Connecticut pot shops to open soon, Massachusetts businesses brace for impact

SPRINGFIELD Thomas Macre has visited recreational marijuana shops in Massachusetts.

He has seen Connecticut plates in the parking lot and thought about the Connecticut money going into the till.

Soon, as a co-owner of manager of Still River Wellness in Torrington, Connecticut, Macre will be in a position to keep those shoppers and their money at home,

Im hoping that, besides the travel, that we will be able to provide the products and the experience to recapture those consumers and have them visit us, Macre said last week.

Still River is one of nine Connecticut medical marijuana dispensaries licensed to also sell to recreational customers, adult-use in industry parlance.

Connecticut has given the nine dispensaries located in New Haven, Branford, Newington, Stamford, Willimantic, Danbury, Montville and Meriden as well as Torrington permission to open Jan. 10.

The advent of Connecticut pot shops hits the Massachusetts marijuana industry at a tough time. Beset with an oversupply, wholesale prices for cannabis products have fallen. A gram of flower cost $12.86 a year ago and just $8.07 this week, according to the Massachusetts Cannabis Control Commission.

Also, Massachusetts retail shops are dealing with a lack of access to traditional banking, competition from the black market and competition among each other.

Northampton marijuana shop The Source closed last month, the first licensed cannabis dealer in the state since legalization to close without the move being part of a merger.

Still, retail marijuana was a $1.42 billion industry in Massachusetts in 2022, according to the states Cannabis Control Commission. Its racked up $4 billion in total sales since the first legal shops opened here in 2018.

In Connecticut at Still River in Torrington, about a 42-minute drive from Enfield, which sits on the Massachusetts line, workers are still building out the recreational retail space Macre doesnt expect to open until Feb. 1.

Certainly, there will be a negative impact on the market in Massachusetts generally, said Brandon Pollock, CEO of Theory Wellness which has locations in Chicopee, Great Barrington and Bridgewater as well as a store opening in a week or so in Brattleboro, Vermont, and locations in Maine. But I think it will be muted.

Pollock said only a few Connecticut stores are opening soon and none are right on the state line in towns like Enfield or Suffield.

But legalized shops will come closer. Macre said his company is looking at locations, he cant say where, for new shops.

And Enfields planning department created regulations in October governing the placement of marijuana shops in a busy town just across the state line thats already a retail destination for Massachusetts residents.

But Nelson Tereso, director of Economic & Community Development for Enfield, said Thursday the planning department has yet to get any applications for marijuana shops in the town,

This is after a pot-reluctant Town Council was voted out and replaced by a new majority at the end of 2021.

Insa has a shop on West Columbus Avenue in Springfield, just a few miles north of the Connecticut line.

We believe the Massachusetts market will remain robust and are excited for what the future holds here, said Pete Gallagher, CEO and co-founder of Insa. As an approved licensed cultivator in Connecticut, we are looking forward to serving that community with our new location in Hartford opening in 2023.

Matthew Yee, chief operating officer of Enlite Cannabis Dispensary in Northampton, said out-of-state traffic will drop off with Connecticut and also Rhode Island opening shops. Itll be especially felt at busy dispensaries on the border of the state highway.

But its part of the industrys maturation. Marijuana businesses increasingly have to compete for local customers on price, location and customer service. Marijuana businesses are increasingly just like, well, businesses.

When Northamptons first shop, NETA, opened in late 2018 it was one of the first in the state and one of the first on the east coast. Folks lined up down the block for months.

Those days are long gone, Yee said.

But his company is still pursuing its plans for a shop in the Indian Orchard section of Springfield. Because he believes in the products and the location, thats how hes going to compete

Pollock said Connecticut shops will have a hard time competing due to regulations. Connecticut limits the potency, the THC concentration, of the marijuana flower and products that can be sold.

According to Connecticut state law, the potency of flower is capped at at 30% THC and all other products except pre-filled vape cartridges at 60%

Macre said the 30% THC for flower falls in the range of what is available everywhere. The 60% cap on other products and limits on edibles are lower than the concentrations that can be found on the market in other states.

Connecticut also restricts retailers from selling strains under their street names, Pollock said.

So a popular breed of cannabis like wedding cake must be identified by a numbered code.

That makes it hard to market and advertise, Pollock said.

As far as taxes, it works out to about 20% in both Massachusetts and Connecticut. But Macre said its a bit more complicated in Connecticut because one tax is on a sliding scale depending on potency.

Jeff Gittler, partner at PKF OConnor Davies, a New York City accounting firm, and co-leader of the firms cannabis practice, agreed that the impact will be slow and incremental.

Nine retailers isnt going to put a damper on the whole Massachusetts industry, Guittleer said.

But think of Great Barrington, Massachusetts, in the southwestern corner of Berkshire County near the New York and Connecticut borders. The town has six marijuana shops.

It was a deliberate strategy, Gittler said. They wanted to draw those visitors.

Shops also deliberately advertised in states where their products were not yet legal.

Now, not only is Connecticut making its move. But the first legal marijuana shop in New York state opened Thursday, to be followed by a legal expansion north into the Capitol Region. All those Albany-area customers the Great Barrington dispensaries hoped to lure in will have a legal option close to home..

Hanging over this discussion is the reality of federal drug laws that have not been legalized even as 21 states and the District of Columbia have legalized adult recreational cannabis use.

You cant transport cannabis over state lines, its still illegal, said Noam Hirschberger, a principal in the forensic, litigation and valuation Group at PKF OConnor Davies Its technically drug trafficking.

Gittler said no one is naive. People do transport cannabis across state lines all the time.

And we know it is very, very difficult to stop them, he said.

Pollock said the law is clear. If someone is 21 and has proper ID, they can buy. The assumptions that they are going to possess and use the product in ways that are legal and responsible.

And falling prices, while bad for growers, grow the business and help legal operators compete with the illicit market.

We are starting to see more and more people coming into pot dispensaries now as prices are going down, he said.

Theory opened its location in Brattleboro, Vermont, Friday, Dec. 30, Pollock said. Like all states, Vermont is regulating the industry in its own way, emphasizing small farmers and locally grown product,

Its high quality, he said.

But, again due to federal law, hell be unable to sell the Vermont brands at the Massachusetts stores. Marijuana cant cross state lines, remember.

The shop is on Putney Road north of town, near the Franklin Pierce Highway Bridge into New Hampshire.

New Hampshire, the Live Free or Die State, is now the lone holdout among New England states with no pot shops.

I think this (Connecticut and Vermont) will put tremendous pressure on New Hampshire, Pollock said.