The Boston Cannabis Board was hesitant to approve a new marijuana store in Faneuil Hall last month because it would be the seventh pot business within a half-mile to earn a local license. They pondered, “Is it possible to have too many cannabis shops?” The administration of Mayor Michelle Wu has announced plans to investigate other US towns with established Cannabis industries.
However, discussions with government and industry executives in California, Denver, and Portland, Oregon, all imply that Boston will not find straightforward answers. In fact, the interviews showed that municipal officials are vulnerable in two distinct ways: If just a small number of potential merchants are given the green light, the massive black market will gladly fill in the gap, providing its customers with more affordable and accessible alternatives.
If too many are given the go-ahead to operate in an area, they will inevitably begin to eat into each other’s profits, prompting the government or industry to take drastic measures, such as imposing a moratorium on issuing licenses. Truman Bradley, executive director of the Marijuana Industry Group, a Colorado trade association, said, “In Denver, a lot of dogs are fighting over a few bones - it’s a mature market with very few spots remaining on the board.”
The problem, they claim, will be solved by the free market, which is supported by some authorities and industry participants. Others may have the success of small enterprises in mind and, as a result, be more mindful of density from the start. Present-day Boston isn’t exactly flooded with pot shops: Massachusetts has had recreational sales for four years, yet only eleven stores are operational in the state’s largest city, despite the fact that the city has been issued almost 1,400 liquor permits.
A complete overhaul of the city’s permitting procedure in 2019 and the challenges marijuana entrepreneurs face in acquiring funding, selecting viable premises, and winning over neighbors are contributing factors to the tardy start. Boston is far behind its comparable cities in terms of pot saturation, even though the city will need to authorize a little more than 50 pot stores to achieve a legal state minimum.
Incomparably sized Denver, for instance, over a hundred stores opened for business within weeks after the start of recreational sales in Colorado on January 1, 2014, and there are still approximately two hundred operating now. In Portland, where there are 218 legal pot shops, the price of weed is similarly low and the availability is similar.
That’s a problem that might be seen as a good thing by consumers in Massachusetts. But there are problems in each of these pot-centric utopias. Revenue from marijuana in Colorado and Oregon fell precipitously in 2022, following several years of steady increase. Oversaturation in the marijuana industry and a drop in pot tourism as more states legalize the drug are blamed by experts for the slump.
That’s in line with what’s happening in Massachusetts, where legal sales have been implemented in all surrounding states except New Hampshire and cannabis prices have plummeted due to increased competition and supply. Kimberly Roy, a member of the state’s Cannabis Control Commission, has recently stated that the commission should investigate regulations that operate as a brake on the market (such as licensing caps) due to growing concerns about market saturation among state regulators.
Until recently, “there was not enough supply, and prices were judged too high to compete with the illicit market,” Roy explained in an interview. “The current supply chain is extremely extensive. Studying the practices of states where cannabis is legalized and regulated is crucial. Perhaps the Commission will deem it necessary to take action in the future.
In Oregon, where the weather is perfect for growing marijuana outdoors, we can see what happens when production becomes unmanageable. Local industry groups claim that the state has been experiencing a large output glut for several years, causing prices to fall and forcing producers and retailers into survival mode.
The federal prohibition on Cannabis commerce, say, officials and industry executives, makes the problem worse by preventing states with an abundance of the drug from selling it to those with a shortage. As a result, in 2019, lawmakers in Oregon passed a bill empowering the governor to strike export deals for marijuana with other states.
After hearing the concerns of long-standing businesses, authorities this year took the extreme measure of suspending the processing of applications for all types of marijuana business licenses submitted after January 1. Denver’s city council recently voted to bar any new pot operators until at least 2027, with the exception of those designated as social equity applicants (business owners from communities hit hardest by drug arrests).
This has prompted a call from cannabis companies in Colorado for the state to implement a similar moratorium. There appears to be an issue with an excessive number of dispensaries selling marijuana. Denver’s executive director of excise and licenses Molly Duplechian has said, “We should have put more controls in place to stop density from the very beginning.”
Duplechian is responsible for regulating the city’s cannabis industry. We had to try to correct it retrospectively. This is a dramatic about-face from the business community in favor of tough regulations. Marijuana businesses in Portland opposed the city’s decision to require a 1,000-foot separation between dispensaries, while in Denver, established medicinal dispensaries successfully pushed to be exempt from a similar buffer requirement.
There is no remorse on the part of both operators and regulators for allowing so many cannabis stores to develop, despite assurances from city authorities that there has been no rise in crime or other negative repercussions due to the proliferation of cannabis businesses. Leaders of the first legal marijuana markets, who are all white, have admitted that they didn’t give equity in licensing much thought until recently.
This is despite the fact that policymakers in Massachusetts and Boston have embraced the idea in recognition of decades of racially disproportionate marijuana arrests. Amy Margolis, an attorney, and the association’s founder, once observed, “Hindsight is 20-20.” Dispensaries in Portland are plentiful despite the [buffer]. It fosters cutthroat competition that actually affects the bottom lines of those involved.
And if those with plenty of financial resources are having trouble making it, what will happen when others from neighborhoods with far less money are thrown into the mix? That’s a very tough problem to solve. However, there is such a thing as too few sellers, as evidenced by the explosion of criminal cannabis sales throughout broad swathes of California where local governments have banned marijuana storefronts.
According to Lindsay Robinson, executive director of the California Cannabis Industry Association, “we have enormous ‘access deserts’ where there has been a proliferation of criminal pop-up dispensaries that have no license at all.” “Density problems have arisen in the larger cities, but our main challenge is that so many local governments have decided against allowing any stores to operate there.
No one is going to go two hours in a state as large as California just to get some legal cannabis. The collective lessons learned from other states highlight a basic challenge for municipal regulators: the local marijuana sectors they oversee are inextricably linked to statewide market dynamics and federal legislation, both of which they have little authority over.
Bradley said that local leaders should be as flexible as possible in the face of uncertainty. To paraphrase, “you can’t put the toothpaste back in the tube and take somebody’s business away if you don’t get [licensing] right.” “Balance is the key in cannabis as it is in life.”
