The Best and Worst Cannabis Regulations

Best: Apparently cannabis consumption lounges are popping up across the state, presumably serving a variety of hemp-derived products. I’ve been on record saying I’m not a big fan of the largely unregulated hemp market, particularly where it competes with the highly regulated marijuana market. That said, when regulators fail as badly as they have in Alabama, this is the result and there are times when I just have to tip my hat to the fearless entrepreneurs who push the boundaries of legality.

Worst: Alabama’s licensing rollout has been a disaster. It’s a symptom of limited licensing structures and the green rush mentality where everybody thinks they’re going to become an overnight millionaire. The state passed a medical marijuana bill in 2021, but the program is still not up and running now in 2024, leaving patients out in the cold.

Best: Although Arizona is limited in terms of actual licenses, there are opportunities for brands to get into the market by subleasing cultivation or manufacturing space from an existing licensee. While this setup might not work for all companies, this and numerous white-label partnerships between Arizona licensees and out-of-state companies ensure the state has a good variety of the nation’s leading cannabis products.

Worst: Similar to Florida, though not nearly as restrictive, I don’t like that Arizona is limited to the roughly 170 existing licensees (the grandfathered medical marijuana licenses plus a small handful of social equity licenses). I imagine license-holders are thrilled about it, but to me it’s anti-competitive and not in the best interest of the consumer.

Best: It’s really hard to find something, anything, to call the “best” in California right now. And these are my rules, so my answer, right now, is “nothing.”

Worst: And that means the worst is … everything. I hate to sound completely pessimistic, and I’m not at all someone who treats every government regulation like a grave impediment to freedom, but it’s obvious that California is not living up to expectations and is not taking steps to ensure a functional legal industry. It seems every chance California has had to be a leader in the modern cannabis world has resulted in more disfunction, all at the expense of business owners — many of whom were sold on the idea of transitioning from the relative comfort of the legacy market to the blue skies of taxation and regulation. I can go down a list of ongoing problems. Egregious taxes and fees. NIMBY local governments. Vendors who aren’t getting paid, either by retailers or distributors, for product that is sold. Significant questions about testing labs. Rampant pesticide abuse. A thriving black market (and, at this point, who can blame any grower for choosing this route?). The plastic tracking tags, for god’s sake. I think what bothers me the most isn’t that mistakes were made. It’s that California has shown an inability or an unwillingness to fix problems on the fly — and when changes are made, they feel like too little, too late. It’s really a shame that we’re losing the legacy farmers who should be a point of pride for this industry and not a casualty of regulatory mismanagement.

Best: Connecticut is a limited license state, but the caps are based on population density, allowing one retailer and one micro-cultivator for every 25,000 residents. While I think this is maybe too limited for retailers, it strikes a balance between the highly restrictive markets and the wide-open ones. For example, Oregon has roughly one retailer for every 5,000 residents, while Florida has one shop for every 30,000 residents.

Worst: Connecticut’s strain name rule is easily one of the most pointless regulations in the entire cannabis industry.

Connecticut state law requires all cannabis products and brands to have their names registered with and approved by the state and names cannot be similar to any existing non-cannabis product, be similar to any “unlawful product or substance” and may not be similar to any other approved cannabis brand or product — allegedly to prevent cannabis brands from appealing to children.

I’ve always thought strain names are pretty ridiculous. They’re often arbitrary, occasionally offensive and almost always inconsistent. One man’s Purple Trash is another man’s Treasure Island. And they start to lose all meaning when every grower thinks they need a “signature strain” to connect with enthusiasts, leading to thousands upon thousands of different strains on the market. But changing Sour Diesel to Gold and Lemon Haze to Yellow (for Curaleaf) is downright stupid. And I’m sorry, but TathracetX, Taytenate and Thusobrid (all Theraplant strain names) sound like pharmaceuticals advertised during football games to treat psoriasis or a spastic colon.

Best: This isn’t a rule or a regulation, but Florida puts out an excellent weekly report on the state’s medical marijuana industry. With three mouse clicks, I can track down the number of active patients (882,430), the number of qualified physicians (2,415), newly approved stores (none for the week of November 4-8) and how many dispensaries are active in the state (692), all updated on a weekly basis. And with some easy calculations based on data provided, I can easily compare the amount of smokable marijuana sold per store per week among any company operating in Florida (for example, Trulieve sold 363 ounces per store during the first week of November; Curaleaf sold 170 ounces; Cookies sold 142 ounces; GTI sold 127 ounces; and Green Dragon sold 48 ounces). Colorado, Michigan and Oregon also put out good monthly reports. Washington is among the worst.

