Massachusetts officials gave the OK for dispensaries to reopen on May 25 for curbside service, and the news couldn't come soon enough for many of the cannabis companies that chose to establish businesses in the state.
Initially, Massachusetts allowed all cannabis sales to continue when the pandemic first took hold and lockdowns began. This was incredibly important for many of these companies, who saw their business plans dissolve as the state took its sweet time to approve licenses. Being allowed to stay open meant they could finally recover for the slow start. But just as quickly, the governor changed course and decided that only medical marijuana facilities could continue sales and that recreational facilities would have to stop. The cannabis companies filed a lawsuit challenging the governor, but lost.
Massachusetts has become an important state for the cannabis industry. Cannabis analytics firm BDSA and its partner ArcView Market Research, announced that 2019 legal cannabis sales grew by 46% to $14.8 billion, a significant increase from the 16% growth of 2018 and the industry's highest annual rate of growth to-date. Growth in the adult-use cannabis markets of Canada, California and Massachusetts were the largest contributors to global sales growth in 2019. The data showed that sales in the California and Massachusetts markets anchored 2019 U.S. legal cannabis sales of $12.4 billion.
AYR Strategies Inc. (AYRSF) is one company who has been forced to pivot in its approach to the state. Luckily, cannabis companies have been trained like no other industry to make these massive changes in strategy on a dime.
"We successfully redirected wholesale capacity into our retail stores, increased available inventory and average spend, promoted incentive programs to increase penetration of medical cards and increased medical patient count," CEO Jonathan Sandelman said.
The company said in its recent earnings release that it has completed four harvests to date from its cultivation expansion in Massachusetts and that it's setting the company up to have a solid inventory available to address pent-up demand when sales resume.
Not only has the lockdown hurt sales, it has also put a dent in the license approval process. This was already slow, but with state and municipal offices closed, the process ground to a halt.
"In terms of our Massachusetts retail operations, we entered 2020 expecting one of our current medical dispensaries to open for adult use sales in May," Sandelman said, "and two more in September; and in supplement to these, in February we secured an alternate adult-use license in a favorable greater Boston town."
Now, the company said that those conversions would be delayed by several months, if not longer.
"We expect robust demand in the Massachusetts market once adult-use sales resume on May 25th with curbside pickup," he added. "We expect to see sales increases very quickly in Massachusetts. With our recently expanded cultivation capacity producing our highest-quality cannabis ever, Ayr is in a strong position to meet the strong demand."
MariMed (MRMD) was able to benefit from the medical only designation in Massachusetts, as it gave its medical patients uninterrupted access to its products during the pandemic. Still, the company is prepping for the day it can tap those recreational consumers.
"The closures have thrown us a curveball, as they have all other businesses in Massachusetts. We have adapted quickly, creating multiple shifts with less personnel per shift, enabling for better distancing. All employees are required to wear appropriate personal protective equipment supplied by MariMed. Deep cleaning by facilities' staff and third party cleaners are scheduled daily," said Ryan Crandall, chief product officer at MariMed.
The company was recently granted three provisional adult-use licenses for cultivation, production, and a dispensary.
"We are preparing our teams for the adult use dispensaries to begin opening next week across the state," Crandall added. "We are staying laser focused on the day-to-day medical guidance being given by the state ... as well as the federal government. As an essential business, we continue to work diligently every day to keep our employees and customers healthy and safe."
Curaleaf Holdings (CURLF) is another cannabis company that is aching to get its store open again.
"We are pleased that our three adult use dispensaries in Ware, Oxford and Provincetown are among the first of the commonwealth businesses allowed to reopen on May 25," said Patrik Jonsson, president of Curaleaf Massachusetts, praising the governor's administration.
"We're very much looking forward to resuming serving our customers with the quality products they have come to rely on, and also getting our people back to work. We expect sales to be brisk as a result of pent up demand, and we are working closely with the Cannabis Control Commission and the Massachusetts Department of Health to comply with all guidelines surrounding our reopening."
It is certainly a welcome sign to the cannabis customers who might have been forced back into the illicit market to make purchases. That business presumably continued despite social distancing requirements. New Yorkers may also be in the mood to take a drive and get out of their homes for a change, even if its just across the state line to buy some legal marijuana.