Issue 61: Massachusetts Reaches $5B in Sales, But How Much of That is Delivery?
The Cannabis Control Commission refuses to release delivery sales data, citing worker safety. Plus, my takeaways from the North East Regional Cannabis Symposium.
Hey folks, sorry for the delay, but I wanted to take the chance to attend today’s CCC public hearing to get some final details on this week’s topics. It’s a mostly Massachusetts focused issue this week, but I’m going to be back on Monday with some further thoughts on the coverage of the Schedule III situation for premium subscribers.
Massachusetts Reaches $5B in Sales, But How Much of That is Delivery?
Commission Declines To Release Delivery Sales Figures, Citing Driver Safety Concerns
Massachusetts cannabis sales have hit another milestone.
The Cannabis Control Commission announced this week that cannabis retailers have made over $5 billion in gross sales since the state’s first adult use stores opened in November 2018. The agency also announced that they have seen record sales numbers in the past three months.
While the press release provided us with some new information on the state of the cannabis industry in Massachusetts, it’s also notable what information wasn’t included. Despite the fact that the first legal adult use delivery in the state happened over two years ago, the Commission is still declining to release any sales data that would reveal how delivery businesses are performing. From the release (emphasis mine):
Aggregate data recorded in the state’s seed-to-sale tracking system, Metrc, by 317 Marijuana Retailers, 9 Delivery Couriers, and 8 Delivery Operators, and 1 Microbusiness with a Delivery Endorsement that have commenced operations statewide showed that on August 31, $5,001,227,188 in gross sales had been generated. For the safety of drivers, specific delivery sales data by license type or entity is currently not available to the public.
Some figures in the delivery space didn’t agree with the decision to withhold this sales data.
“My gut feeling says that the reason they are not differentiating between both streams of revenue is because delivery operators are straight up struggling across the state,” said Ruben Seyde, founder of Delivered, Inc via a LinkedIn message, “Even the ones that are doing well are struggling when you compare it to the numbers that dispensaries put out.”
Seyde suggested that the agency has an ulterior motive for not releasing this data.
“If I had to guess, the real reason they are not revealing that data is because they don’t want to be embarrassed more on how much we’re struggling.”
Other delivery business owners expressed similar dissatisfaction with the decisions. Devin Alexander, Founder of Rolling Releaf, also told he didn't take it was necessary.
When reached for clarification, commission staff said that they do not want to prematurely release data that could be attributable to specific license holders, citing the fact that there’s less than ten delivery companies currently operating.
Speaking after the public hearings held by the commission on Friday to discuss the new draft regulations, Chair Shannon O’Brien said she first learned of the decision to withhold this information when she read the press release.
“That’s the first time I had seen that,” she told me.
Delivery operators have been increasingly vocal about the struggles they have faced, including dealing with the controversial two-driver rule and the difficulty in alerting the general public that legal cannabis deliveries are even an option.
It’s clear that delivery companies are struggling, but impossible to know exactly how bad things are for them without any data.
Despite Concerns, Store Closures Remain Relatively Rare
While we didn’t get any delivery data, we did get some clarity on how many license holders have officially closed up shop in the state. From the press release:
To date, just five Marijuana Retailers, or 1.6% of all such operating businesses, have surrendered or let their license expire in Massachusetts since stores opened in 2018. Overall, 16 Marijuana Establishments, or 2.8% of all previously operating Marijuana Establishments, have surrendered their license, let it expire, or had it revoked since 2018.
Of course, these numbers are just part of the picture. Just because dispensaries are still open doesn’t mean business is going swimmingly, and some businesses that have closed to customers have yet to officially hand in their licenses.
Still, these figures push back against the notion that the cannabis industry in the state is completely unraveling at the seams, an idea most recently pushed in a Boston Herald opinion piece that cited the exit of Trulieve from the state as an example of the industry’s alleged collapse.
For perspective, It’s fair to say that there are more restaurants have closed in the Worcester area in the last twelve months than there are dispensaries that have closed across the entire state since 2016.
