Comparing US state approaches to cannabis licensing

U.S. states have taken varied approaches to licensing cannabis businesses under federal prohibition, but up to now, there is limited research on cross-state licensing approaches. This paper provides a systematic analysis of the current licensing strategies taken by all states that have passed medical cannabis laws (MCLs)/recreational cannabis laws (RCLs).

The researchers construct comprehensive data on cannabis business licenses offered in each state, as well as metrics for license categories, cost, and issuance volume. They then analyze patterns between these metrics, also considering how long ago states implemented MCLs/RCLs, qualitative licensing aspects, state ideology and voting preference, and state cannabis taxation data.

They observe that states tend to license medical cannabis more restrictively than adult-use cannabis: i.e., by offering licenses in fewer categories, at a higher cost, in lower issuance volume, and more often mandating vertical integration. Additionally, states that implemented MCLs/RCLs earlier tend to offer licenses in more categories, at lower cost, and in greater volumes. Further, though states that implemented MCLs recently lean conservative and Republican, the study does not observe clear relationships between ideology or voting preference and licensing policy. In the supporting results, they observe that a greater share of states with complex licensing structures impose non-retail price cannabis taxes than states overall, and they discuss how states have changed their licensing policies over time.

Wang, Lucy Xiaolu & Wilson, Nicholas. (2022). U.S. State approaches to cannabis licensing. International Journal of Drug Policy. 106. 103755. 10.1016/j.drugpo.2022.103755.  

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