May 14, 2018

Central Mass. prepares for pot

Photo | Courtesy
Cultivate in Leicester is planning to offer adult-use cannabis products come January 1.

On July 1, Massachusetts will open the doors to its newest industry: Retail weed.

The new industry brought along by the state's voters in November 2016 is bringing jobs, tax revenue and a new wave of entrepreneurs to the state and Worcester area – adding adult-use recreational marijuana to the six-year-old medical cannabis industry.

In Central Massachusetts, at least 10 adult-use retail shops will seek to open after July 1, when recreational licenses can be awarded, based on WBJ's research into public notices, public filings and news reports.

Cultivate Holdings in Leicester hopes to be one of the few facilities up and running on the first day it's legally allowed to do so, said President Sam Barber.

Currently, Cultivate operates a medical marijuana grow site and dispensary in Leicester. The Cannabis Control Commission – the state recreational marijuana regulatory body – approved Cultivate's priority application, allowing the production of recreational products starting July 1.

"We're excited to get rolling in this market, and I think it's going to be great for the company as well as the community in terms of the number of jobs we're creating," said Barber, "and the tax revenue is going to be a huge help for this town."

Jobs, jobs, jobs

Currently at 20 jobs as a medical dispensary, Cultivate will add up to 15 by the end of the year, and more will probably be added once demand for recreational product increases. Barber said all employee areas will be increased, including production, sales and front office jobs.

"Pretty much across the board," he said.

At Southborough marijuana testing facility Evio Labs, the employee count is expected to triple within the next year, said co-founder Lori Glauser.

The lab currently tests the 17 companies producing medical marijuana in the state, and it will shortly begin testing recreational marijuana.

"We foresee a lot of new growers and producers coming in," she said. "We're definitely going to be ramping up our staff."

Temescal Wellness, which is planning recreational dispensaries in Framingham and Hudson, will have at least 75 employees in the state by the end of 2018, and that number could double by the end of 2019. The company operates in Massachusetts, New Hampshire and Maryland. Its Worcester cultivation facility began growing last month.

The Hudson dispensary on Coolidge Street will open first as a medical dispensary sometime in June, said Ted Rebholz, founder and CEO. This summer, Temescal's dispensary in Worcester will transition to recreational products.

Despite this anticipated growth because of the retail marijuana industry, the medical marijuana market will limit the state's cannabis inventory and the rollout of retail establishments.

Inventory issues

At dispensaries selling both medical and recreational marijuana, medical patients come first, and retail customers are sold the remainder.

"We want to be sure we can satisfy patients of all needs and regardless of the shift to adult-use statewide, we want to make sure all medical patients have what they need," Rebholz said.

According to the Massachusetts Department of Public Health, the state has 16 medical marijuana companies approved to sell, and dozens more are waiting to be approved.

"In talks with other cultivators to make sure, over and above what they're able to produce in house, we can also purchase product from other folks to make sure each patient can get what they want," Rebholz said.

There is a wide belief the state will very quickly run out of product, said Patrik Jonsson, president of Curaleaf, which operates an Oxford medical pot dispensary. The company, which operates a medical dispensary in Hanover and more than a dozen throughout the country, just opened its Oxford doors last month to medical patients.

Photo | Edd Cote
Medical marijuana for sale at Curaleaf in Oxford. The company is planning to sell recreational cannabis this sumer.

"We're ramping up production as quickly as we financially can," Jonsson said. "It takes a long time."

The company is planning to open for recreational sales in late July because of those issues.

"I don't know anyone that's going to be open July 1," he said.

At Cultivate, Barber and his staff are building out more of the production facility to accommodate the forecasted increase. Production will just about double, and 10,000 square feet of the 24,000-square-foot facility in Leicester will be devoted to production.

Preparations are being made to ensure a smooth rollout at the location, including installing a barrier to separate the medical operations from the recreational.

The company has already set some product aside for the adult-use market to ensure product is actually available once the recreational doors open. However, per state regulations, medical patients must remain a priority. At least 35 percent of the inventory must be set aside for medical marijuana cardholders.

"If there's ever a long line, we'll make sure medical patients are a priority," Barber said.

A modest rollout

Medical and recreational customers will largely be able to purchase the same products, though medical products will me markedly stronger and higher in THC than recreational products.

The big difference, however, is what those customers are paying.

According to the DPH, a medical marijuana card costs $50 annually on top of $100 if the patient wants to grow up to 10 ounces of marijuana, which is a 60-day supply.

Medical patients pay nothing in tax, while adult-use customers will be taxed up to 20 percent.

"If you spend $1,000 on cannabis in a year – which is not too difficult to do – there's $200 in taxes right there," said Jim Borghesani, a major proponent of the effort to pass the law in 2016.

A modest rollout

Because the medical program is so established in the state, Borghesani is predicting a very modest rollout of the retail side of the business to where just a handful of companies will be up and running at first.

The No. 1 reason, he said, is the small number of cultivation facilities currently up and running.

"There's going to be a limited supply available to a limited number of retail facilities," he said, echoing the concerns of cannabis companies.

Further, finding a location suitable and allowed by law to grow or sell marijuana can be increasingly challenging.

At least 190 cities and towns have banned or imposed a moratorium on retail pot shops, including Milford, Northborough and Westborough. If a town hasn't outlawed the legal sale of pot, zoning restrictions could make finding a suitable piece of land difficult.

"Then, you have to hope the landlord doesn't have a mortgage that he or she feels will be jeopardized because of the cannabis use," Borghesani said.

Only a handful will be open on July 1, and most of them will be existing medical dispensaries given priority review from the CCC.

"I anticipate long lines," Borghesani said. "I do think there will be a lot of customers competing for a limited amount of supply in limited locations where they can get that supply."


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