If you were going to open your own state-legal pot operation, which state would you focus on? The temptation is to assume states like California, Oregon, and Colorado are the obvious choices. But they might not be. Consider Utah. Is it possible that the Beehive State has a Favorable Pot Market than its more liberal counterparts?
That seems to be the case, at least if actions taken by Curaleaf during the first half of the year are any indication. As one of the most powerful pot companies in the nation, Curaleaf has pockets deep enough to do just about anything it wants. The multistate operator could go into virtually any market and make a huge splash. Their past successes are proof that they know what they are doing.
So why expand in Utah while simultaneously downsize in California, Colorado, in Oregon? Like any other company, Curaleaf is interested in strong markets. That should tell you something.
Knowing the size of California’s pot market, one would think that exiting the state is a bad business move. Ditto for Colorado and Oregon. But these are legacy states. They are states that helped usher in state-legal marijuana and that now boast both medical and recreational pot.
Despite the environment in all three states, sales in those states have fallen in recent years. According to the Cannabis Business Times, legal pot sales fell by 21% in Colorado last year. They were down 16% in Oregon and 8% in California. But why?
The news media blames the market correction following a 2020 COVID pandemic spike. I don’t buy it. People did not start using recreational pot during the pandemic only to suddenly stop once the pandemic was over. I suspect the real reason is that black-market marijuana is cheaper. And that reality gives us a hint as to why Utah’s market is thriving.
Utah has only legalized medical cannabis to this point. That automatically limits the demand for illegal product. In addition, the state has only licensed 15 dispensaries to serve a population in excess of 3 million.
Beehive Farmacy operates two of Utah’s dispensaries, one in Brigham City and the other in Salt Lake City. They explain that one of the benefits of limiting dispensary licenses is making it worthwhile for business owners to operate in the state. The market is not overly saturated with too many pharmacies vying for too small a piece of the pie, like you currently see in Oklahoma.
The good folks over at Curaleaf understand this. They were competing against a boatload of legal and illegal operators in California, Colorado, and Oregon. They finally got to the point of deciding that remaining active in those states wasn’t worth it. Instead, Curaleaf started closing its operations in the legacy states earlier this year.
Meanwhile, they pulled off the biggest acquisition in the history of Utah’s state-legal cannabis market. They now control a quarter of that market through their retail assets. Meanwhile, medical cannabis sales in Utah have grown every year since the state program was implemented.
If you run a pot business in California, Colorado, or Oregon, the unfortunate reality is that the bloom is off the proverbial rose. The industry’s struggles in your particular state are well documented. Meanwhile, your counterparts in Utah are thriving. You probably shouldn’t consider packing up and moving, though. The opportunities in Utah are limited. That is one of the reasons operators are doing so well there. And Utah is not likely to become California.