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First Connecticut cannabis cultivation license goes to…a Massachusetts company?

First Connecticut cannabis cultivation license goes to…a Massachusetts company?

Connecticut cannabis cultivation license

Insa, a Massachusetts based cannabis company, has received the first provisional cultivator license for recreational cannabis in Connecticut. The company, with operations in three states currently, was able to obtain the license through a social equity process.

The Connecticut Department of Consumer Protection which issued the license confirmed that the company passed the required background checks and paid $3 million in fees to receive the license. The 14-month provisional license gives the company time to hire employees, establish a business plan and build out their cultivation facility.

Insa currently operates three recreational cannabis dispensaries just over the border in Springfield, Massachusetts. If their final license is approved, Insa will have the ability to operate over 15,000 square feet of cultivation space.

16 social equity applications were approved overall out of 41 total applicants. This process was not held under the lottery format of other non-social equity licenses.

Connecticut’s cannabis law defines a disproportionately impacted area (i.e. social equity applicant area) as a U.S. census tract in Connecticut that has a higher historical conviction rate for drug-related offenses, or an unemployment rate greater than 10%.

Of the 16 approved applicants: two live in Bridgeport; five in Hartford; one in Manchester; one in Middletown; three in New Britain; one in Southington; one in Stamford; and two in Waterbury. However these applicants must still undergo their background checks before they receive provisional licenses like Insa.

Illinois implemented a similar social equity platform when the state legalized cannabis in 2020. It has led to a slew of issues regarding insider connections and big players coming in to beat out local businesses.

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.

Is Colorado cannabis industry dying or just returning to normal?

Is Colorado cannabis industry dying or just returning to normal?

Colorado cannabis

The Colorado cannabis market that thrived during the peak of the COVID pandemic has been slowly coming back down, decreasing 32% since the state broke records in July of 2020.

Colorado cannabis sales broke $226 million in July 2020 alone, setting a new record for the state. Latest state records show that total cannabis sales in the state for May 2022 were just $147 million.

At first glance this could be interpreted as the market correcting itself following the massive boost it received during the COVID pandemic. It could also be seen as the Colorado cannabis market losing marketshare following the legalization of cannabis in neighboring states like New Mexico and Oklahoma.

This answer is likely a combination of both.

During the peak of the pandemic, cannabis sales rose to record levels across the country. While many restaurants and stores shut down for months, in most states with recreational and medical cannabis, dispensaries remained open.

Cannabis was treated similarly to alcohol in this instance; liquor stores were allowed to remain open in most states during the pandemic as well.

The picture of Colorado’s cannabis industry profits becomes less pessimistic when taken in context and compared to pre-COVID numbers. However the numbers still show an industry that is struggling to grow as the national industry also grows and consolidates.

For comparison, let’s take the same month that we can consistently track according to state released data; May.

In May 2019, total Colorado cannabis sales were $143 million. One year later in May 2020, the state sold over $192 million in cannabis, which would gradually increase month by month until the record breaking month of July 2020 ($226 million).

It is easy to see the boost that COVID gave to cannabis sales in Colorado, as in May of 2021 sales were back down to $194 million. This number is just $2 million more than the same month in 2019.

Comparing to 2019 and removing 2020 from the equation, May 2019 to May 2022 show almost no growth.

Coincidentally, July 2021 was also one of the most successful months of the year, selling $202 million in cannabis products. The industry has not broken $200 million in sales since then.

As an additional comparison, we can look at the same 5 month timeframe from this year (2022) and last year (2021), from January to May.

The mean cannabis revenue in Colorado in 2021 from January to May was $192 million.

The mean cannabis revenue for 2022 is $151 in the same time period.

For a pre-COVID reference, sales for the same period in 2019 were only $133 million.

In other words, while Colorado cannabis sales are down compared to previous quarters, the industry has overall seen growth. The boost the industry gained from COVID has had residual impacts, with more people still purchasing cannabis than before the pandemic.

However the state has not seen a booming month like July 2020 for some time. Current trends in the industry hint that it is unlikely the state will see sales numbers surpassing $200 million until the next holiday season, if ever again.

New York Announces Conditional Adult-use Cannabis Retail Dispensary Licenses

New York Announces Conditional Adult-use Cannabis Retail Dispensary Licenses

new york adult use cannabis licenses for retailers

In March of this year the New York Cannabis Control Board (CCB), which oversees the Office of Cannabis Management (OCM), proposed a regulatory framework to create and oversee Conditional Adult-Use Retail Dispensary Licenses.

These licenses will be the first allowing retailers to sell recreational cannabis in New York, outside of tribal lands. However only certain individuals meeting a “justice-involved” standard will be eligible to apply.

