How Will Legalized Marijuana Affect C-Stores?

There are a lot of "ifs" around what the legalization of pot could mean for the convenience-store industry. Certainly, as legalization of recreational use marches across the U.S. map every time the polls open, the answer to the question of whether or not marijuana will be legal for everyone seems to be an obvious "yes." But will pot ever be available for sale in a regulated environment in convenience stores? The answer to that question isn't nearly as certain.

C-stores definitely seem uniquely poised to take on the challenge of marijuana sales. After all, the industry has been legally selling alcohol (in most states) and cigarettes for a long time, with staff that are specially trained in carding and regulated-product sales practices. And in Canada, c-store retailers just took a step closer to legally selling recreational marijuana in c-stores when Cannabis Wheaton, a marijuana product supplier, recently inked a deal to sell Canadian cannabis at 350 convenience stores in western Canada and Quebec. The deal would make Cannabis Wheaton the sole supplier for 10 years. The company didn't disclose its c-store partner.

A 2017 Gallup Poll shows that the majority of Americans support the legalization of marijuana for recreational use, with 64% indicating they'd approve of such measures. Eight states have already legalized recreational marijuana: Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon and Washington. Legalized recreational-use pot is helping to account for 100,000 to 150,000 new jobs created by cannabis-related companies, according to Marijuana Business Daily, with the potential to increase those positions to 300,000 by 2020. 

But it doesn't necessarily mean good news for U.S.-based c-stores, unless of course they can get in on a bit of the marijuana action themselves.

"Wall Street analysts are beginning to consider the growing reach of cannabis as they provide guidance on publically traded consumer packaged goods to manufacturers and retailers," said Rick Maturo, co-counder of Cannabiz Consumer Group. "Retailers should view this threat as being as real as that posed by Amazon. If they don't, they may find themselves with limited product leverage as tens of millions of consumers migrate some of their purchasing away from CPG on their shelves in favor of cannabis."

Sales of legal weed in the North American market grew by 34% to $6.9 billion last year, and it's expected to grow by 26% annually through 2021, according to The Motley Fool. And all of this is to say nothing of other marijuana products that include edibles and beverages. Will convenience stores ever benefit from the marijuana windfall? Or will sales of tobacco, alcohol or even coffee falter because of the dispensary around the corner? Click through to see if your state could be the next to legalize recreational marijuana, if it hasn't already. 24/7 Wall Street reviewed marijuana usage rates, exisiting marijuana laws and legislative processes in each state to make an educated guess about which are most likely to legalize pot next.

 

Arizona

As a ballot initiative state, Arizona voters can vote directly on proposed laws. States that allow ballot initiatives are much more likely to legalize recreational marijuana use than non-ballot-initiative states. Last November, voters struck down Proposition 205, which would have decriminalized the position of up to 1 ounce of marijuana. Despite that setback, other ballot-initiative states, such as California, initially struck down similar propositions only to legalize them later.

Arkansas

Voters in Arkansas, another ballot-initiative state, recently approved Issue 6, which allows the use of medical marijuana with doctor approval. That said, many voters may not be open to the idea of legalization, with just an estimated 11.3% of Arkansas adults over the age of 18 using marijuana in the past year. 

Connecticut

Connecticut is one of several states to have decriminalized marijuana, with first-time offenders caught with less than half an ounce facing no more than a $150 fine. The state's medical marijuana program, which has been around since 2012, was recently upgraded; legislators added several new conditions to the list of those approved for medical marijuana. 

Delaware

The study found that Delaware could be the next state to legalize recreational marijuana use. State lawmakers have sponsored House Bill 100, which would regulate and tax marijuana the same way the state currently taxes alcohol. It made it past the Revenue and Finance Committee and will be considered by the state legislature in January 2018. And a 2016 poll conducted by the University of Delaware found that 61% of residents support legalization.

Florida

In November 2016, Florida residents voted by a 71.3% to 28.7% margin to legalize medical marijuana use. But for now, the state has not decriminalized possession, with recreational users in the state facing serious legal consequences if caught with any amount of marijuana.

Illinois

State lawmakers in Illinois are considering legislation in Senate Bill 316 and House Bill 2353 that would allow adults of legal drinking age in the state to possess, cultivate and purchase limited amounts of pot. Marijuana sales could add an estimated $566 million in excise tax revenue per year and as much as $133 million in sales tax revenue annually. 

Maryland

Support for legalizing marijuana for recreational use is on the rise in Maryland, with 54% of residents in support in 2014 rising to 61% in 2016, according to a Washington Post-University of Maryland poll. Maryland already allows medical marijuana use and has decriminalized possession of under 10 grams, capping the fine for having a small amount to $100.

Michigan

Proponents of pot legalization in Michigan are gathering the 252,523 signatures necessary to include a proposal to tax and regulate marijuana like alcohol on the state's November 2018 ballot. Voters in Michigan already legalized medical marijuana for certain medical conditions in 2008.

Minnesota

Pro-pot lawmakers in Minnesota have introduced bills that would have allowed voters to decide whether to amend the constitution to include marijuana as a right. The measure failed, but attitudes toward pot are shifting. 

Montana

The state approved medical marijuana in 2007, an initiative that lawmakers later voted to repeal, only to be blocked by a veto from the governor. Then, in 2011, lawmakers worked hard to impose stricter regulations on the medical marijuana program. The following year, Constitutional Initiative 110 that proposed full legalization failed to get enough signatures to make it to the ballot. A similar initiative failed again in 2016, despite growing acceptance of marijuana use. In 2002, an estimated 36.2% of adults 26 and older in the state perceived risk from monthly marijuana use. As of 2014, only 26.6% found regular use to be harmful.

New Hampshire

New Hampshire decriminalized marijuana possession of up to three-quarters of an ounce in September 2017. And 17.1% of adults in the state already use marijuana. A University of New Hampshire poll found that 68% of residents support legalizing marijuana for recreational use.

New York

Marijuana legalization advocates believe New York state officials might be inspired to act if legalization works well in neighboring Massachusetts, which begins selling pot legally in July 2018. New York already has a medical marijuana program with a significant amount of users overall. More than 2.3 million adults in New York used marijuana last year. Users caught with it have little to worry about in terms of legal repercussions, with 25 grams or less incurring a $100 fine. Second-time offenders get a $200 fine.

Ohio

Ohio first attempted to legalize recreational marijuana in 2015. Most voters weren't worried about marijuana itself; rather, they were concerned the ballot initiative would have created an oligopoly, limiting pot profits to just a few companies sponsoring the legislation. Even the prominent pro-pot advocacy group Marijuana Policy Project didn't endorse the bill. 

Rhode Island

Rhode Island lawmakers are working on a bill right now that would legalize marijuana for personal use. The bill will likely be introduced in the first legislative session of 2018. The bill has about a third of the House of Representatives as co-sponsors.

Vermont

Vermont was almost the first state to have a legislature pass a law allowing people 21 and over to use marijuana for recreational purposes, but it was vetoed by Gov. Phil Scott. He wanted further study of the effects pot has on public safety and state tax revenue. He said he'd be willing to sign a recreational pot bill into law with a few tweaks.