Two years ago, Mainers exhaled – and maybe coughed a little to really get things going – as the sale of recreational cannabis, or marijuana, was finally permitted.
In Portland, business is booming, the state’s sales figures confirm. With more pandemic-related travel restrictions lifted and tourism up, the summer of 2022 taught cannabis retailers more about the burgeoning industry than any stretch since 2016, when Mainers voted to decriminalize marijuana.
The big summer has led some to describe Portland as a kind of weed mecca unlike anywhere else in New England. They argue that the city’s competitive market is the proverbial rising tide that lifts all boats, as growing consumer demand has expanded the varieties of edibles and brought on novelty products like cannabis-infused seltzers and energy drinks.
But other Portland shop owners say the southern Maine recreational cannabis experience has been a mixed bag. The industry has weathered unexpected hurdles — not all of them owing to the pandemic. Some owners have buyer’s remorse about opening their stores in Portland, saying that Maine’s largest city is rife with fees and too saturated with marijuana shops and that overproduction of recreational cannabis has depressed revenues.
With interstate travel picking up significantly over 2021, this summer “unlocked the market and allowed it to breathe,” said Thomas Winstanley, the marketing director at the Massachusetts-based dispensary Theory Wellness.
“This past summer was probably the first real summer where Covid wasn’t the main variable,” Winstanley said. The Theory Wellness spot in South Portland was one of the first retail cannabis stores to open in southern Maine. The company has locations in Waterville, Bangor and several in Massachusetts.
The tourism uptick led to increased engagement with consumers and customers and a “normalization” in operational workflow and continued retail growth. As tastes and comfort levels evolve, those in the industry need to keep up with the strains and products they offer, Winstanley said.
More stores have begun to experiment with their offerings and test out novelty products. Theory Wellness has expanded into the cannabis-infused drink market, producing cannabis seltzer and energy drinks, and are now experimenting with seasonal products.
“We’re really bullish,” he said. “I think you’ll see a lot of innovation in the Maine market. I think the quality of cultivation will continue. We want to continue to grow with it.”
An ‘oversaturated’ market?
Others offer a less rosy outlook. Jeff Solman, owner and head of operations of the Grow Room, a recreational dispensary on Warren Avenue, said that while the retail market is doing fine, there are unexpected challenges on the cultivation side of the supply chain.
Marijuana is being produced faster than consumers can keep up, he said.
“I’m cultivating more than I can sell in my retail space,” Solman said. “I have to sell wholesale.”
Overproduction at the top of the adult-use industry means a drop in price, Solman says.
“Wholesale prices dropped from $3,000 a pound last year to $1,500 a pound this year. That’s really hurt the market.”
Solman attributes the imbalance to stricter regulations in the recreational market than the medical market. According to him, the medical side has an “unfair advantage” because they have less regulation and overhead costs like packaging, though the product is the same.
Opening and operating the Grow Room in Portland has been a frustrating venture for Solman. The city’s controversial 2020 plan to award 20 businesses with licenses based on a set of criteria that gave preference to local owners — which the city scrapped after a lawsuit from a dispensary with out-of-state corporate owners — left him and others unsure if they would obtain a license, he said. That delayed construction of his building, he said, and ultimately meant he didn’t open until September of 2021.
Solman also criticized the $10,000 license fee, which he feels contributes to a misconception that retail marijuana outlets will do incredible business in the city. That may be true for the many stores in the Old Port, but Solman’s Warren Avenue location relies on commuter traffic.
“In hindsight I would have put my business anywhere other than Portland,” he said.
The licensing fee paid by cannabis retailers goes into the city’s general fund and helps support the permitting and inspections department, according to city spokesperson Jessica Grondin.
Portland has issued 24 adult-use licenses for retail stores, with 10 such additional licenses pending, according to Jessica Hanscombe, the city’s director of permitting and inspections.
The number of retailers in the city has Solman squeamish. Though he says his retail business continues to grow, crediting tourism and more people transitioning from medical to recreational use, he’s wary that “oversaturation” will inevitably thin out some retailers.
“There’s going to be a shake out,” he said. “I don’t think everyone is going to make it. Not everyone is growing at the same pace and some people are doing better than others.”