Executive Director
In other commission-related news, Executive Director Shawn Collins penned an op-ed in Worcester Business Journal that argues that legal cannabis in Massachusetts has been a success story, particularly in Worcester County.
Collins also sat down Statehouse News Service’s Colin Young to discuss a number of topics. You can read the full interview here, but here’s a few of the big takeaways:
Collins hinted at the fact that he may be heading towards the exit in the not too distant future, but said there is no concrete plan for him to leave at the end of the year. He also disagreed with how Chair Shannon O’Brien depicted their conversation about his potential exit (he was not in attendance for today’s public hearing).
He also pushed back against O’Brien’s claim that the agency is in crisis.
Collins also offered his thoughts on the commission H.R. department’s examination of the behavior of employees during that now infamous unannounced inspection of MCR Labs, saying that claims of physical aggression “were just not substantiated.”
Takeaways from the North East Regional Cannabis Symposium
Here’s A Breakdown of What Massachusetts Cannabis Workers Think About The Current State of Affairs
I attended the North East Regional Cannabis Symposium last week. Here are some of my thoughts from the experience:
Frustration with the CCC continues. You’d probably be hard pressed to find any industry that speaks glowingly of the people who regulate them, but complaints about the agency dominate any conversation about the state of affairs. Perhaps the most common gripe is the idea that there are variations in the ways that different inspectors will interpret the same regulation.To the agency’s credit, representatives from the CCC were there to take notes and listen.
People still hate Metrc. The state’s seed-to-sale tracking system continues to be the bane of existence of many cannabis business workers. There were a number of complaints about the mandatory software, but the biggest one were continue problems with products ending up in “Metrc jail,” a glitch in the software that makes it impossible to move a particular product along to its next virtual destination. The company’s customer service also drew scorn.
Testing and lab divide. One thing that’s causing difficulty in efforts to lobby the commission to improve the testing situation is the fact that the labs are not a united front. Efforts to form a single trade organization to represents all of the state’s labs have yet to yield results, and squabbles over testing methods and accusations of wrongdoing continue to divide the space.
Multiple lab employees also expressed skepticism towards the commission’s new lab director, who previously worked for a testing lab before taking the gig.
Missed payments. While I was well aware that many cannabis companies are skipping out on their bills, it was jarring to see how many businesses are being impacted by this problem. Some workers said other cannabis companies currently owed their business six figures worth of debt for wholesale transactions.
There’s been some efforts to put together an ad-hoc list of businesses that are habitual bill skippers, but maintaining such a black list is easier said than done. There’s also been some calls for regulators to get involved, but it’s fair to say the CCC is probably hesitant to add even more responsibilities to their plate right now. Even if the CCC does attempt to step in and start trying to play referee in payment disputes between license holders, it’s unlikely that this policy could be implemented quickly enough to provide relief to businesses any time soon.
NERCS was a good idea. It was nice to see a cannabis event that spent more time focusing on workers than executives, and the discussions during the symposium were way more informative and way less performative than your typical panel discussion at a conventional conference. It’s also important to note that the discussions weren’t all doom and gloom; many dispensary employees seem to enjoy their interactions with their customer base, and the enthusiasm from attendees showed that many cannabis workers remain dedicated to their craft. If NERCS becomes an annual event, it will be a welcome addition to the local cannabis calendar.
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New England
MAINE CANNABIS REGULATORS CONSIDER NEW RULES TO EXPAND CONSUMER ACCESS (Hannah LaClaire | Portland Press Herald)
The proposed rules are also a nearly complete overhaul and rewrite or a “repeal and replace” of the original guidelines, which Maine Office of Cannabis Policy policy director Gabi Pierce said is intended to make the roughly 100-page rule that regulates adult-use cannabis in Maine more user friendly with updated formatting, organization and language. A public hearing on the changes is scheduled next week.
ANALYSIS: Considering the amount of fear mongering we see over the subject, I’m somewhat shocked that these new rule changes will include provisions that will allow for an increase in the total amount of THC in edibles. While I agree that the current rules aren't really backed by any sort of scientific reasoning, I’m surprised any regulator or politician wants to be labeled by conservatives as the person who “made marijuana candies more potent.”