Worst: One of the worst, most anti-competitive regulations in the entire country is Florida’s limitation on cannabis business licenses. To have only 20 operating companies and 25 total licensees, in a state of 22 million residents, is borderline criminal. And passing the adult-use initiative on the ballot in November wouldn’t have significantly improved that problem.

Best: Cannabis consumption lounges. It’s great to see a small handful of states recognize the need for public consumption spaces and actually following through with letting them get established and open. Illinois, despite frequent slowdowns and many flaws in its overall cannabis program, has seen consumption lounges open slowly but steadily over the past two years. By my latest count, seven other states also allow consumption lounges: Alaska, California, Colorado, Michigan, New Mexico, New York and Nevada. Businesses will need time to iron out the kinks, and regulations certainly need some revisions, but this is a small but significant step forward for normalizing cannabis.

Worst: To some degree, Illinois shares some similarities with California. The rec market is up and running and generating significant revenues, but it feels like the state has failed to live up to expectations. Despite having 2.5 million more people than Michigan, Illinois is on a projection to sell about a billion dollars less cannabis. A well-intentioned social equity program has mostly been a bust, with only about half of eligible retailers operational and many who have yet to open being at risk of losing their licenses. Licensing fees for non-social equity business are high ($5,000 non-refundable application, plus $30,000 to $60,000 in biennial renewal fees). Plus, taxes based on THC percentage make no sense to me.

Best: This is a stretch, but I’m running with it: I like that Louisiana limited grow licenses to public universities, rather than private enterprises. It shows some creativity and not just following what every other state has previously done. There were only two production licenses issued, which likely would have created a licensing nightmare, just as it’s done in virtually every limited license situation. Plus, I feel there’s some important credibility and research that can come from a partnership with higher education institutions. That said, Southern University and Louisiana State University both contracted with cannabis companies, so I’m not sure the intended goal was achieved. In the spring of 2024, Louisiana lawmakers approved the transfer of those grow licenses from the public universities to their private contractors, Good Day Farm and Ilera Holistic Healthcare, which previously paid more than $1 million annually in licensing and contract fees to the universities and the state Health Department.

Worst: Louisiana has a generally terrible medical marijuana program. It’s far too limited, with fewer than 20 “pharmacy” licenses issued in a state with nearly 5 million residents. It was the first Southern state to legalize medical marijuana with then-Governor Bobby Jindal signing into law a bill to establish a basic regulatory framework. Though numerous improvements and reforms have been made in the past nine years, it remains well behind neighboring states like Arkansas and Mississippi. And with only two licensed growers, there’s little hope for fair and competitive pricing for Louisiana’s patients.

Best: In early 2024, Maryland awarded 174 social equity licenses for cannabis businesses. While social equity licensing has been ineffective, if not a complete disaster, in many states, Maryland feels like it could be an exception. That means Maryland has granted more social equity licenses than Arizona has allowed total licenses — to compare two states with relatively similar populations (Maryland has 6.2 million people, while Arizona is at 7.4 million). That said, it remains to be seen whether social equity licenses help achieve the goals of diversifying the industry and repairing the harms of the War on Drugs — or if they end up being a gateway to bankruptcy built on hopes, dreams and hype.

Worst: Despite legalization, Maryland continues to have mandatory minimum sentences for a handful of cannabis-related crimes. Mandatory minimums were among the most detrimental weapons from the War on Drugs that led to exploding prison populations.

Maryland has mandatory minimum sentences for: repeat offenders who have previously been convicted of possession with intent to distribute within 1,000 feet of a school on two or more occasions (five years); any offender convicted of possessing 50 pounds or more of marijuana (five years); any offender who is in possession of a firearm at the time they are arrested for trafficking marijuana into Maryland (10 years); and any offender convicted of being a “drug kingpin” who dealt more than 50 pounds of marijuana (20 years). I’m not saying these crimes should not be prosecuted. But mandatory minimums are the cudgel used to negate mitigating circumstances or prevent judges and juries from analyzing each case independently.

