How the recreational markets tend to effect legalization after legalization in Illinois, Michigan, Massachusetts and Arizona

In the middle of the green wave expected in the northeast, particularly in New Jersey, Connecticut, New York and Virginia, Pablo Zuanic, analyst at Cantor Fitzgerald reviewed economic trends in four states that have legalized the recreational use of cannabis: Illinois, Michigan, Massachusetts and Arizona.

With the exception of Arizona, which had a well-developed medical market, Zuanic estimates that sales of adult cannabis after 2-3 years in the respective programs will be between about 5 times and 7 times the level of. medical sales (before recreational legalization).

According to the analyst, this “could imply a significant advantage for operators in New Jersey and other future recreational states.” He warned that the proliferation of stores in some states over time could cause the economy to weaken both in terms of gross margins and (especially) in terms of sales per store.

At the same time, Zuanic noted that limited cultivation licenses and caps will also have an impact on prices and the economy. while “Limited cultivation licenses combined with the proliferation of stores will benefit more established operators. “

The analyst explained that sales are determined by “the three A’s, access (stores; retail density), assortment (sizes, range, power, quality) and affordability (price)”.

From Overweighted equities followed by Cantor, Zuanic pointed out Curaleaf (OTC: CURLF) and Green Thumb Industries (OTC: GTBIF) which have operations in NJ / NY / CT; Columbia Care (OTC: CCHWF) with operations in NJ and New York, such as Cresco (OTC: CRLBF); TerrAscend (OTC: TRSSF) in NJ and Trulieve (OTC: TCNNF) in CT.

Breakdown of state markets


Although the local cannabis markets saw a slight deceleration after a strong second quarter, Zuanic says he will continue to offer some of the most attractive savings, in terms of per store sales and wholesale prices.

  • Recreational cannabis sales in September were $ 122 million, reaching $ 371 million in the third quarter, up 24% from the second quarter of 2021.
  • He’s on a $ 1.49 billion recreational sales rate.
  • Almost two years after the start of recreational sales (in January 2020), that is 5.4 times what medical sales were in the third quarter of 2019 ($ 69 million).
  • Sales of medical products continued to grow, amounting to $ 101 million in the second quarter of 2021.

  • Without competition from new stores, incumbents continue to benefit from the continued growth of the state market.

  • Wholesale prices of $ 4,129 per pound are up from $ 3,652 per pound in April. Among the highest prices in the 20 states tracked by Cannabis Benchmarks.


Zuanic said this market presented “robust growth trendsBut he said he was unsure of the economy, “given the lower wholesale prices and low average income per store.”

  • Leisure sales in September were $ 125 million, with the third quarter reaching $ 379 million, up 19% from the previous quarter and 37% from the second quarter of 2021.
  • MI is on a $ 1.52 billion execution rate in recreational sales per year.
  • Almost two years after the start of adult cannabis sales in December 2019, recreational cannabis sales are 4 times what medical sales were in the third quarter of 2019 ($ 92 million). Medical sales continued to grow, reaching $ 119 million in the third quarter of 2021.
  • Adult cannabis sales per store, at $ 4.9 million, are much lower than other states, and wholesale prices at $ 2,378 per pound are lower than in Illinois and Massachusetts.


Zuanic considers the market to have robust growth trends and a stable economy. At the same time, the analyst admitted that he wondered about the risk of a proliferation of stores (this may be less of a concern for those who focus more on wholesale).

Finally, Zuanic called Arizona a market “facing some lull after a good start.” And felt that “it is a state where state property can be more valuable than culture”.

Although there is no official sales data for AZ, BDS Analytics estimates recreational cannabis sales at an average of $ 55 million per month in July / August. This would equate to an average of $ 91 in cannabis sales, per capita (less than IL’s $ 117).

The analyst maintains that Arizona’s medical program was highly developed when the recreational program arrived. However, medical sales continue to decline.

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