Rest of U.S / National
GREEN THUMB SETTLES CONTRACT WITH MARIJUANA WORKERS IN ILLINOIS (MJBizDaily)
Employees at three Chicago-area Green Thumb Industries-owned Rise cannabis stores organized by the International Brotherhood of Teamsters and the company agreed to a multiyear contract this week, union officials told MJBizDaily on Friday.
The deal follows months of negotiations that were interrupted in April by a nearly two-week-long strike by the nearly 100 workers employed at the Rise stores in Joliet and Napier.
ANALYSIS: If I was (still) a cannabis worker, my main takeaway from this story would be that work stoppages get results. Considering the difficulty that cannabis companies have in quickly replacing badged cannabis workers, you don’t necessarily have to be a union to participate in one either.
LAWSUIT ACCUSES N.J. MAYOR OF HELPING CANNABIS RETAILER WIN APPROVAL IN HIS OWN TOWN (Jelani Gibson | NJ.com)
The lawsuit brought by Sourland Provisions, which was denied a retail sales license, alleges the municipality’s mayor, Paul Anzano, served as another cannabis company’s legal advisor and that company ultimately got approval.
According to the lawsuit, Anzano had started helping the company, Evolve Sky, even before Hopewell opted in to allow adult-use cannabis sales.
ANALYSIS: When you give hundreds of municipalities the authority to choose winners and losers with little oversight, this type of stuff is always a possibility. These accusations don’t quite reach the levels of what former Fall River Mayor and current prison inmate Jasiel Correia did, but it’s still something that deserves further scrutiny.
Lucy Scientific to Acquire High Times Brand Rights (Adam Jackson | Green Market Report)
Under the agreement, Lucy will release 19.9% of its shares to High Times and commit to semiannual payments over the next five years. These payments are based on the profit margins from the acquired IP. Lucy can choose to fulfill this obligation in either shares or cash.
Lucy is also giving High Times back licensing rights to open stores and sell THC products in the U.S. For this, High Times will pay Lucy $1 million a year. If cannabis becomes federally legal, that payment will double.
The deal is expected to be finalized in the next two weeks.
ANALYSIS: I would say something like “High Times has become everything it once rebelled against,” but if we’re being honest that happened years ago at this point. Politico documented their decline back in 2020, and Green Market Report previously covered the bizarre connection between High Times and Lucy.
International
🇪🇸 DAILY BLACKOUTS STRAIN A POOR SPANISH NEIGHBORHOOD. IS MARIJUANA TO BLAME? (Constant Méheut | New York Times)
At least a dozen other poor districts across Spain have also been affected by the double scourge of failing electrical grids and illegal marijuana production, according to local rights organizations.
After a two-month blackout in 2020 in a poverty-ravaged neighborhood in Madrid, United Nations human rights experts called on the Spanish government to fix the problem and criticized the authorities for blaming “the power outages on illegal marijuana plantations.”
ANALYSIS: People continue to find new innovative ways to scapegoat marijuana. This is clearly an infrastructure problem more than a drug problem.
🇨🇦 MOUNTIES EYEING CHANGE TO RECREATIONAL CANNABIS USE POLICY FOR MEMBERS (CTV News via Canadian Press)
A change to the five-year-old policy could bolster recruitment of new officers by bringing the Mounties in line with police forces that have much less restrictive policies on pot use.
An internal RCMP briefing note, obtained by The Canadian Press through the Access to Information Act, recommends a 24-hour restriction on cannabis use before reporting to work, with some exceptions.
ANALYSIS: This policy would be more progressive than most I’ve heard of in states south of the border that have legalized. I’ll leave it you up to you to determine whether this new rule inhibits the ability of the Mounties to finally catch Snidely Whiplash.
In the first episode, Pablo digs through the archives of the Dan Lebatard Show to explore if the titular liberal sports radio talk show host (and Pablo’s new boss) accidentally played a role in launching Donald Trump’s political career.
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