Best: Michigan has one of my favorite home-grow provisions of any adult-use state. Adults are allowed to grow up to 12 cannabis plants per household, and they can possess any amount of cannabis that was specifically harvested from those plants. Show me a home-grow state that has a better rule. I’ve never liked the idea that states allow adults to grow a certain number of plants, but one bumper crop could instantly turn the person into a criminal due to possession limits.

Worst: I’ve never cared for the word “dispensary,” but I recognize it’s a common phrase for a cannabis shop, largely carrying over from the era before adult-use legalization became the standard. Apparently Michigan doesn’t like the word either, going so far as prohibiting cannabis shops from using the term “dispensary” when advertising or posting a sign on their building. Instead, pot shops are called “provisioning centers.” Of course, this shouldn’t be all that surprising from a state that insisted upon the archaic “marihuana” spelling. I’ve been unable to confirm the rumor that the state considered requiring one’s nose and pinky finger be raised skyward every time references a “provisioning center.”

What do you do for a living, Bentley?

Well, Octavia, I operate a provisioning center in Au Sable. Pinky raised appropriately.

Best: Mississippi’s original cannabis law was considered friendly for both patients and businesses but, following the Supreme Court’s rejection of the initiative (see below), the state passed a medical marijuana initiative that was much more restrictive. That said, a revision was recently passed to allow patients to pick up a one-month supply of cannabis at a time, rather than the highly problematic seven-day supply previously enacted. This shows a willingness among regulators to pass common-sense reform to benefit people who need medical cannabis the most.

Worst: The worst part about Mississippi cannabis has nothing to do rules and regulations and everything to do with the state Supreme Court’s decision to strike down the medical marijuana program that passed in November 2022 by an incredible 73.3% of voters, all based on a technicality in the signature-gathering process. Although lawmakers have since passed a revised version of the medical marijuana legislation, the Supreme Court blockage felt like the court was bowing to pressure from anti-cannabis crusaders and a direct repudiation of what voters in the state wanted. It was undemocratic minority rule at its worst.

Best: Somewhat like California, it’s hard to find “good” rules within Montana’s adult-use cannabis market. In many ways, it feels like lawmakers are actively curbing the legal market — even though 57% of voters approved of the legalization initiative in 2020. Some examples include the fact that cannabis business licenses cannot be sold or transferred the same way an alcohol license can, the fact that adult-use cannabis sales are banned in “red counties” that voted against Initiative 190 and the fact that topical products are limited to 6% THC (you’re regulating the potency of something I rub on my elbow?!?).

So, for the sake of selecting a best rule, I’m going with Montana limiting adult-use business licenses to existing medical marijuana licensees — a regulation that sunsets on July 1, 2025. I don’t love this rule, but it does give a head start to medical marijuana entrepreneurs who persevered through the tough early days of the Big Sky State’s legal industry and prevents some mom-and-pop businesses from being immediately overrun by out-of-state carpetbaggers.

Worst: Imagine this scenario: Your retail shop buys a bunch of Halloween-branded cannabis products for a festive October sales push, but it turns out people prefer to stick with the brands and products they’re accustomed to, and you end up with way too much Zombie OG. So, like any other retail operation, on November 1 you slash prices on your Halloween treats to clear out the off-season inventory. Although Montana has no provisions against discounting prices, the state charges taxes on the FULL, ORIGINAL COST!!! So when you sell holiday fun packs for $40, a 50% discount from the $80 they were priced at before Halloween, you pay taxes on the $80, not the clearance price. Does that make any sense? Is there any other industry or product that is taxed in this manner? Please, give me one example to justify this greed and level of exploitation.

Best: Allowing state-licensed consumption lounges. Granted, Nevada and Las Vegas took way too long to finalize rules and issue licenses and ultimately allow businesses to move forward with this new retail model, but things finally started moving forward in 2023 — and I’m really excited to see where they go from here. In a tourist city like Las Vegas, where casinos still rule the land and remain entirely anti-cannabis, designated consumption lounges are a no-brainer. I honestly think these businesses are going to struggle financially, at least for a few years, but imagine the possibilities of combining elements of fine dining and cannabis culture with live comedy, musical acts, burlesque shows, major sporting events on giant TVs. The possibilities are endless.

