Opt-out municipalities in legal cannabis states help support illegal marijuana sales - report

Boy buying marijuana on the street from dealer

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Local municipalities that have opted out of allowing cannabis dispensaries in states where marijuana is legal continue to see a robust illicit market, according to a new report.

The report from Leafly and Whitney Economics found that when these towns opt out of having dispensaries in their jurisdiction, they are inadvertently allowing illict cannabis sales to thrive.

"Fears surrounding local cannabis stores may prompt elected officials to prohibit cannabis companies in their towns," lead author Bruce Barcott of Leafly said. "But adults in every community already purchase and enjoy cannabis, legal or not. The cities and counties that skip out on cannabis are essentially voting to keep their local illegal marijuana markets in business."

As a result of opting out, the report noted that these towns put public health at risks by allowing individuals to purchase untested marijuana; sustain illicit sales to teens; and lose tax revenue and potential jobs.

For example, even though California legalized adult-use cannabis four years ago, illegal sales account for more than 50% of adult consumer sales. About 62% of the state’s municipalities have opted out.

By contrast, Colorado, which has 18 dispensaries per 100k residents -- the highest in the country -- had 99% of adult cannabis sales down in the legal marketplace.

Multi-state operators: Cresco Labs (OTCQX:CRLBF); Columbia Care (OTCQX:CCHWF); Trulieve Cannabis (OTCQX:TCNNF); Green Thumb Industries (OTCQX:GTBIF); Curaleaf Holdings (OTCPK:CURLF); MedMen Enterprises (OTCQB:MMNFF); Acreage Holdings (OTCQX:ACRHF); Ayr Wellness (OTCQX:AYRWF); Verano Holdings (OTCQX:VRNOF); and Jushi Holdings (OTCQX:JUSHF).

Cannabis-related ETFs: AdvisorShares Pure Cannabis ETF (YOLO), Amplify Seymour Cannabis ETF (CNBS), ETFMG Alternative Harvest ETF (NYSEARCA:MJ), AdvisorShares Pure US Cannabis ETF (MSOS), and Global X Cannabis ETF (POTX).

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