SUPPLY ISSUES ARE OCCURRING IN NJ.
New Jersey saw a smooth start to their recreational cannabis market starting in April. Still, industry officials continue to worry about the possibility of supply shortfalls that could disrupt this Northeast market. “At this point, New Jersey has been rapidly depleted, and I don’t see a whole lot of other grows,” said Steve Schain, a New Jersey-based cannabis attorney with Smart Counsel. “Opening a dispensary is one thing, but opening a grow is quite another, which is what we need to have.” One expert in the state believes that the state will be supply bottlenecked for the next six to twelve months. As the state currently sits, 13 existing medical cannabis cultivators were permitted to sell adult-use products with the stipulation that medical patience will get priority if supply runs short, which some regulators believe is already happening and that these cultivators aren't living up to their promises.
Psychedelics Are coming at the federal level.
It is anticipated that there will be federal approval for the prescription use of psilocybin and MDMA use, and the Biden administration is exploring making a task force to investigate the therapeutic of these psychedelics. Congressional lawmakers noted that even National Institute on Drug Abuse (NIDA) Director Nora Volkow has said that the “train has left the station” on psychedelics, and they wrote that “people are going to use them regardless of whether regulators act.” This follows the DEA in the past two weeks getting sued on multiple fronts for how they police psychedelics.
A new state, same story.
We have started to see wholesale price stability in mature cannabis markets like California, Oregon, and Colorado, but many of the newly legal cannabis states are still seeing a price decrease in their markets as they try and find normalization in these growing markets. Michigan is the latest state to show the pressure that price deterioration is having on its market, as wholesale prices are now as low if not lower than the mature markets. “Industry insiders say cannabis flower in Michigan is readily available for less than $1,000 a pound on the wholesale market – and often for much less – because of oversaturation as more and more cultivation businesses come online in a state with no limit on business licenses.” We have continued to present on this topic during our Monthly Industry Sales Update Call in which many states are not growing due to consumer volume, but rather pricing pressure compared to a year or even a quarter ago. Growers in Michigan were getting roughly $2k a pound just a year ago compared to $600 today. These states rely on the cannabis markets to create tax revenues for the state, but if these cultivators and retail shop owners aren’t able to turn a profit, the state will lose out on tons of money as well (similar to what we have seen in Canada).
