Worcester Business Journal

wbjournal.com | May 13, 2019 | Worcester Business Journal 11 Cultivating Success Vantage Builders' Cannabis Construction Practice is one of the most experienced in Massachusetts. We completed our first cultivation and dispensary facility in 2016 – one of the first to open in the state – and have the direct industry knowledge to get cannabis entrepreneurs from groundbreaking to growing, on budget and on time. Our deep experience in retail complements our cannabis industry expertise when designing high-end dispensary locations that are welcoming, relaxing and well organized. www.vb-inc.com | 781.895.3270 T H E B U S I N E S S O F M A R I J U A N A F O C U S Weed County Worcester County has more than double the number of state recreational license applications than the next closest county. High prices = black market In the competitive marijuana industry, Massachusetts operators are taking notice of the high demand and somewhat limited access – compared to other legal states – and prices reflect that reality. An eighth ounce of marijuana typi- cally goes for about $60 including tax. In other legal states, weed can go for about half as much. Jim Borghesani, who worked for the Massachusetts legalization campaign in 2016 and now advises marijuana firms, said that was expected. e high prices are a combination of supply-and-demand dynamics and high taxes, but much more so the former, Borghesani said. Cannabis firms oen have had to set purchase limits to keep products on shelves while maintaining a state-man- dated supply for medical patients, even as production ramps up. Due to that, the black market is still thriving. According to BDS Analytics, more than 76% of Massachusetts cannabis will be purchased illegally this year. However, it appears legalization has put a dent into the black market, as nearly 90% of pot was bought illegally last year. In other similarly-sized states with mature adult-use markets like Colorado, Oregon and Washington, illegal sales make up 34%, 41% and 35%, respec- tively. According to Smith in Washington, that number continued to drop each year as the state added more stores. Within a year, prices were down to competitive levels. "We've now totally undercut the black market," Smith said. e per-gram price of weed in Wash- ington was about $30 to start. Now, it's about $6. Big players, no diversity In Massachusetts, the CCC made it clear it wants to set aside a part of the industry for people unfairly hurt by the War on Drugs and prohibition. e CCC formed an application process for so-called economic empowerment applicants, and six businesses have submitted completed applications. None have been awarded a provisional or final license. Hoffman conceded that part will take time as the industry matures. At least one economic empowerment applicant in Worcester, New Dia, is pre- paring its application for the CCC. e vast majority of banks won't lend to these companies, forcing small businesses to rely on the experience and financial strength of larger multi- state operators via investment or management agree- ments, said New Dia owner Ross Bradshaw. It's primarily the loads of cash and knowledge minorities looking to enter the industry are lacking. As a result, more than half of Massachusetts pot companies are backed by wealthy investors or powerful political figures. According to the CCC, 73% of cannabis workers in the state are white, which doesn't square with arrest data. According to a 2016 report from the ACLU, the arrest rate for marijua- na possession in 2014 was 3.3 times higher for black people than it was for white people. For sales, it was 7.1 times higher. However, Massachusetts is the pio- neer of cannabis equity and is set to roll out more equity programs shortly. "I know the CCC is trying to be thoughtful, and it's taking a while," said Bradshaw, adding capital and industry knowledge are essential pieces small business entrepreneurs have been struggling to gain in the early stages of the industry. "We all have to be patient and realize we'll hopefully get there," he said. Ross Bradshaw, owner, New Dia W Source: Commonwealth of Massachusetts, Cannabis Control Commission

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