would cannabis, however.

How Much Cannabis Do You Want to Grow?

Let’s assume you live in or near a state that lets you cultivate cannabis. Now, you need to know how much cannabis you want to grow.

Like most business owners, you probably answer that question with a dollar sign in front of it. The wholesale price of outdoor-grown cannabis in the U.S. was about $950 per pound in 2020. The wholesale price will change from year to year depending on factors like weather and demand. Keep in mind there was exceptional demand for cannabis products in 2020 as people struggled with stress from the pandemic. To stay on the safe side, let’s say that a pound of dry cannabis flowers wholesales at $900.

If you want revenue of half a million per year, you need to sell about 556 pounds of cannabis flower. Interestingly, that’s the weight of cannabis flowers many farmers say they get from one acre of land. Of course, how much flower you get depends on numerous variables, including:

  • How much space you give your plants.
  • Whether your plants get the sunlight, water, and nutrients needed to grow well.
  • Properties of the strain(s) you grow.

Again, to keep the numbers on the safe side, let’s say you can expect to get 500 pounds of cannabis flower per acre per year. At $900 per pound, you still make $450,000 in revenue.

At this point, one acre might sound like more than enough land for your cannabis cultivation. But don’t forget that $450,000 in revenue isn’t anywhere close to $450,000 in profit. To reach that amount, you will need considerably more land.

Expenses That Affect Your Cannabis Cultivation Profits

Consider how many things you will need to pay for before you can generate a profit from cannabis land. Some of your most significant expenses include:

  • The price of purchasing the land.
  • Taxes and permit fees (they vary wildly depending on your state).
  • Buying and maintaining farming equipment.
  • Young plants that you will grow into mature, flowering plants.
  • Shipping (it costs money to get flowers from your farm to a warehouse or store).
  • Employees (a master grower can earn more than $100,000 per year).
  • Insurance (you’ll need general liability insurance, crop insurance, workers’ compensation insurance, product liability insurance, etc.).

You also need to consider whether the cannabis cultivation land has been developed. Raw land may not give you access to any utilities. Perhaps you have a pond on the property that can help provide water, but you will not have electricity or sewage. Installing these systems will cost a lot of money before you can start growing your crops.

Does the land have any buildings on it? Your farmland must do more than provide space to grow cannabis. You will need a place to store your equipment, dry your flowers, and process other plant materials. You will need bathroom facilities on the property. You might want to build a small house where you can conduct business and spend the night when necessary (it may be a long drive back to town).

When you consider all the costs of starting a cannabis cultivation farm, you quickly see that you will not make half a million dollars per acre. The actual amount of profit you can earn depends on how much you spend throughout the year. In many states, the taxes alone will make your jaw drop.

Yes, all of this looks very expensive. That doesn’t mean you should give up on your dream of becoming a cannabis cultivator. Plenty of people have gotten rich by growing legal cannabis outdoors. To get there, you need to find the right plot of land.

Features to Look for When You Buy Cannabis Cultivation Land for Sale

Clearly, you have a lot to think about before you buy cannabis land for sale. Some things are more important than others, though. You can have a barn built pretty easily. You cannot change the amount of sunshine an area gets.

Look for the following features when you compare cannabis cultivation land for sale.

Plenty of Direct Sunlight

A lot of people believe cannabis needs high temperatures to grow well. That isn’t true. Consider, for instance, that some of the best marijuana comes from Northern California, which has a mild climate and high elevation.

Cannabis does, however, need an abundance of sunlight to reach its maximum size. When researching cannabis cultivation land, look for options that:

  • Have long days that will give your plants plenty of direct sunlight.
  • Don’t have objects, such as a forest or mountain, that will block sunlight, effectively cutting your day short.

Indoor cultivators have complete control over how much light their plants get. By growing cannabis outside, you lose that level of control. You do, however, have the ability to choose a location that will give your plants the sunlight they need to grow.

Soil That Drains Easily

Standing water causes significant problems for most plants. When you have too much water, it’s only a matter of time before molds and fungi start to grow. It doesn’t take long before they can ruin your crop.

Well-drained soil will help ensure that your plants get plenty of water without suffering from conditions like “root rot.” Yes, if your plant’s roots stay too wet for too long, they will start to rot in the ground. As the roots degrade, the rest of the plant dies.

You can perform a quick soil drainage test by digging a hole about one foot deep and pouring a gallon of water into the space. Ideally, the water will stay in the hole for a few minutes before draining beneath the surface.

Don’t make a financial commitment to the land until you have a professional analyze the soil. Environmental tests can check the soil for good draining, a pH level that cannabis enjoys, macronutrients cannabis needs to grow, and micronutrients that can enhance growth.

