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In a shift reflecting America’s changing attitudes towards cannabis, the number of cannabis dispensaries has surpassed that of McDonald’s Corp.
restaurants, showing an evolution in consumer trends and legal frameworks. With a majority of the U.S. population now living in states where recreational marijuana use is legal, the industry’s expansion is now noticeable.
A Nationwide Transformation
Recent analyses by the Pew Research Center highlight that over half of Americans reside in areas permitting recreational cannabis use, a mere twelve years following Colorado and Washington’s leading legalization efforts.
Additionally, an overwhelming 74% of Americans are in states where marijuana use, whether for recreational or medical purposes, is lawful. This surge has led to the establishment of nearly 15,000 cannabis dispensaries nationwide, outstripping the approximate 13,500 McDonald’s locations in 2023.
California boasts the highest number of dispensaries, contributing a quarter to the nation’s total, whereas Oklahoma has emerged with the highest density of dispensaries per capita.
Challenges And Opportunities In Retail Cannabis
Joe Lustberg, managing partner at Upwise Capital and upcoming Benzinga Cannabis Capital Conference speaker, brings an optimistic yet pragmatic perspective to the burgeoning retail cannabis market.
“It’s all about location and good capitalization,” Lustberg told Benzinga, stressing the role of retail in the cannabis ecosystem, especially as cultivators and processors seek viable outlets for their products.
Facing Market Hurdles
Despite the optimism, the industry faces hurdles. Lustberg spoke about the early admission of multi-state operators, the burgeoning illicit market, and excessive taxes as primary obstacles.
“Having a ‘THC tax’ is absolutely absurd,” he notes, pointing out the competitive disadvantage legal operators face against the illicit market’s sophisticated offerings, which often mirror legal retail products in appearance and quality. A substantial portion of illegal cannabis in New York, for instance, originates from California, suggesting that curtailing this supply chain could be pivotal in combating unauthorized sales.
A Look Ahead
As the U.S. cannabis industry continues to outpace traditional fast-food giants in its footprint, the challenges of taxation, regulation, and market competition remain at the forefront. Stakeholders like Lustberg advocate for a balanced approach, recognizing the potential of the retail sector to drive the industry’s future while calling for reforms to address the existing bottlenecks impeding growth.
