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Connecticut pottery stores open, Massachusetts businesses brace for impact

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SPRINGFIELD – Thomas Macre visited recreational marijuana stores in Massachusetts.

He saw Connecticut plates in the parking lot and thought about Connecticut money going into the cash box.

Soon, as co-owner of the director of Still River Wellness in Torrington, Connecticut, Macre will be able to keep those shoppers and their money at home,

“Hopefully, in addition to the trip, we’ll be able to provide the products and the experience necessary to win back those consumers and have them visit us,” Macre said last week.

Still River is one of nine medical marijuana dispensaries in Connecticut licensed to also sell to recreational customers, for adult use in industry parlance.

Connecticut gave the nine dispensaries — located in New Haven, Branford, Newington, Stamford, Willimantic, Danbury, Montville and Meriden as well as Torrington — permission to open Jan. 10.

The advent of Connecticut pot shops hits the Massachusetts marijuana industry at a difficult time. Plagued by oversupply, wholesale prices for cannabis products have plummeted. A gram of flower cost $12.86 a year ago and just $8.07 this week, according to the Massachusetts Cannabis Control Commission.

Additionally, Massachusetts retail stores face a lack of access to traditional banking services, black market competition, and competition among themselves.

Northampton marijuana store The Source closed last month, the first licensed cannabis dealer in the state since legalization to close without the move being part of a merger.

Still, marijuana retail was a $1.42 billion industry in Massachusetts in 2022, according to the state’s Cannabis Control Commission. It has made a total of $4 billion in revenue since the first legal stores opened here in 2018.

In Connecticut, at Still River in Torrington, about a 42-minute drive from Enfield, which is on the Massachusetts line, workers are still constructing the recreational retail space that Macre doesn’t expect to open until Feb. 1.

“There will definitely be a negative impact on the Massachusetts market in general,” said Brandon Pollock, CEO of Theory Wellness, which has locations in Chicopee, Great Barrington and Bridgewater, as well as a store opening in about a week. in Brattleboro, Vermont. , and Maine locations. “But I think it will be muted.”

Pollock said only a few Connecticut stores will open soon and none are right on the state line in towns like Enfield or Suffield.

But the legalized businesses will come closer. Macre said his company is looking for locations, he can’t say where, for new stores.

And Enfield’s planning department in October created regulations governing the location of marijuana stores in a bustling town just across the border that’s already a retail destination for Massachusetts residents. .

But Nelson Tereso, Enfield’s director of economic and community development, said Thursday the planning department had not yet received applications for marijuana stores in the city,

This is after a pot-averse city council was voted out and replaced by a new majority at the end of 2021.

Insa has a store on West Columbus Avenue in Springfield, a few miles north of the Connecticut line.

“We believe the Massachusetts market will remain robust and we’re excited for what the future holds here,” said Pete Gallagher, CEO and co-founder of Insa. “As a licensed licensed grower in Connecticut, we look forward to serving this community with the opening of our new location in Hartford in 2023.”

Matthew Yee, chief operating officer of Enlite Cannabis Dispensary in Northampton, said out-of-state traffic will decline as stores open in Connecticut and Rhode Island. This will be particularly felt in the busy dispensaries on the side of the national road.

But that’s part of the maturation of the industry. Marijuana businesses increasingly have to compete for local customers in terms of price, location, and customer service. Marijuana businesses are becoming more and more like businesses.

When Northampton’s first store, NETA, opened in late 2018, it was one of the first in the state and one of the first on the east coast. People lined up for months.

“Those days are long gone,” Yee said.

But his company is still pushing ahead with plans for a store in the Indian Orchard section of Springfield. Because he believes in products and location, that’s how he’s going to compete

Pollock said stores in Connecticut will have a hard time competing due to regulations. Connecticut limits potency, THC concentration, marijuana flower and products that can be sold.

Flower potency is capped at 30% THC by Connecticut state law and all other products except pre-filled vape cartridges at 60%

Macre said the 30% THC for the flowers is in the range of what is available everywhere. The 60% cap on other products and limits on edible products are lower than levels that may be found on the market in other states.

Connecticut also prohibits retailers from selling strains under their “street” names, Pollock said.

Thus, a popular strain of cannabis like the “wedding cake” must be identified by a number code.

“It makes it difficult to market and advertise,” Pollock said.

As for taxes, that works out to about 20% in Massachusetts and Connecticut. But Macre said it’s a bit trickier in Connecticut because a tax is on a sliding scale based on horsepower.

Jeff Gittler, a partner at PKF O’Connor Davies, a New York accounting firm, and co-head of the firm’s cannabis practice, agreed the impact will be slow and gradual.

“Nine retailers aren’t going to put a damper on the entire Massachusetts industry,” Guittleer said.

But think of Great Barrington, Massachusetts, in the southwest corner of Berkshire County, near the borders of New York and Connecticut. The city has six marijuana stores.

“It was a deliberate strategy,” Gittler said. “They wanted to attract these visitors.”

Stores also deliberately advertised in states where their products were not yet legal.

Now, not only Connecticut is making its way. But the first legal marijuana store in New York state opened on Thursday, followed by a legal expansion north into the Capitol area. All of the Albany-area clients that Great Barrington dispensaries hoped to attract will have a legal option near them.

Above this discussion is the reality of federal drug laws that have not been legalized even as 21 states and the District of Columbia have legalized adult recreational cannabis use.

“You can’t transport cannabis across state lines, it’s still illegal,” said Noam Hirschberger, director of forensic, litigation and assessment group at PKF O’Connor Davies. “It’s technically drug dealing.”

Gittler said no one is naive. People transport cannabis across state lines all the time.

“And we know it’s very, very difficult to stop them,” he said.

Pollock said the law is clear. If someone is 21 and has proper ID, they can buy. The assumptions that they will own and use the product legally and responsibly.

And the fall in prices, although harmful for the producers, increases the activity and helps the legal operators to compete with the illicit market.

“We’re starting to see more and more people entering pot dispensaries now that prices are coming down,” he said.

Theory opened its Brattleboro, Vermont location on Friday, Dec. 30, Pollock said. Like all states, Vermont regulates the industry in its own way, with an emphasis on small farmers and locally grown produce,

“It’s high quality,” he said.

But, again due to federal law, he won’t be able to sell Vermont brands in Massachusetts stores. Marijuana can’t cross state lines, remember.

The store is on Putney Road north of town, near the Franklin Pierce Highway bridge in New Hampshire.

New Hampshire, the Live Free or Die state, is now the only remaining New England state without pot shops.

“I think this (Connecticut and Vermont) will put tremendous pressure on New Hampshire,” Pollock said.

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