Massachusetts

insights

May 16, 2022
Notable Players

A Deeper Look At This State

Regulatory Framework

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:

  • Are social equity applicants.
  • Already have agreements with municipalities.
  • Acquire existing retail locations.

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.

Notable Market Activity

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

February 2020 | Cresco acquires Hope, Heal, Health

January 2020 | STEM joint ventures with Community Growth Partners

What's the Play?

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.

Market Snapshot

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

594/273

By The Numbers

Population

~6.9MM

21+ Population

~4.59MM

Annual Tourists

~
30
MM

Medicinal Legalization

2012

Adult-Use Legalization

2019

First Adult-Use Sales

2018

MMJ Patients

~100K

Monthly Revenue

~$154MM

Cultivation Cap

100K Sq.Ft.

Cultivation Licenses

121/No Limit (Operational/Limit)

Retail Licenses

222/No Limit (Operational/Limit)

Retail License Cap per Operator

3

Vertical Integration

Required

Delivery

Allowed

MMJ Qualifications

Less Restrictive

Adult Population/ # Retail Licenses

~20.6K

Accepts Out of State MMJ

No

MMJ Patients / # Retail Licenses

*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.

Top Cultivators

Notable Market Activity

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Proprietary Sharp Capital Advisors data - compiled using various sources including state and local government data

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Shit We Don't Know

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