Browse environmental services on 420 Property to get land analyzed before you buy!

Access to a Water Source

During the best years, your crops will get watered by frequent rainfall that keeps the soil moist but never threatens to drown the plants. Unfortunately, you can’t rely on the weather to work in your favor. You will almost certainly face a drought at some point in your cultivation career.

You don’t need to worry about rainfall nearly as much when you have access to a water source on your land. If the farm is located near a town, you might find that you can tap into the municipal water supply. From there, you can irrigate your crops to keep them happy and healthy.

Farmland located far from other companies and residents, however, may not have accessible waterlines. In this case, you will probably need a large pond. When your plants don’t get enough rain, you can pump water from the pond and irrigate your crops.

The problem with a pond, though, is that you can lose the water during a severe drought. With enough heat, the water will evaporate, leaving behind a puddle of mud. This probably won’t happen, but it’s a possibility.

When comparing farmland, look for options that can connect to municipal waterlines. If that’s not an option for you, try to find a property that already has a large pond. Otherwise, you will need to hire someone to dig a pond for you. It’s not incredibly expensive, but it is one more thing that you have to pay for.

Access to Power (Electricity)

This is one of the biggest concerns for outdoor cannabis cultivators. Some farmland in the U.S. does not have access to the power grid, which makes it difficult for you to access the electricity you need to power everything from water pumps to security lights.

Secondarily, you want to make sure that you can rely on the local power grid. Can the line running to your property power all of your electrical equipment? Will you need to ration power to prevent a short? These aren’t surmountable problems, but they’re far from ideal.

You can get a generator, but most generators are built for short-term use. They burn fuel quickly and emit a lot of carbon dioxide. You don’t want to rely on them as your sole source of energy.

Solar panels offer a better option for off-grid energy production. Solar technology has improved quite a bit over the last decade. You can probably get more power than you think from a few panels. Depending on your property, you might choose to install the panels on a building or erect them in a field. Either way can work well as long as you don’t need that small patch of ground for cultivation.

Solar panels and installation don’t always cost a lot of money, and they can make an excellent alternative to power grids.

Browse solar equipment listings on 420 Property to find options that match your land’s energy needs!

Low Visibility

Let’s think about location. On the one hand, you want your cannabis cultivation land fairly close to a town or city where you can buy supplies. Some of the best cultivation land sits right outside major cities, making it easy for you to transport dried flowers and other products to distributors.

On the other hand, you don’t want everyone who passes by the property to see that you have several acres of cannabis. Most people will leave your farm alone. Someone, however, will eventually get the idea that they can sneak onto your land, grab a few ounces, and earn money selling your cannabis illegally.

You can construct fences, install security systems, mount motion-sensing lights, and post guard dogs all over the place. All of those things cost money. Also, there is always someone out there desperate or stupid enough to try trespassing on your land.

It’s much easier to choose a location with low visibility. Perhaps you have a nice farmhouse and barn that blocks the view of your crops from the road. Maybe you have to drive down a long path to access your cultivation land. You could potentially grow several types of crops in your fields, carefully placing the cannabis out of sight.

Obviously, you’re running a legal cultivation business. You should still keep stealth in mind. While you want to comply with the law, others will want to steal from you and sell your product on the black market. That’s not why you get into the legal cannabis cultivation industry.

Proximity to Major Roads

While you don’t want high visibility, you do want easy access to major roadways. Depending on your area’s laws, you might ship cannabis all over your state. A farm located near a highway or interstate will reduce the time and money it takes to move your product to warehouses and retailers.

Proximity to a major road will also make it easier for you to bring in the equipment and supplies you need to manage a successful company. A solar power installation company might charge a nominal fee for bringing equipment to a farm that sits right outside the city. If you’re 100 miles away off a dirt road, though, they might want to raise their price.

Compliance With State and Local Rules

As always, you must comply with state and local rules when cultivating cannabis. Your state might have a law about keeping cannabis grow operations away from school zones. Some communities have laws that forbid anyone from growing cannabis within their borders. The state government might approve of your business, but that doesn’t mean the local municipality does.

Cover all your bases by consulting with cannabis business and real estate lawyers. They can review your cultivation plans, compare them to state laws and local ordinances, and give you assurance that you comply.

Search cannabis business and real estate lawyers on 420 Property to make sure you buy property where you can operate your business legally.

Find Your Cannabis Cultivation Land on 420 Property

The amount of cannabis cultivation land you need depends on a lot of variables. Size isn’t the only thing that matters. You also need an environment that nourishes your plants.