Worst: The Nevada Cannabis Compliance Board used to charge operators $111 per hour for “time and effort” related to inspections, compliance questions and other interactions. The state eliminated this fee in 2024, but not before raking in $1.7 million or more annually, according to Nevada Cannabis Association executive director Layke Martin. Earlier this year, Martin told Marijuana Venture horror stories about some businesses receiving giant bills from the Cannabis Compliance Board, including one small family farm in rural Nevada that was charged $47,000 for a single inspection. The time-and-effort fee was in addition to exorbitant fines often levied by the state for violations as petty as not having paper towels in the bathroom.

Best: Avoiding the urge to see giant dollars and cannabis as the answer to all budget shortfalls, New Jersey has what I believe are the lowest adult-use taxes in the country. All sales are subject to the state sales tax of 6.625%. And that’s it. No business-killing excise tax tacked on top. Just a reasonable sales tax under 7%. Compare this to Washington (37% excise plus state and local sales taxes that typically exceed 10%) and it’s easy to say New Jersey has done right by businesses, at least in this one regard.

Worst: New Jersey has plenty of problems, many of which are related to the slow and somewhat complicated nature of licensing and applications. However, to me, local municipalities banning cannabis businesses is the worst thing that stuck out to me. I found one (outdated) article that said about 70% of municipalities had banned cannabis operations — a significant number of NIMBYs considering voters passed the legalization initiative with 67% of the vote.

Best: I’ve got two things for New York: the ban on vertical integration and the cap on three retail licenses per company. Vertical integration has become the standard within the cannabis industry, and from a tax perspective, particularly with the onerous authority of 280E, it makes a lot of sense for businesses. That said, I think prohibiting vertical integration is better for the consumer and creates a more vibrant industry, and I appreciate that New York was willing to take a different direction than almost every state that came before it and to resist what I’m sure was substantial pressure from the industry’s largest companies to allow vertical integration.

Similarly, prohibiting companies from owning more than three retail licenses also creates a more vibrant industry by preventing Big Weed from buying market share with the sheer force of capital. That said, I think both of these regulations should eventually be repealed. Give operators time to develop on a more level playing field, but eventually allow the principles of free enterprise to shape the regulations and the overall industry landscape.

Worst: Much like California, almost everything about New York so far has been a disappointment. Leadership has been utterly lacking, from the governor’s office down, and with the complicated bureaucracy of having multiple regulatory agencies keeping their hands on the industry.

Best: In 2015, Ohio voters rejected a bill to legalize adult-use cannabis that would have enshrined a tiny number of businesses as the sole producers and retailers allowed in the Buckeye State. I think voters often see the big headline — Vote to Legalize Recreational Marijuana — and skip over the fine print. In this case, residents took note of the monopolistic nature of the bill and rejected it soundly, with 64% of voters opposed. Take that, Nick Lachey.

Worst: Potency caps. Potency caps do little to nothing to keep consumers safe. If anything, they encourage the black market to fill the void for higher potency products. Any lawmakers out there trying to ban people from drinking 151 rum? Under Ohio rules, concentrates cannot exceed 70% THC and flower cannot exceed 35% THC. This is a little better than Vermont. But still pointless. Besides, do people still think 35% flower exists? I don’t think I’m the only one who’s immediately skeptical.

Best: After several years of license moratoriums, Oregon finally instituted a cap on cannabis business licenses, restricting the free-market approach that was part of the state’s original adult-use rules. The initial green rush from 2014 through 2016 led to more than 800 retail licenses granted in a state with just over 4 million people, in addition to the well-publicized chronic oversupply from 2,000-plus growers. The problem was evident and the state actually took steps to rectify it, and this should be an example for other states to follow.

Worst: At the risk of sounding like a parent softly disciplining a child, I’m not thrilled about the Portland Pickles minor league baseball team selling cannabis beverages at its home games. I’m not mad. I’m just disappointed. Hear me out: On one hand, it’s a remarkable milestone for the normalization of cannabis and really cool to think how far we’ve come in that regard. On the other hand, I don’t like how marijuana and hemp products are treated with two different sets of rules. Plenty of state-licensed marijuana companies would love to sell low-THC beverages at the ballpark, but they can’t because they’re regulated like plutonium, while hemp-derived products — with essentially the same ingredients, but a different method of processing them — are generally regulated as strictly as neon pink plastic squirt guns. Congrats to Cycling Frog for making this historic partnership happen … but I would like to see rules that allow all cannabis companies to compete on a level playing field. That means loosening the tight grip on marijuana rules, while implementing some stricter guidelines on hemp.

