10 Pricing Questions North Carolina’s State-Run Cannabis Plan Still Needs to Answer

North Carolina officials are considering a cannabis market in which private companies cultivate and manufacture products but government-controlled stores handle retail sales.

The draft recommendations, labeled “for discussion only,” combine elements of North Carolina’s Alcoholic Beverage Control system and Quebec’s government-run cannabis market. They propose three separate tiers covering production, distribution, and retail, with restrictions on vertical integration.

Cultivation and manufacturing would remain private. Distribution could be managed by private wholesalers, a state warehouse, or both. Retail would operate through centralized state stores or local public boards overseen by a cannabis commission.

The stated goal is to attract consumers to the regulated market without encouraging consumption. The draft also recognizes price as a tool for competing with illicit sellers, although public ownership of stores would not necessarily mean government-set prices.

That distinction leaves important questions unanswered. Public retailers can influence prices without fixing them directly through purchasing, markups, assortment, store density and shelf access.

The stakes are visible across existing markets. A September report by Pablo Zuanic, senior analyst at Zuanic & Associates, found that cannabis prices declined over both the previous 12 and 24 months in 16 of the 17 states examined. North Carolina’s framework may limit some causes of price compression, but its financial effects will depend on the following decisions.

1. How Would North Carolina Procure Cannabis Products?

A state retail monopoly could become the principal buyer for every licensed producer. Regulators must decide whether purchasing would occur through negotiated contracts, competitive bids, standing orders, or a central catalog.

Central procurement could reduce duplication and give the state leverage to obtain lower prices. It could also concentrate power over private businesses in one buyer. If purchasing decisions prioritize the lowest bid, cultivators may face falling wholesale prices even when consumers continue paying stable retail prices.

The system will also need safeguards against favoritism, slow payments, and dependence on a small group of large suppliers.

2. Would State Cannabis Stores Use Required Markups?

North Carolina’s ABC system provides a familiar structure for controlling alcohol distribution and retail, but cannabis has different production costs, price volatility, and illicit competition.

A required markup could generate predictable public revenue and prevent aggressive discounting. Set too high, however, it could leave legal products unable to compete with illicit sellers. Set too low, it could encourage consumption while reducing the funds available for store operations, enforcement, and public-health programs.

The state would need to determine whether one markup applies to every product or whether flower, concentrates, edibles and medical products receive different treatment.

3. Which Products Would Receive State Approval?

Statewide product approval could establish consistent standards for potency, testing, packaging, and labeling. It would also determine which private companies gain access to the only legal retail channel.

A narrow catalog may simplify oversight but limit innovation and consumer choice. A large catalog could create administrative bottlenecks and leave stores carrying duplicative products.

Approval criteria will affect investment decisions before the first store opens. Manufacturers need to know whether product authorization will depend primarily on safety, consumer demand, price, local sourcing, or the state’s judgment about whether a product encourages consumption.

4. How Far Would Promotional Restrictions Go?

Limits on advertising and promotions may support the council’s public-health objectives. They could also make it difficult for new businesses, craft farms and unfamiliar brands to reach consumers.

Regulators must distinguish between mass-market promotion and the basic commercial information consumers need to compare potency, ingredients, format and price.

Restrictions on discounts, loyalty programs, or in-store displays could further reduce competition. If brands cannot promote themselves, placement within state stores becomes more valuable—and the process for awarding that placement becomes more consequential.

5. How Many Stores Would North Carolina Open, and Where?

Store density is one of the most important variables in cannabis economics. Too few stores can preserve revenue per location but leave consumers far from the legal market. Too many can reduce productivity and increase operating costs.

Zuanic’s July market review illustrates the range. New Mexico had approximately 1,006 dispensaries and annualized revenue of only about $550,000 per store. Arizona, with a 169-store cap, generated approximately $7.1 million per store.

North Carolina must balance access with productivity while accounting for rural communities, population centers, tourism, and local opposition. A controlled footprint only works against the illicit market if legal stores remain reasonably convenient.

6. How Would the State Allocate Shelf Space?

Even without setting prices, the public retailer would decide which products receive prominent placement, how many items each producer may list, and how long underperforming products remain available.

Shelf allocation could be based on sales, product quality, price, geographic diversity, or support for small businesses. Each approach creates different winners.

Basing decisions entirely on sales could reinforce established brands. Reserving space for craft producers could improve market access but reduce inventory productivity. The criteria should be public, measurable, and subject to review.

7. Who Would Control Distribution?

The draft presents three possibilities: private wholesalers, a state-operated warehouse, or a hybrid system.

A central warehouse could improve product tracking and simplify enforcement. It could also add handling costs, create a single point of failure, and slow inventory replenishment. Private distributors may respond more quickly to demand but could add another commercial margin between producers and stores.

A hybrid system offers flexibility but risks creating unequal treatment if the state warehouse receives preferential terms or access.

8. How Much Cannabis Would the State Purchase?

Purchasing volume will determine whether North Carolina develops a balanced market or accumulates excess supply.

Buying too conservatively could produce shortages, high prices, and continued illicit purchasing. Overordering could force markdowns, product destruction, or pressure on suppliers to accept lower wholesale prices.

Ohio provides the opposite example. Zuanic found that retail flower prices increased from $5.75 per gram in the third quarter of 2025 to $6.25 in the second quarter of 2026 as demand outpaced available supply. Supply discipline can support prices, but persistent shortages can also undermine consumer migration into the legal system.

9. How Would Suppliers Compete?

The proposal includes a craft cultivation license intended for North Carolina farmers and smaller businesses. Whether those companies remain viable will depend on how the state evaluates suppliers.

Large producers may offer lower prices, broader assortments, and more reliable volume. Smaller farms may contribute local ownership, differentiated products, and regional economic development but lack similar economies of scale.

North Carolina must decide whether procurement will treat all suppliers identically or include volume limits, regional preferences, or dedicated purchasing opportunities for craft businesses. Those choices will determine whether the market becomes diversified or concentrated.

10. What Retail Margin Would the State Permit?

The final question is where the money goes. The difference between wholesale procurement costs and consumer prices must cover store labor, rent, distribution, compliance, losses, technology, and public programs.

A generous retail margin could support reliable public operations but squeeze producers or raise consumer prices. A narrow margin may help compete with illicit sellers but leave the system dependent on high sales volumes or public funding.

Retail stability also does not guarantee producer stability. In New Jersey, Zuanic found that flower prices fell 43% over two years while estimated product volume increased 89%. Connecticut prices declined 42% as volume rose 76%. More cannabis sold does not necessarily translate into stronger revenue or margins.

North Carolina’s proposal could prevent uncontrolled retail proliferation and create consistent statewide oversight. It could also shift price competition away from stores and toward private suppliers negotiating with one dominant public buyer.

Those outcomes cannot be evaluated from the ownership structure alone. The procurement formula, store count, wholesale capacity, markups, assortment rules, and permitted margins will ultimately determine whether the system can protect public health, compete with illicit sellers, and leave enough economic value for private operators to survive.

The council’s deadline is also clear. Executive Order No. 16 required preliminary recommendations by March 15, 2026, and requires final recommendations by December 31, 2026—not October 2027.