Are you ready to start comparing cannabis cultivation land that can lead to business success?

Find your next property today!

October 14, 2022Comments Off
Common Types of Loans for Hemp & Cannabis Businesses

Unlike most industries, companies that work with hemp and cannabis find it challenging to secure loans through banks and credit unions. Unfortunately, federal law makes it nearly impossible for traditional banking institutions to work with the hemp and cannabis industries. Even when a presidential administration says that its Department of Justice will not pursue cases in states with legal cannabis, banks know that the next administration could take the opposite approach.

Luckily, private lenders have stepped in to help cannabis and hemp businesses meet their funding goals. At Canna Business Resources, we help you find a lender that can meet your needs. It helps, however, to know what type of loan will benefit your company most.

The following list will introduce you to the common types of loans for hemp and cannabis businesses.

Real Estate Loans for 420 Properties

The best cannabis real estate for sale can cost a lot of money to buy. The downside is that you need to accumulate a sizable amount of money before you can buy a storefront, farm, greenhouse, or warehouse space. In return, you get several benefits, such as:

  • Access to a large community of cannabis consumers willing to pay for quality products.
  • Visible storefronts that commuters see throughout the day.
  • Locations with heavy foot traffic.
  • Cannabis-friendly neighborhoods that charge reasonable taxes and let you meet consumer demands.

Unless you have a couple of million dollars saved, you will have a very hard time purchasing 420 properties without relying on a loan. Commercial real estate loans can fall anywhere from $500,000 to $25 million. A larger company with excellent credit might even qualify for higher sums.

Ideally, you can make a down payment that covers at least 30 percent of the commercial real estate’s appraised value. Qualified borrowers, however, can possibly get loans with small down payments.

Loan terms typically last from six months to 10 years. You can expect to pay 7 to 15 percent interest.

You can get the lowest interest rates by developing an excellent business plan, maintaining a high credit rating, and making a larger down payment.

You have a lot of options, and even a couple of percentage points can make a huge difference in the amount you repay. Get the best deal by starting your search with Canna Business Resources.

Equipment Loans

All types of cannabis businesses need equipment loans. If you own a dispensary or storefront, you can use an equipment loan to purchase items like security systems, point-of-sale systems, and even attractive shelving that will make products more appealing to customers.

In a greenhouse, you can use an equipment loan to help you buy irrigation systems, solar power panels, and machinery that helps you move products efficiently.

Grow houses based inside warehouses have significant equipment needs. Lighting and irrigation systems can cost thousands upon thousands of dollars. There are cheaper options, but they rarely work as well as highly calibrated systems that help cannabis plants reach their maximum potential. When you want large flowers with high THC and CBD percentages, it makes sense to buy the right equipment. You could save money in the long run.

In some cases, you can lease equipment. Owning is usually the best option, though. Equipment loans from Canna Business Resources make it possible for you to get the items you need to streamline your business and cultivation processes.

Loan terms usually fall between one and seven years. Rates tend to start around 7 percent. With lease-to-own, you can finance up to 100 percent of the equipment’s cost.

Hemp and Cannabis Business Loans

Hemp and cannabis business loans give you more control over how you spend the money you borrow. Lenders will want to know how you plan to spend the money, but you are not restricted to specific items like equipment or real estate.

Lines of Credit

Lines of credit are extremely flexible. Your credit cards are lines of credit, so you can expect your cannabis business line of credit to work much the same.

There are some specific cases when you have restrictions on how you use your credit. For example, you might have a line of credit with a cannabis wholesaler. In that case, you can only use your credit to purchase products from that company.

When you have a line of credit from a private lender, though, you open your business to more growth opportunities. For example, you know that you can purchase the inventory you need without running out of money to meet payroll. When you find yourself in a tight spot, you can tap into the line of credit for temporary help.

Working Capital Loans

Working capital loans play a similar role as lines of credit. They are not long-term loans that you use to grow your business. Instead, they are small, short-term loans that fill in the financial gaps that businesses often experience.

The next time you find yourself wondering how you can pay all of your expenses, you should look into a working capital loan. Canna Business Resources can put you in contact with a reliable lender with reasonable rates.

Real Estate Sale-Leaseback Funding

Real estate sale-leaseback funding is a creative way for you to maintain control of your property while using it to borrow the money you need to operate a business.

The arrangements typically involve finding a third-party lender willing to let you borrow an amount of money approximately equal to the value of the real estate. You retain ownership of the property as long as you continue repaying the lender.

To an outside observer, it looks like you’re leasing the property. In reality, you own the property but you pay someone else because they let you use the real estate as collateral.

