Cannabis
Jason Vegotsky , CEO of Petalfast .
What do other people in the industry foresee ? Petalfast is a cannabis growth agency that consults with businesses entering the market . They are familiar with navigating the maze of regulation and red tape . However , another potential challenge comes from the other side of the law . Due to a variety of factors including price and availability , some consumers find themselves returning to unregulated growers — AKA the black market . Businesses may have to contend with competition from this “ legacy market .”
“ It comes down to two things : regulation and access ,” says Jason Vegotsky , CEO of Petelfast . “ I don ’ t think anyone wakes up in the morning and says , ‘ I ’ m going to go buy illegal weed .’ I think people say , ‘ it ’ s not convenient for me to go get a legal product .’ Whether that be access from a drive-time perspective — as in there ’ s not any legal outlets close enough — or access from a pricing standpoint , that fits what they were used to getting . Obviously , in a legal framework , things are going to be a bit more expensive . How big that gap is will dictate how fast we can get consumers moving from the legacy market into the legal market .”
“ Over time , we do see prices come down ,” Vegotsky adds . “ When a state first comes online , there ’ s less supply than demand , but over
time , more supply enters , and prices drop . I believe that access is more important than price point . Prices eventually come down ; competition will breed price drops . A lot of people won ’ t make the drive to buy legal cannabis . We need more cities to adopt — the more cities adopt , the more we see the benefits of legalization .”
“ In fact ,” continues Vegotsky , “ I believe that any city that doesn ’ t adopt the legal framework of cannabis is adopting the illegal framework of cannabis . It is happening in your city , whether you want to believe it or not . Why not put a safer avenue in the city
“ If there is Federal legalization , it is likely we ’ ll see a regulatory framework similar to alcohol , with an agency like the TTB taking the lead .”
– Andrea A . Golan , Counsel at Vicente Sederberg
“ One of the things I ’ ve observed about the three-tier system is how different it ’ s applied state-to-state .”
– Paul Weaver , director of TeaPot
with recreational cannabinoids ?”
Another important process that businesses need to anticipate is how cannabis will be regulated once its legal nationwide . A common expectation is that the drug will be overseen similar to the beverage alcohol industry , with a three-tier system in place and separation between producers and retailers .
“ If there is Federal legalization , it is likely we ’ ll see a regulatory framework similar to alcohol , with an agency like the TTB taking the lead ,” says Golan . “ It would also make sense for states to combine their alcohol regulatory oversight with their cannabis oversight , since in many laws the laws would be similar .”
“ I think cannabis will go the wine and spirits route ,” says Vegotsky . “ From a compliance standpoint , it regulates and lets all parties know the rules of the game and how to play within it . New York came out with a three-tier system . I think it ’ s a very good system to start . We ’ ll
see how it works out , but if New York has success , you ’ ll see more and more states adopt the three-tier system .” “ One of the things I ’ ve observed about the three-tier system is how different it ’ s applied state-to-state ,” says Paul Weaver , Director of TeaPot , a cannabis beverage company under the Boston Beer Company . “ Every state still has a very different path to market for selling alcohol . The one constant is that beverage distributors — i . e ., the beverage trucks , the forklifts , the warehouses and everything required to move beverages — is a tried-and-true system . I think it ’ s appropriate to think about how they
Spring 2023 • Beverage Wholesaler 19