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Maine Cannabis Cultivators Struggling as Industry Crashes

Maine Cannabis Cultivators Struggling as Industry Crashes

Maine cannabis growers struggling

The Maine cannabis industry officially launched in October 2020, just after the peak of COVID when customers were stuck at home with money to spend. This led to rapid construction of Maine cannabis cultivation facilities to meet the demand of consumers.

Due to Maine’s climate, most cultivators are doing so indoors, which brings with it additional costs. The largest of these costs most commonly is electricity.

Compared to your typical home, an indoor cannabis cultivation facility can use roughly 10 times as much electricity per square foot. With rising electricity costs across the country, these costs are rising drastically for cultivators.

One cultivation facility in Maine, which typically averaged $4,500 for electric monthly, was charged $10,000 this January.

Compounding this issue is the tanking price of wholesale cannabis. With energy prices more than doubling, and the commodity it produces dropping drastically in value, it is becoming more and more difficult to maintain.

According to Cannabis Benchmarks, wholesale cannabis prices in June were the lowest in more than three years. Add to that rising material and labor costs, and the rapid expansion of Maine’s legal cannabis industry is beginning to look like maybe it was premature.

For reference, the state had 14 licensed recreational cannabis grow operations at the end of 2020, and over 42,000 square feet of canopy under cultivation. By the end of 2021, there were 55 grow operations and over 262,000 square feet of canopy, according the Maine Office of Cannabis Policy.

Additionally, consumers have also been feeling the strain of an impending recession and rising electricity costs, with home electric costs rising up to 80% so far this year. Supposedly the bulk of blame for this problem can be places on the Russia/Ukraine conflict.

Across the nation, growers are attempting to combat higher electricity costs by making the switch from High Pressure Sodium (HPS) lighting, for more efficient LED grow lights. However an average HPS fixture costs $300, and an average quality LED costs up to $1,000.

In an effort to help growers transition, Efficiency Maine was started in the state to give rebates to large grow operations, with a minimum $10,000 incentive to make the switch to LEDs. The program has issued 30 rebates so far.

One company spend $60,000 on new LED grow lights, and received a $30,000 rebate from Efficiency Maine. The facility was able to cut its energy usage by 70%.

Consider a flower room with 20 high-pressure sodium lamps rated at 1,000 watts each. They’re on 12 hours a day and cost $14,000 a year to run. Replacing them with 600-watt LEDs would slash the run cost 40 percent, to $8,400 a year.

However as the rebate only applies to larger operations, smaller scale growers are left to fend for themselves. Some are attempting to cultivate outdoors and in greenhouse settings to save on costs, but the window is smaller in Maine due to the climate that turns cold earlier than other regions of the country.

Others are fighting with electric companies to try and get better rates, or shopping energy brokers against each other to lock in better rates. In Maine and across the country, we are likely going to see a mass exodus from the industry.

As costs of production continue to rise while the commodity continues to drop, it becomes less and less feasible to make a profit. Unfortunately small businesses will be most impacted by this transition while larger, commercial multi-state operators with investor backing will be able to stay afloat and capture more marketshare in every state they are active.

Making the transition to a more energy-efficient grow isn’t as complicated as it may seem, it is typically costs that can scare most business owners away. Talk to us about sourcing the equipment you need from our commercial partners so you can get the best pricing possible and keep your business operating efficiently.

New Mexico cannabis sales hit nearly $40 million in first month

New Mexico cannabis sales hit nearly $40 million in first month

New Mexico cannabis sales revenue numbers

In its first month of recreational cannabis sales, New Mexico brought in nearly $40 million in revenue.

After launching its legal cannabis industry on April 1, the state made over $4 million in its opening weekend. Through the rest of the month, adult use sales across 40 cities in New Mexico sold $22 million worth of cannabis products.

The remaining $17 million was medical cannabis sales.

Medical cannabis sales are exempt from taxes unlike recreational sales, so there was no tax revenue generated from the $17 million in sales for the month. The majority of the state’s recreational sales were in Albuquerque, home to roughly 564,000 residents.

The city alone sold nearly $15 million in cannabis in April. The next highest revenue generated was in Las Cruces at only $2 million in adult use sales.

Las Cruces is also home to the state’s first licensed cannabis lounge where consumers can enjoy cannabis in a public setting.

New Mexico communities that border Texas also saw a fair amount of sales in the first month of adult use cannabis in the state. Hobbs and Sunland Park sold $1.7 and $1.4 million respectively, including medical and recreational cannabis sales.

An analysis from Sun-News found that Sunland Park had the third highest sales per capita, likely due to “cannabis tourism” from Texas and Mexico.

New Mexico cannabis sales are taxed at 12% for adult-use, plus additional taxes from local jurisdictions. Final tax revenue numbers won’t be announced until May 25, but with current data it is expected that the state will make about $2.6 million in tax revenue for the month.

Additionally, the 12% excise tax rate on adult-use cannabis sales is set to increase to 18% in 2025. This is still a lower tax rate than neighboring states Arizona and Colorado.

It is likely that the 4/20 holiday helped to boost recreational sales in the New Mexico’s first month. However the state’s director of the Cannabis Control Division, Kristen Thomson, is still satisfied with how the state performed and anticipates continued growth in the future.