Explore Your Cannabis Funding Options With Canna Business Resources!

You have plenty of funding options to start or grow your cannabis and hemp industry business. Start by filling out a Canna Business Resources application. We’ll contact you to discuss opportunities and help you choose a great solution.

October 14, 2022Comments Off
How to Submit a Successful Cannabis Business Loan Application

Starting a small business might not sound like it costs a lot of money. When you take a closer look, though, you often find that even the smallest hemp and cannabis startups need at least half a million dollars before they can even begin operations. Financing from Canna Business Resources makes it possible for you to access the money you need to pay for essentials.

Unfortunately, not everyone can qualify for a cannabis business loan. Even fewer people get business loans with low interest rates. Typically, businesses can expect to pay anywhere from 7 to 15 percent interest. Qualifying for a lower rate will make it much easier for you to repay your loan while generating profits.

The following guide will help you learn how to submit a successful cannabis business loan application. Follow these steps to improve your chances of getting a low-interest loan that helps your new or growing business thrive.

Maintain an Excellent Credit Rating

Although private lenders aren’t forced to follow as many rules as banks and credit unions, they do take their decisions seriously. They must, after all, protect their investments.

Having an excellent credit rating, typically defined as a number between 800 and 850, will make your cannabis business loan application more appealing to lenders. If you have a credit score over 800, you have a good chance of securing a low-interest loan that will help fund your business.

If you do not have an excellent score, you can start taking steps to improve your rating. Most people and businesses find that they can raise their scores quickly by:

  • Lowering the amount of debt that they carry (especially high-interest credit card debt)
  • Contact the major credit bureaus to request a copy of your credit history.
  • Review your credit history to find any inaccuracies that could pull down your credit score.
  • Make all payments on time (if you must delay payments, always pay them within 29 days of the deadline).

Depending on your current rating, you could improve your score within a few months. The effort and time you invest will make it easier for your cannabis business lender to give you an affordable loan that meets your needs.

Do you need additional help making your loan application appealing to lenders? Contact Canna Business Resources to talk to a consultant. Your consultant might have advice that improves your qualifications quickly so you can get a loan and start your cannabis business.

Save Money for a Down Payment

A down payment can help your loan application stand out from others. Having money for a down payment is especially helpful when you want to purchase real estate, vehicles, and equipment.

How much money should you put down for your cannabis loan? Ideally, you can commit to 30 percent of the overall cost. That’s not a small amount of money when you’re starting or growing a cannabis business. Buying real estate for hemp or cannabis cultivation can easily cost $1 million. That means saving $300,000.

Accumulating the money you need for a down payment probably sounds challenging. You get several benefits from a sizable down payment though. When you commit your own money, the lender will know that you take the business opportunity seriously. That makes it more likely that you will get a favorable interest rate. Even one point lower could save you tens of thousands of dollars in interest payments.

For New Businesses: Write an Effective Business Plan

Lenders want to know how you plan to use the money they give you. They also want to know that you have a good idea for turning your loan into a profitable business.

Writing an effective business plan can have a significant impact on a lender’s decision to accept or decline your application for a cannabis business loan.

Your business plan should include:

  • A stand-alone executive summary that explains uses four to five pages to explain how you plan to grow a successful cannabis business.
  • A management team section that describes the skills and experience of the people on your management team.
  • A value proposition that explains how your company will fill an unmet market need.
  • A section that describes opportunities in the market, such as targeting a specific audience or releasing a product that will appeal to new consumers. This section should include data that backs up your claims.
  • A description of your operating plan that tells lenders how you will build a profitable business structure that streamlines processes and maximizes efficiencies.

If you already have a location or license for your cannabis business, include that in your business plan. It demonstrates that you have already been through much of the industry’s bureaucracy. The location might also play a role in your business’s success.

For Existing Businesses: Write an Expansion Plan

If you want a cannabis business loan to expand an existing brand, you need to provide financials from the last several years. Essentially, you want to use accurate data to show the lenders that your business can turn a loan into profits.

How do you plan to use the money you borrow? What impact will the changes have on revenues and brand recognition?

Anticipate questions lenders might ask. It’s always better to put lenders at ease early in the process. A favorable impression puts you ahead of other applicants who have not taken these extra steps.

Review Your Opportunities for the Best Cannabis Business Loan

Whether you want to buy a greenhouse, open a new storefront, or purchase extraction equipment to start making new cannabis products, Canna Business Resources can help you reach your goal.

Get started today by filling out the Canna Business Resources application to let our consultants know about your business plans. We’ll do our best to pair you with a loan that helps your business succeed while keeping interest and fees as low as possible.

