February cannabis sales for Maine, Massachusetts, and Rhode Island were all down since their December highs, which were driven by winter holiday shopping, say company operators. Operators interviewed by Grown In say they aren’t surprised by the trend and are instead preparing for spring bump, powered by April 20 sales.
“Everyone is getting ready for the 4/20 events, all of the pop ups that are happening. You’re going to see those numbers every year look like that and then ramp up as the spring comes in,” said Philip Smith, owner of Freshly Baked Company, a microbusiness in Taunton, Mass.
Maine saw a 2.8% increase in retail dollar sales from January to February 2021 according to the Office of Marijuana Policy; Massachusetts had a 2.4% increase, per the Cannabis Control Commission; and Rhode Island had not reported February numbers at the time of publication but had a 48% decrease from December 2021 to January 2022, according to the state’s Office of Cannabis Regulation.
Smith’s company is preparing for the April 20 holiday in part by buying extra distillate for products they manufacture and wholesale cannabis for prerolls.
“We picked up our production schedule to make sure we had a healthy supply of all our top selling products. We just launched a new strain-specific live resin gummy that is very popular that we probably should’ve prepared better for because one of our flavors was actually sold out. So there’s definitely a lead up when it comes into 420 for cultivators, for manufacturers, for everybody,” Smith said, noting that even the price of distillate is drastically down.
Yet the price of cannabis on the retail side is still high compared to the lowering price of wholesale cannabis, Smith said. A year ago, his company was paying $3,500 to $3,800 per wholesale pound. Now, the cost is down to $1,500 per pound, a 57% decrease.
Meanwhile, the price for one ounce of flower for adult use consumers went down just 3% on average in one year from February 2021 in Massachusetts.
“You’re seeing the price definitely start to lower as the industry starts to commoditize but you’re not really seeing that correlation on the retail sales because the cost of flower really hasn’t gone down for the consumer. But on the wholesale side it has. Hopefully as more dispensaries pop online and it gets more competitive, you’re going to start to see that retail price of flower drop down,” Smith said. “At the end of the day, the traditional market, the black market, they still lead the way in price. So until we get somewhere close, it’s always going to be hard to compete with that side.”
Smith said he expects April sales to rival December 2021 sales and has already seen an uptick in orders, thanks to 420 holiday sales.
“We just had our best week ever, actually,” Smith said.
Ulysses Youngblood, president of Worcester, Mass. dispensary Major Bloom and a professor at Clark University, said his company purchases wholesale flower and passes on many of the savings to customers, selling an eighth for as low as $25 pre-taxes.
“We are also manufacturing so we deal with raw materials, as opposed to finished goods,” Youngblood said. “Now, how does that impact the consumer? It does bring the price down, at least for our retail shop because we’re integrating, it brings the price down. I’ll give you an example. When we first opened up, we had acquired a strain that was pre packed and ready to go and we had to put that strain on our menu for $55 or $60. That same strain we ended up acquiring as raw materials and did the packaging and labeling ourselves” and now it costs consumers $25, he said.
But that’s not what’s happening in the rest of the industry.
“When we opened our doors, we changed a lot of things in the industry. Our locations are in the projects of Worcester. I literally have had people come up to me and say that they’re not trying to pay $20 for a frickin’ pre-roll,” Youngblood said. “So what do we do? We produce pre rolls, a two-pack and we sell them for $18. That’s the same price that you get one preroll for any other dispensary in Worcester. It’s just different. I mean, you gotta respect where you are.”
For the April 20 holiday, Major Bloom is launching a new product inspired by the legacy market – cereal bars laced with THC. But Youngblood said his business is not trying to compete with the illicit market, which largely does not offer terpene and THC labeling. He noted that some traditional market dealers sell eights for $60.
“That’s not competition. It’s just being a smart consumer. When it comes to these alternative consumption methods other than smoking flower, I don’t know if you’ve ever had an edible that’s too strong. You know what dosage you get in here because everything’s tested. It’s not about competition with the illicit market, it’s about consumers making an informed decision,” Youngblood said.
Ronnie Strunk, General Manager of Yamba Market, which is scheduled to open on April 20th as the first adult use store in Cambridge, Mass., said the illicit market will always be present.
“I don’t feel the illicit market pricing has really impacted much of our business because they don’t have testing,” Strunk said. “You’re really doing them a disservice because you have no way of knowing that those products are safe for consumption. And same thing for even certain types of edibles that have to go through different types of processes.”
He’s also gearing up for a big April 20 holiday.
“If you’re not successful in April, it’s probably due to in-house processes versus the way the market is,” Strunk said.