OCM officials have said that the state will issue between 100 and 200 Conditional Adult-Use Retail Dispensary Licenses. Plans to release the licenses are currently slated for late 2022 or early 2023.

An “Eligible Applicant” is:

  1. An applicant that has:

    • a) a significant presence in New York State, either individually or by having a principal corporate location in the state;

    • b) is incorporated or otherwise organized in the state; or

    • c) a majority of the owners are residents by being physically present in the state no less than 180 calendar days during the current year or 540 calendar days over the course of 3 years;

  2. An individual, or an entity with one or more individuals, where at least one individual:

    • a) Is “Justice-Involved,” meanings individuals who were; or had a parent, legal guardian, child, spouse, or dependent who was; or were a dependent of an individual who was convicted of a marijuana-related offense in New York before March 31, 2021;

    • b) Provides evidence of the primary residence of the Justice-Involved individual at the time of said individual’s arrest or conviction; and

    • c) The Justice-Involved individual holds or held for at least two years at least 10% ownership and control of a business that had net profits for at least 2 years, or a qualifying nonprofit.

  3. A nonprofit that is: recognized as an entity pursuant to section 501(c)(3) of the Internal Revenue Code; intentionally serves Justice-Involved individuals and communities with historically high rates of arrest, conviction, incarceration or other indicators of law enforcement activity for marijuana-related offenses; operates and manages a social enterprise that had at least two years of positive net assets or profit; has a history of creating vocational opportunity for Justice-Involved individuals; has board members or officers who are Justice-Involved; has at least five full-time employees.

Additional requirements include 51% ownership in aggregate by one or more individuals who meets the requirements of (1) and (2). 30% ownership by at least one individual who satisfies (1) and (2) whom exercises sole control of the applicant or licensee.

As for the license itself, the conditional period for which the Conditional Adult-use Cannabis Retail Dispensary Licenses applies will last four years from when the license is issued. An applicant that receives a license must begin operations within 12 months of it being granted.

Cannabis products can only be acquired from authorized entities, and can only be distributed within the state.

The licensee “shall enter into and comply with all terms and conditions of any agreement with any fund approved by the [CCB] and made available by [OCM], including, but not limited to, accepting a dispensary location identified by the fund or office, any loan agreement with such fund, any lease or sublease agreement with the State of New York or its agents, or any other such agreements into which the licensee enters.”

After the Conditional Period, licensees may apply to transition to an adult-use retail dispensary license.

Nevada cannabis lounges approved by state oversight board

Nevada cannabis lounges approved by state oversight board

Nevada cannabis consumption lounge licenses

Regulations for the licensing and operation of cannabis consumption lounges in Nevada received approval from the state’s oversight board Tuesday.

State lawmakers approved a bill authorizing cannabis consumption lounges in Nevada last year. The last several months have included 15 meetings among Nevada Cannabis Compliance Board members to determine the licensing process.

Two consumption lounge license-types will be issued. The first is for lounges that will be directly attached to a retail cannabis dispensary. The second is for independent, stand alone consumption lounges.

Anybody can apply for a Nevada cannabis consumption lounge license. However one person cannot hold a retail dispensary license and an independent consumption lounge license at the same time.

Only the owner of a licensed operational retail cannabis dispensary may be eligible to apply for a retail cannabis consumption lounge license. In other words, a consumption lounge attached to a dispensary will be owned by the owner of the dispensary.

The Nevada Cannabis Compliance Board will hand out 20 licenses for independent consumption lounges, with 10 reserved for social equity applicants. To qualify as a social equity applicant, the applicant must be someone “who has been adversely affected by provisions of previous laws which criminalized activity relating to cannabis, as determined by the Board [. . .] Such adverse effects may include, without limitation, adverse effects on an owner or officer of the applicant.”

An independent cannabis consumption lounge would contract with a retail cannabis dispensary to supply cannabis for customers to consume on site.

If all 20 licenses are handed out by June 30, more will be issued as long as the amount of independent consumption licenses does not outnumber the amount of retail consumption lounges.

However a retail cannabis consumption lounge will not come cheap. The application alone requires a non-refundable application fee of $100,000.

An independent cannabis consumption license on the other hand will carry a $10,000 fee to apply. This fee can be reduced further for social equity applicants.

Currently there is no word on when or how the licenses will be scored and issued. Additionally there will still be several months ahead of developing and promulgating regulations for cannabis consumption lounges.

Local jurisdictions will also have the option to restrict cannabis consumption lounges from opening in their area.

The Nevada Cannabis Compliance Board will be keeping those interested in Nevada cannabis consumption lounges up to date through a newsletter, which can be subscribed to on the government website.