October 14, 2022Comments Off
The Pros And Cons Of Real Estate Loans For The Cannabis Industry

usiness can cost quite a bit of money. Unless you already have several million dollars in cash, you will probably need a real estate loan for your cannabis business. Learn about the pros and cons of cannabis property loans so you can make informed decisions.

Con: You Cannot Rely on Banks and Other Traditional Lenders

Banks and credit unions must follow federal laws, making it dangerous for them to work with businesses in the cannabis industry. Even when you operate in a state with legal cannabis, few banks will want to loan your business money.

The apprehension of traditional lenders will probably remain as long as the federal government lists cannabis as a Schedule I drug. Banks did not start lending to the cannabis industry during the Obama Administration even though the president said that the Department of Justice would not focus on legal businesses. That was a smart decision for the banks. As soon as Jeff Sessions became the Attorney General, that rule changed.

Unfortunately, that means you cannot rely on a bank or credit union to give your cannabis business real estate loans. Until the law changes, they will not take the risk.

Pro: Private Real Estate Loans Can Help Fund Cannabis Property Purchases

Private real estate lenders don’t need to worry as much about following federal laws. Since they do not act as banks, they have fewer restrictions.

Plenty of reputable lenders have filled the gap left by banks. Now, you can apply for and receive money that makes it possible for your cannabis business to grow. It’s no different than any other type of business borrowing from a private lender.

Con: Higher Interest Rates, so Compare Offers

The amount you pay for 420 real estate can vary significantly depending on the type of property you want to purchase and where the property is located. A fully-equipped recreational retail store for sale in Michigan might cost about $2 million, while a medical marijuana dispensary in Oklahoma might cost half a million.

Regardless, most businesses do not have immediate access to that much money. A cannabis real estate loan makes it possible for you to purchase property. You will, however, have to pay interest on the loan, which increases the overall cost of the property.

Slight differences in interest rates and fees can significantly affect how much money you spend repaying your real estate loan.

Let’s say you borrow $1 million with a loan that charges 15 percent over the next five years. You can expect to pay your lender about $23,789 per month. By the time you repay the enter real estate loan, you will have spent about $1.43 million. That’s $430,000 in interest.

Even a 1% change makes a big difference in the amount of interest you repay. Consider what happens when you borrow $1 million and repay the money over five years with a 14 percent interest rate. Your monthly payment falls to about $23,268. You save about $520 per month just by lowering your interest rate by one percent. When you finish repaying the loan, you will have spent about $1.396 million. With just one percentage point, you’ve lowered your overall repayment by more than $30,0000.

Take time to compare all of your offers so you can get a real estate loan that helps you purchase property without spending more money than you can afford.

Pro: You Can Get Competitive Loan Offers From Private Lenders

The good news is that most private real estate lenders know they face a lot of competition from each other. Assuming that you have an excellent credit score and can commit to a 30 percent down payment on the property, you will attract attention from several lenders.

At best, you might qualify for a loan that charges 7 percent. That would make it much easier for you to start a successful business that generates enough revenue for you to repay your loan and still keep profits that help your brand grow.

If you don’t have an excellent credit rating or a sizable down payment, talk to private lenders to see how you can make your application more appealing. You might learn that waiting a few months will give you time to improve your credit rating or save more money for a down payment.

Con: You Will Likely Need a Substantial Down Payment for Your Real Estate Loan

Practically all lenders will require a down payment before they let you borrow money. The down payment helps ensure that you take the arrangement seriously. When you invest $30,000 in a $1 million property, the lender sees that you’re willing to accept some risk and lower their risk.

Keep in mind that lenders will often lower their interest rates when you contribute more to the down payment. With $30,000 on a $1 million property, the lender might charge 13 percent. With $100,000, you could find yourself paying 10 percent or less, depending on factors such as your credit history and the property’s value.

Pro: Many Private Lenders Will Work With You to Meet Your Needs and Limitations

Are you slightly shy of meeting your lender’s requirements? That doesn’t mean you shouldn’t apply for a loan. Some private lenders are willing to overlook minor imperfections and keep the big picture in mind. Your credit score, for instance, might not reflect your actual risk or trustworthiness.

When in doubt, reach out to private lenders to talk about ways you can qualify for cannabis real estate loans. They might give you advice that makes the process easier and faster.

Start Your Cannabis Business With Help From Canna Business Resources!

No matter what type of cannabis business you want to start, you will save money in the long run by purchasing real estate. Apply for a real estate loan through Canna Business Resources to see whether you qualify for the amount of money you need.

October 14, 2022Comments Off
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