Best: Rhode Island is exploring a hybrid merit-lottery system for the 24 adult-use retail licenses that will be allowed to operate once the relatively new adult-use market opens. It’s unclear whether this system will be put into action, but at least regulators are looking at ways to limit licenses without simply handing them to the most well-financed companies. Merit-based systems, such as that in Illinois, have been noteworthy for the number of legal and financial problems they’ve created, while lotteries based strictly on luck can result in businesses unqualified or unable to operate a retail enterprise. Hopefully Rhode Island finds the right blend between the two.

Worst: As with several other states, I get hung up on exorbitant licensing fees. Under the Rhode Island Cannabis Act, retailers must pay a $125,000 licensing fee, in addition to a $30,000 annual licensing fee. This plays on the myth that cannabis companies are making money hand over fist, and also dramatically increases the barrier to entry in this new industry.

Best: I’m going to say the fact that Utah has a medical marijuana program, regardless of its positives and negatives, is the best thing about this state’s rules and regulations. If Utah, which is heavily influenced by the Mormon church, and sells 3.2% ABV beer, can legalize medical cannabis, then there’s literally no excuse for Idaho, Kansas, Nebraska or Wyoming.

Worst: Predictably, it’s the limitations placed on businesses and the industry. Despite having more than 83,000 cardholding patients, the state will only issue 15 licenses for medical cannabis “pharmacies,” all of which have already been granted.

Best: Virginia is the first Southern state to legalize the possession of cannabis for recreational use. Congrats. That’s great. However, due to years of back-and-forth politicking (see below), you still can’t legally buy it anywhere. That’s … not so great.

Worst: Let me see if I can get this straight. When Democrat Ralph Nordham was the governor, he and the Democrat-led Virginia House and Senate negotiated a bill to legalize cannabis and establish a regulatory framework for commercial cannabis, which would allow for adult-use sales to begin in 2024.

When Republicans regained control of the House, they dragged their feet on reapproving the sales provision as part of a “re-enactment clause” (which has nothing to do with men dressing up in old-timey war outfits and tromping around real and imagined historic battlefields). Then Republican Glenn Youngkin took over as governor in 2022, and he was too busy stalking transgender bogeymen and bogeywomen to address cannabis, despite 68% of adults supporting legalization, according to a 2021 poll. In 2024, Democrats regained control of the Legislature and passed a bill to allow adult-use sales. Youngkin vetoed the bill, saying it, just like voting rights and critical race theory, “endangers Virginians’ health and safety.” No wonder people hate politics.

Best: In 2022, Washington, D.C. passed a bill allowing adults to “self-certify” they are utilizing cannabis for medical purposes. While it feels a little like another loophole law, I love that the District — which legalized medical marijuana in 1998 and recreational cannabis in 2014, but does not allow commercial sales due to heavy-handed Congressional oversight — is putting wellness decisions in the hands of its people, rather than requiring doctors to be the middle-men. Sure, this means some consumers will use “medical” cannabis for “recreational” purposes. So what. We know cannabis is far less harmful than other intoxicating substances — and far less harmful than dozens of overused common food substances from sweeteners to food colorings. There’s a certain philosophy that says all cannabis use is medicinal. I don’t agree with that sentiment 100%, but if cannabis helps me with my insomnia (or any number of common ailments), I shouldn’t have to argue with my doctor about whether I should try Ambien first before “resorting” to an edible before bedtime.

Worst: The “gifting” system that became common as a loophole to Congress blocking commercial cannabis sales in the District. I hate loophole systems where businesses are forced to say, “Technically, I’m not selling cannabis to customers. Technically, I’m selling them an exorbitantly priced pipe and ‘gifting’ them a certain quantity of cannabis.” But I also hate rules and regulations that incentivize businesses to find and exploit loopholes, rather than going the legal, licensed route. New York is also dealing with some of the consequences of this issue, with, what it claims are more than 1,000 unlicensed cannabis shops. Most people don’t want more law enforcement to be involved, but it’s a tough situation without clear answers.