What Ohio Investors Can Learn From Maryland's Cannabis Market: Sector Analyst Keeps It Simple

As Maryland's cannabis market matures, it offers valuable insights for states like Ohio preparing to launch recreational sales. Pablo Zuanic of Zuanic & Associates highlights Maryland's stability, competitive landscape and market dynamics as a potential model for other states. Understanding Maryland's experience can help Ohio anticipate challenges and opportunities in the evolving cannabis industry.

Zuanic says the comparison is valuable for Ohio because both states share similar market structures and regulatory environments. Like Maryland, Ohio is transitioning from a medical to a recreational market, with incumbent operators gaining a head start. Additionally, both states face competition from neighboring regions with established cannabis programs.

"Both Maryland and Illinois had orderly transitions from medical to recreational sales and have enjoyed above-average economics. Notably, incumbents were grandfathered into recreational sales from the start, unlike in New York, and they have benefited from this head start. We expect a similar pattern in Ohio,” reads the report.

These common features make Maryland's experience a relevant and instructive model for Ohio, helping it anticipate and navigate potential challenges in its market development.

Stable Sales And Market Dynamics

Since the start of recreational sales in July 2023, Maryland's total cannabis sales have plateaued, growing only 1% through April 2024 to $273 million.

Zuanic attributes this to factors such as high prices, a static number of stores and competition from neighboring states like New Jersey and Pennsylvania. "Affordability may be an issue, with prices above most eastern states." 

Maryland's flower prices remain high at $8.76 per gram in Q2 2024, significantly more than Illinois ($8.11) and Massachusetts ($5.12).

Market Share And Brand Performance

Public multi-state operators (MSOs) hold a stable market share of around 40% in Maryland. Green Thumb GTBIF leads with a 12.5% share, followed by Curaleaf CURLF at 8.4% and Verano VRNOF at 7%.

Notably, private MSOs and regional operators also play a significant role. "In the case of MD, MSOs have maintained about 40% brand market share and own about one-third of retail stores," Zuanic explains.

The market share among top brands is competitive, with the top three brands in the flower category holding a combined 23%. In the vape category, the leading brands, including Curaleaf's Select, command a 39% share.

Price Trends And Future Outlook

Maryland's cannabis prices experienced a slight decline after the initial surge in recreational sales. Flower prices dropped by 7-8% since Q3 2023, while vape prices fell by 14%. Despite this, prices remain higher than in other eastern states. "With rec, vape prices increased 16% in Q3 2023 QoQ and are down 14% since then," Zuanic says.

As neighboring states like Pennsylvania and Delaware consider recreational legalization, Maryland may face increased price pressure. "If PA, DE, and DC potentially going rec, we would expect price pressure in the future for MD," he predicts.

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