Aspiring adult use retailers in Massachusetts will have to be more strategic as the growth of retail licenses outpaces the growth of overall cannabis sales.
“You have to be a lot more strategic about where you’re picking that retail location,” said Jon Napoli, founder of cannabis consulting business CannAssist. “If you’re going into a town that has already got them, you better be going into a better location.”
Total monthly sales in Massachusetts continues to grow. In the first four months of 2022, total monthly sales jumped about 20-30% in each month when compared to that same month in 2021. The state also recently surpassed the $3 billion mark in total adult use sales last month.
At the same time, the total number of retail licenses with commence operation orders jumped from about 100 in January 2021, to 216 in April 2022, based on data from the Cannabis Control Commission.
The jump in retail licenses means that in the last 16 months the average monthly sales per license has dropped from $870 thousand to $566 thousand.
Napoli said that the trend was a natural result of a maturing market place.
“That’s to be expected,” said Napoli. “That’s not something that we are surprised by. There is obviously a pie and it’s being divided up into more slices. But as long as the pie is expanding, and as long as we can keep growing the industry here in Massachusetts for the next few years, we’re satisfied with that.”
“I wouldn’t even recommend anyone get into cultivation in Massachusetts at this point,” said Napoli. “It’s just way too competitive and the market is saturated, but there is definitely still good opportunities for retail.”
Ben Virga, owner of South Shore Bud’s, an adult use retailer that opened in Marshfield last December, said that he anticipated the tightened market and tried to be strategic about his location.
“We saw this coming,” said Virga. “When we decided to start this company, four and a half years ago, we knew there would be a time and a place in Massachusetts where the ability of a dispensary to simply open its doors and everyone shows up would come to an end.”
Virga said that he and his business partner came from the world of real estate, which left them aware of the important need for strategic planning.
“The cardinal rule of real estate is very simple, it’s location, location, location,” he said.
This approach is especially important considering that 112 of the state’s 351 municipalities have opted out of allowing legal adult use sales.
“A lot of municipalities restricted the zoning to kind of out-of-the-way locations within that municipality. A lot of industrial parks, a lot of remote sections of town, which was totally fine if there wasn’t any competition, but as competition has grown it makes it tougher and tougher,” said Virga.
Despite the hardships of a maturing market, Virga said that his business’s location seems to be paying off so far, which he speculated might be the large part of his surrounding community that are not regular cannabis users, but are willing to try. He noted that roughly one third of his new customers are new to cannabis entirely.
“We’ve seen double-digit percentage growth every month that we’ve been open,” he said. ”Everyone is fighting over that same 20% of consumers that were cannabis users all along, but there’s so many people that are new to cannabis, it’s a changing landscape.”