Adult-use stores in Massachusetts closed for business on March 24th and reopened on the 25th of May. Sales were significantly higher than usual in the two weeks leading up to the closing of the adult-use market’s retail stores in Massachusetts. The day before closing, March 23rd, sales spiked 60% because of customers trying to stock up before the lockdown. 

A new report issued by Nucleus One, a Massachusetts-based B2B cannabis company offering a variety of services, has reviewed the COVID-19’s impact on the state’s cannabis industry. 

Ellen Rosenfeld, President of CommCan, said: “Every worse thing that could have happened, happened.” Like other states, the Massachusetts adult-use marijuana program lost a lot of money. Their sales revenue shortfall totaled to $116 million, with a tax revenue shortfall of $19.3 million. The stores were closed for 61 days and lost $1.9 million in sales each day they were closed. 

CommCan specifically lost $2 million over the two months the stores were closed and NETA saw an 85% drop in sales during that time. Additionally, the number of medical marijuana patients increased by more than 20% as new medical patients were able to become certified through telehealth. 

COVID-19’s Impact on Production 

There was an initial decrease in the number of registered cannabis employees in the state starting March 23rd. On May 12th, recovery began and there is now a record-breaking number of 4,500 employees. 

Plant harvest began to rebound dramatically after May 29th and reached new heights in late June at 1,400 plants a day. 

Reopening after COVID-19 

Adult-use stores in Massachusetts experienced “pent-up demand” after reopening, causing various issues and overwhelmed order systems. According to Thomas Winstanley, the Marketing Director at Theory Wellness, after the initial boom, “it has been a bit sluggish compared to last year.” Staff and customers must adhere to social distancing guidelines as well as wear face coverings. 

There are a few reasons that can be attributed to lackluster sales. Fear and social anxiety, longer wait times, and using alternative channels and the black market to purchase cannabis. 

Applications and Licensing 

The Cannabis Control Commission (CCC) has approved 477 applications so far, with the total applications reaching 6,009. The majority of approved applications have been for retail operations, with cultivation facilities following closely behind. Manufacturing facilities are the third-highest number of applications Massachusetts has seen for the adult-use market. 

148 retailer licenses are pending across Massachusetts, with 172 provisionally approved as of June 4th, 2020. 51 retail stores are in operation across the state as of June 30th, 2020. 

Retail Trends 

Eight new adult-use stores have opened since May 25th – and sales bounced back close to pre-COVID levels in June. The recovery can be largely attributed to curbside pick-up orders that retail stores have made available. Daily sales per store have declined by 28% compared to pre-COVID. Additionally, weekend sales have decreased significantly. 

Flower accounts for 47.3% of sales in 2020, edibles account for 16.4%. The product mix has not changed too drastically after reopening, but flower and pre-roll sales picked up in June. 

Cultivation 

There are currently 32 active cultivation operations across the state of Massachusetts, with 98 provisional licenses in place and 15 final licenses. 7.6 million square feet of cultivation space has been provisionally licensed. 

There are 130 indoor cultivator applications compared to only 16 outdoor cultivation applications. 

Delivery 

As of June 4th, CCC reported 16 delivery applicants. 190 communities have allowed adult-use delivery in Massachusetts, with deliveries limited to: 

• The municipality which the delivery licensee has identified as its place of business
• Any municipality which allows for adult-use retail within its borders
• Any municipality which, after receiving notice from the Commission, has then notified the Commission that delivery may operate within its borders
• Deliveries to any other residence that benefits from federal funds, hotels or bed and breakfasts are forbidden 

Ayr Strategies

One Massachusetts cannabis company Ayr Strategies (OTC:AYRSF) has reported that its sales have already begun rebounding. This week, the company said that its medical dispensary sales continue to increase, with June revenue up 76% from the first-quarter monthly average despite adult-use retail dispensaries reopening in late May. Ayr reported that its average transaction volume was up 40% per day compared to first-quarter monthly average, with the average spend per ticket up 20% compared to first-quarter monthly average; gross margin levels were approximately 70%.

Ayr CEO Jon Sandelman said, “In Massachusetts, our record-setting month of June was achieved even as our wholesale business sold only approximately 65% of our monthly capacity. In normalized markets, we sell everything we produce each month, so we are entering the summer months with valuable inventory to sell into the recreational market in Massachusetts, which is repairing post the Q2 COVID shutdown. The number of operating dispensaries in the state has increased 25% since the stores reopened in late May, with Ayr currently selling to 82% of those new stores and a total of 36 out of the 55 dispensaries in the state.  We are now seeing wholesale demand steadily increase across our portfolio and expect the market growth to further accelerate our wholesale business.