Massachusetts’ legalized recreational cannabis industry saw growth in 2021 and expects more in 2022, but competition from both within and in neighboring states and pushback in Holyoke point to growing pains.
“I would describe it a lot more as maturing,” said Erik Williams, co-founder and chief operating officer of Canna Provisions Group, which has shops in Holyoke and Lee. “That means we welcome more and more new customers. It means we welcome new products. This isn’t cannabis from even 10 years ago, where it was flower in its various forms.”
Today there is a range of cannabis products that Williams says fall under the general umbrella of wellness, from salve for sore muscles to the recreational products many might be more familiar with.
Massachusetts has 387 licensed retailers, according to statistics kept by the state’s Cannabis Control Commission. There are another 28 licenses pending. The state has also licensed 296 cultivators and 225 manufacturers.
Legal recreational cannabis is a $1.4-billion-a-year business in Massachusetts, with the state’s retailers having sold $2.5 billion worth of product in just more than three years of operation. The industry regularly brings in between $3 million and $5 million in a single day.
To put that $1.4 billion number in context, the state Department of Agriculture says Massachusetts provides an annual market value of over $475 million in farm products.
Revenue from the state’s marijuana excise tax now surpasses collections from alcohol — $74.2 million versus $51.3 million in fiscal 2022 as of December.
The taxes on cannabis and alcohol are structured and applied differently. The state levies a 10.25% excise tax on consumer purchases, in addition to the local option tax of up to 3% and the state’s 6.25% sales tax. The excise tax on alcohol is based on volume and is paid by the producer.
Still, it’s an astounding leap for an industry born just six years ago when voters approved a 2016 statewide plebiscite. The first recreational marijuana retailers opened two years later in 2018.
But at what point are there more stores than customers to support them?
“We can look at other states and see that saturation happen,” said Matt Yee, chief operating officer for Enlite Cannabis Dispensary.
Enlite opened its first store in Northampton in November and is in the final stages of getting approved for another store in the Indian Orchard section of Springfield.
The Northampton Enlite is the ninth dispensary in Northampton alone. Yee, part of the restaurant-owning Yee family, said competition means dispensaries have to operate like other businesses paying attention to service and location.
He sees the impact of competition in the interest his business gets from potential wholesale suppliers. The sales reps seek him out now to pitch products. He used to have to seek out products.
Pushback against the cannabis industry is also growing.
In Holyoke, a city that sees cannabis as an economic engine, John Aubin, the owner of Open Square Properties near Lyman Street, is complaining of odor. In a December letter, Aubin asked the city to impose a moratorium and study odors he traces to GTI and Trulieve.
“Wind and weather conditions can spread the odor over long distances. Odors from Trulieve, over 1,000 (feet) from Open Square, are noticeable at Open Square with increasing frequency,” Aubin wrote.
In Springfield, the process of allocating marijuana retail licenses has proven controversial, with allegations of pay-to-play.
Massachusetts marijuana shops will also soon have to deal with outside competition.
Both Williams and Yee said lots of customers come in from out of state. But in 2021 alone, governors in Connecticut, New York, Virginia and New Mexico approved what the industry calls adult use, or the nonmedical, recreational use of cannabis.
This month, Mississippi became the 37th state to legalize medical marijuana. Eighteen states, two territories and the District of Columbia have enacted legislation to regulate cannabis for nonmedical use, according to the National Conference of State Legislatures.
Yee said neighboring states are years away from having stores. “When that day comes, we’ll probably see a change in that traffic,” he said.
Williams took a more optimistic view.
“The normalization of cannabis helps everyone across the board,” he said.
As more places legalize marijuana, he said, it brings more people into the customer base. Those folks will partake when they visit the Berkshires, and he’ll be there to serve them.
Meg Sanders, CEO of Canna Provisions, said the idea of normalization also fits with the coming legalization of social consumption. The Massachusetts legislature is weighing rules for “cannabis cafes” where people could come and consume marijuana just like at a bar selling alcohol.
“It remains to be seen how that business model will play out,” Sanders said. “It will be one more point of access to a safe cannabis experience.”
Meanwhile, the trained cannabis workforce is expanding. Holyoke Community College said 53 students have completed its core program as well as some specific occupational training tracks in the cannabis industry. The college anticipates 50 more students for the remainder this year.
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