The ‘West Coast of the East Coast’
While the market is certainly crowded, Jim Henry, the chief executive officer at Sweet Dirt, said it’s robust enough for them to make it work, mostly through experimenting with different products.
Sweet Dirt is a local franchise based in Eliot, with retail stores in Waterville, Bridgton and Portland, where they’ve operated out of the long-vacant former Wok Inn building in Morrill’s Corner in March 2021.
Henry praised the market’s diversity in Portland, where the clientele can support a variety of specialty cannabis goods. Edibles and infused beverages are a growing segment of the market, and other items like pre-rolled joints offer new or returning customers a way back into cannabis without having to commit to large quantities of various strains.
He said eventually, the market will have more cannabis-infused offerings, like sodas and beer, and even powdered drinks. He cited Liquid Death, a canned water company which just got a $700 million valuation, as an example of a strong sign for a growing beverage market.
As for the growing number of stores, he believes it’s a case of “the more the merrier,” bringing prices down for consumers and helping to sustain long-term interest.
“It shows legitimacy,” Henry said. “It shows the industry is moving forward. I know it can be tough to share revenue, but that will figure itself out.”
Unlike Solman, Henry said being in Portland was a benefit to his and other stores. He praised the Maine cannabis scene, calling it the “west coast of the east coast” in terms of its unique offerings compared to the rest of New England.
“If New York is the Amsterdam of weed, Portland is the Marrakesh of weed,” he said. “Not being in Portland would be a mistake. It’s more expensive, sure, and more challenging. But that’s the cost of doing business.”
Marrakesh, a major city in Morocco, is one of the world’s largest producers of hashish, and marijuana has become a major tourism draw for the country. Amsterdam, meanwhile, legalized cannabis in 1976, and products are openly sold in coffeeshops.
The presence of cannabis retailers has indeed changed the complexion of the city. Most marijuana businesses undergo build outs of existing vacant spaces, so they apply for building permits along with state and municipal licenses, according to Hanscombe. Most licenses are issued within 30 days, she said, but “because of the complex nature, some are taking up to a year to be licensed.”
Adult-use recreational cannabis was first supported by Maine voters back in 2016. Two legislative rewrites and two gubernatorial vetoes followed, until it finally became law in 2018. The first active adult-use licenses were issued in September 2020 and stores began opening in October, though many municipalities – such as Portland – didn’t rush out to join the club.
As adult-use retailers set their sights on 2023, creativity and experimentation will continue to guide the city’s weed scene.
“The market is still changing, it’s still maturing into itself,” Winstanley said. “It will be interesting to see how they start to shift. It’s still very early in its lifecycle, and we’re excited to see it get bigger.”
Five facts about marijuana in Maine
- Just how good a summer was it? So far in 2022, nearly $98.3 million in sales has been generated from just under 1.5 million transactions, according to Maine’s Office of Cannabis Policy. In August, there were more than $17 million in sales generated from nearly 263,000 transactions.
- It’s become a major industry. The sales figures show a dramatic increase since adult use went online. The state generated nearly $4.3 million in sales in 2020 and just under $82 million in sales in 2021.
- Demand was hot. The average price per gram in August was $8.71, while for the year to date, it was $9.79 per gram.
- Officials want to bring it all above board. Erik Gundersen, the director of the Office of Cannabis Policy, said his office was encouraged by the market growth, which he saw as helping to eliminate the illegal cannabis market. “In the months and years to come we are hopeful that more towns and cities will take steps to welcome the regulated cannabis marketplace into their communities by opting in to help eliminate the illegal market,” Gundersen said. Gundersen stepped down from the Office on Oct. 7 to take a job for a national consulting firm. His deputy, Vern Malloch, a former Portland police chief, will assume the job on an interim basis.
- No need to fear. Some of the worries associated with removing cannabis prohibition haven’t borne out. Beyond a string of “grab-and-run” robberies (with no weapons or force) targeting delivery drivers a couple years ago, the industry growth has not led to an uptick in criminal activity, according to Portland Police Department spokesperson Robert Martin, as any calls the police receive are not unique to the cannabis industry.
— Colin Ellis