“New Mexicans showed up on April 1 ready to support local businesses selling high-quality New Mexico products, and they’re still coming,” Thomson wrote.

“Thanks to hard work by the dedicated people working in the industry, supply easily met consumer and patient demand. New Mexicans have a lot to be proud of in the launch of this new industry, which is already adding value to the state’s diverse economy.”

The CCD has projected that the New Mexico cannabis industry will create up to 11,000 jobs statewide, with $300 million in sales and $50 million in tax revenue in its first year.

New Jersey recreational cannabis sales finally begin

New Jersey recreational cannabis sales finally begin

New jersey recreational cannabis sales have started

Thursday April 21, 2022 marks the first day that recreational cannabis can be sold to consumers in New Jersey. Doors opened at the first dispensaries at 6 AM, with lines wrapping around the block.

“It’s a huge event. It’s a moment in time in American history where prohibition 2.0 is lifted,” said Ben Kovler, the chairman and CEO of Green Thumb Industries, which has two facilities opening Thursday, one in Bloomfield and another in Paterson.

However the industry isn’t fully taking off just yet. Just over a dozen “alternative care providers” in the state that were already providing medical cannabis to patients were given permission to sell adult-use cannabis on opening day.

It is still unclear when the hundreds of other cannabis business applicants will get their licenses and be allowed to open their doors, but it will likely start with social equity applicants first.

State regulators say dispensaries in New Jersey are allowed to sell up to the equivalent of 1 ounce of cannabis, which means an ounce of dried flower, or 5 grams of concentrate or 1,000 milligrams of edibles, like gummies. However perishable edibles like cookies and brownies will not be available.

Recreational cannabis sales will still apply the state 6.625% sales tax, with 70% of the proceeds going to areas disproportionately affected by marijuana-related arrests.

New Jersey is the first among several neighboring states to launch recreational cannabis sales. New York legalized cannabis in 2020 but has yet to implement a recreational market. Pennsylvania has a successful medical cannabis industry, with advocates and even legislators pushing for full legalization this year. Connecticut also legalized cannabis but has yet to implement any marketplace for consumers.

First New York cannabis dispensaries to open on tribal land

First New York cannabis dispensaries to open on tribal land

New York cannabis dispensaries

The New York legal cannabis industry may be delayed by politicians and bureaucracy, but that isn’t stopping Native tribes from rolling out their own markets.

The Saint Regis Mohawk Tribe based in Akwesasne will be the first to launch a regulated cannabis market in New York state. Beginning April 15, several Tribal businesses will open their doors to sell cannabis flower, edibles and other cannabis products to consumers.

The Tribe is able to do so thanks to their Adult Use Cannabis Ordinance. The ordinance states that adults 21 years old or older can transport, possess, and use up to three ounces of cannabis and up to 24 grams of concentrated cannabis.

Once New York legalized cannabis officially in 2020, the option to legalize the plant on tribal lands became more enticing. Not beholden to state laws and regulations regarding the plant, the Tribe was free to establish their own regulatory framework to permit sales and possession.

The Saint Regis Mohawk Tribe is also the first in the country to regulate and license tribal member-owned businesses for cannabis.

According to the Tribe, licensing fees collected from legal cannabis operations will be used to keep community members employed and fund a wide range of community services. Additionally the funds will help support educational scholarships, public safety, road maintenance, elder assistance, health care, and community organizations.

Tribal Chief Michael Conners said he believes the system will benefit the community while providing a safe product for consumers.

“We are confident that the hard work of the tribally licensed cannabis business owners will result in loyal customers from beyond Akwesasne,” Conners said. “We know that it took a while, but we are confident that our system is designed to provide quality product, in a regulated system, with Compliance oversight and a qualified Board of Managers to see that all regulations are followed for the safety of our community and consumers.”

New Mexico cannabis sales pass $4 Million in first weekend

New Mexico cannabis sales pass $4 Million in first weekend

New mexico cannabis sales brought in a lot of money

In its first weekend of adult-use recreational cannabis sales, New Mexico cannabis sales surpassed $4 million.

The brand new market broke $3 million on day one as dispensaries across the state opened their doors to customers for the first time. Over the next two days the industry would bring in a total of $4.5 million.

According to state officials, there have been 49,552 transactions for recreational cannabis as of 12 pm Sunday, totaling $3,092,712. During that same period, about $1,425,000 worth of medical cannabis was sold.

The first recreational cannabis transaction occurred at 12:01 a.m. in Las Cruces. Sales in the state’s largest city, Albuquerque, didn’t start till 10 a.m. By noon Friday, recreational sales had reached $476,000. About 70 percent of all cannabis sales Friday were for recreational use.

New Mexico cannabis sales for adult-use were signed into law by the state’s governor in April 2021. By December 2021 the state’s Cannabis Control Division began accepting applications with no limits on how many licenses would be given out.

Other states have taken similar approaches, like Oklahoma, which also didn’t put limits on licenses or plant counts for cultivators. While Oklahoma’s market is now oversaturated with cannabis products driving prices down, it is way too soon to say if New Mexico will face a similar issue.