America was one of the first countries on the globe to adopt cannabis reform and repeal prohibitionist cannabis laws, at least at the state level. The country is now home to the largest cannabis markets on the globe and earns billions of dollars annually from fees and cannabis sales.
Twenty-four states already allow recreational cannabis sales, but several of them passed adult-use cannabis policies in the past couple of years and are still working out the kinks in their markets. However, players in some of America’s youngest recreational cannabis markets are grappling with increasingly stringent rules and regulations that have the potential to stifle their growth. The cannabis industry is already known for its strict rules and numerous fees, which often raise the cost of business and make it hard for businesses to turn a profit.
However, newer markets are taking it a step further with outright bans on certain cannabis products and harsh limitations on marketing, product design and packaging as well as much lower potency caps. Consequently, cannabis operators in young markets such as Maryland, Arizona, New York and Missouri are now facing new policies that could increase the already high cost of business even further and cripple these markets before they can truly soar.
Missouri’s recreational marijuana market is looking at another potential inventory shortage as dozens of manufacturers and brands wait for hundreds of thousands of their product stock-keeping units to receive approval. This expanding backlog, which prevented many brands from entering Missouri’s adult-use market, is due to child safeguards included in new packaging rules that were published in July.
Marijuana product manufacturers in Missouri have been waiting for several weeks now after the Missouri Department of Health and Senior Services (DHSS) passed guidelines limiting cannabis packaging to a single primary color and up to only two symbols or logos featuring different colors.
Operators in New York are also struggling to follow newly passed packaging rules for recreational cannabis while businesses in Maryland have barely any room to market their brand, retail stores or cannabis products on most conventional marketing channels.
Cannabis regulators in Maryland have also banned the sale of cannabis elixirs and concentrates, which are best-sellers in other recreational markets. They also passed capped THC levels in individual edibles at 10 milligrams and 100 milligrams per package. According to Wendy Bronfein, the cofounder of Maryland cannabis operator Curio Wellness, the current environment simply isn’t conducive to business.
For companies that may be looking to expand into different markets, such as Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), the tightening restrictions being imposed on the new markets may be a serious matter of concern.
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