Editor’s Note: Today’s post comes from contributing editor Dr. Stefano Tijerina, a lecturer in management and the Chris Kobrack Research Fellow in Canadian Business History at the University’s of Maine’s Business School.
In the year 2020, the State of Maine officially legalized the sale of recreational marijuana—good timing for the industry, considering that the pandemic restrictions put in place by the administration of Governor Janet T. Mills provided an opportunity for medical and recreational users to sit back in their homes, relax, and partake in the consumption of cannabis. Initial sales of recreational marijuana in October 2020 set high expectations, but the opening boom was followed by an oversupply in local markets that hint at potential problems for the industry in years to come.
In the past, illegality kept marijuana prices high and supply low but not anymore. The legal market now faces the structural challenges of supply and demand, and, like any new rising commodity, cannabis must experiment with market adjustments, which will result in winners and losers. Unfortunately, it is small businesses that must confront these challenges in the middle of a pandemic. It is not all bad news for the consumer, though, since these are good times to enjoy the highest quality and abundant variety of “flower” in the state’s market history. Overall, there are good omens for the years to come.
In a tight November 2016 referendum that ultimately required a recount, the citizens of Maine voted to legalize medical and recreational marijuana production and consumption. The medical marijuana industry was quickly established and was up and running with little delay. The takeoff for recreational marijuana, however, was not as smooth. Opponents of legalization used legal and political tactics to delay the process with hopes of ultimately blocking recreational marijuana in the state. Nevertheless, the voters had spoken, and there was no turning back. In October 2020, almost four years after the legalization vote, Maine’s market for recreational marijuana finally launched.
One month after the first eight licensed recreational marijuana businesses opened their doors to customers, Maine authorities reported cannabis sales of $1.4 million, which brought the state $140,945 in sales tax collections. Initial data showed that smokable products represented 76% of total sales, while concentrates (14%) and cannabis-infused products (10%) made up the rest of the market.