Massachusetts is the oldest adult-use market in New England. Operators have enjoyed their first-mover advantage within this limited license state. License holders are capped at 100,000 sq. ft. of cultivation and operators cannot own more than three retail licenses.
While the Cannabis Control Commission feigned strict social equity requirements, major MSOs still found their way into the market, building out the maximum three dispensaries allowed per owner. Operators need to secure Host Community Agreements and satisfy a myriad of other state and local regulatory requirements before licenses are issued, which has slowed market development.
Potential new entrants might find it difficult to break into the state’s retail market unless they:
Prized retail locations typically command prices of $5-$10MM. Cambridge is one of the first cities within the state to eliminate taxes on adult-use cannabis sales making it extremely attractive to customers. Time will tell if surrounding cities will follow-suit.
March 2022 | Agrify Corp. announced a senior secured debt facility for up to $135MM
January 2022 | 4Front Ventures acquires New England Cannabis Corporation for $50.3MM
September 2021 | Jushi finalizes $91.2MM deal to acquire Nature's Remedy
September 2021 | Ayr Wellness Inc. acquired Cultivauna Inc, the owner of Levia-branded cannabis infused seltzers and water soluble tinctures
September 2021 | Cresco acquired Cultivate in a $90MM deal
June 2021 | GTI acquires Liberty Compassion
October 2020 | Curaleaf acquires Alternative Therapy Group
The Bay State is a profitable, limited license state that is highly attractive to MSOs. As a result of the three dispensary limit, most of the MSOs have already reached their maximum retail presence. This regulation results in numerous profitable small businesses with only a few large suitors left.
Though the state had a slow start to adult-use sales in late 2018, sales have skyrocketed. 2021 finished strong with a total of $1.38B – and are on pace to exceed $2.6B by 2025.
If you have an opportunity to invest in a Massachusetts operation, you won't regret it. Strong business opportunities remain in cultivation and in select retail locations, including the underserved Boston area. Single store sales reach as high as $100MM per year.
If you are a SSO, bide your time, reap the annual earnings rewards, and wait until something changes on the regulatory front to allow for a monetization event.
*The commission created 11 tiers of cultivation licenses based on square feet, ranging from up to 5K sq.ft (Tier 1) to up to 100K sq.ft. (Tier 11). Once a cultivator has sold 85% or more of its product in the past six months, it can apply to expand. Cultivators may also reduce production. Oh and the state can issue craft grow licenses, yippie.