Editor’s note: The author is Deputy Director of Economic Development for 1Berkshire.
Recreational Cannabis has come a long way since the voters of the Commonwealth legalized it in 2016. What was once viewed as the province of teenagers in basements has been steadily losing its stigma as more and more people try cannabis products for everything from recreation to help dealing with serious medical problems, or just to relieve aches and pains. The explosive growth of cannabis retailers across the state has put downward pressure on prices and made it easier than ever for adults aged 21 and older (as multiple respondents noted, the largest age group of new consumers is seniors) to give it a try. Product innovations, from new strains to new methods of delivery, continue to push the envelope with regard to how Bay Staters enjoy cannabis.
In contrast to the rapid pace of change on the industry side, regulations have not kept up with the speed of adoption and innovation. With the industry still contending with the deliberate pace of policy changes by the Commonwealth’s Cannabis Control Commission (CCC) and federal illegality, retailers find themselves in a bit of a push-pull situation.
We reached out to a number of Berkshire retailers to get a sense of the regional landscape, including the current state of the industry, what is and isn’t working, the status of some upcoming changes, and what has them excited and apprehensive for the future. Berkshire Roots’ Chief Revenue Officer Zach Helms, Bloom Brothers’ founder and CEO Nathan Girard, Canna Provisions’ co-founder and CEO Meg Sanders, Farnsworth Fine Cannabis Company’s co-founder and CEO Alexander Farnsworth, The Pass’ Chief Operating Officer Bill Packer, and Theory Wellness’ Chief Marketing Officer Thomas Winstanley were kind enough to share their insights with us.
State of the Market
Asked about their opinion of the Berkshire cannabis market, there is broad agreement that the region may presently have too many recreational dispensaries. In stark contrast to the earliest days of recreational sales, Berkshire County is now home to approximately 25 active cannabis dispensaries. “The saturation is quite heavy,” Girard shared, “and in some communities like Pittsfield, there are still many pending licenses.” Sanders concurred, “The number of cannabis dispensaries throughout the Berkshires is too high [and there] is way too much cultivation in the state. This will impact the Berkshires as some of these businesses will not survive.” According to Packer, “Per capita, there is far more density of dispensaries in the Berkshires than in Boston.” More on that later. Increased local competition as well as “new legal markets opening up for legal cannabis around us…and compression in pricing as the demand curve has normalized” are other challenges, according to Winstanley.
Worth noting, however, is that all respondents identified some bright spots. Farnsworth called out the variety of unique retail experiences to suit a broad range of customer interests. Girard cited the industry’s ability to support hundreds of local jobs. Those local jobs are supporting a fair amount of repeat local customers, per Helms, who referred to how gratifying it is “to see customers return time after time, not just to pick up the product they need, but to visit with our employees.” Sanders and Winstanley cited the continued growth of the industry and increasing acceptance of legal cannabis as positives. Packer added, “Quality matters and will ultimately win over new and returning customers.”
Competition from Neighboring States
As alluded to previously, recreational cannabis is becoming legal in markets around the Berkshires. This January, Connecticut joined Vermont in licensing recreational dispensaries, and New York has been slowly moving toward catching up. Given the head start that the Berkshires has enjoyed as the location with the closest legal cannabis for New York and Connecticut, Berkshire dispensaries all acknowledge there will be some impact on sales within the region, likely leading to contraction and dispensary closures in the local market, though some identify it as a greater concern than others do.
All stress that Massachusetts requires some of the strictest product testing standards and thus safest products in the nation (unlike New York, which currently has a significant number of unlicensed dispensaries whose products are of uncertain provenance and regulation), while others noted that the experience and product offerings will help to hold on to some of the out-of-state traffic the region currently enjoys. As Winstanley put it: “As markets mature, so does the industry, where quality and service become paramount.”
Cannabis Delivery
The CCC authorized the first direct-to-consumer cannabis deliveries to begin in July of 2021. However, you may have noticed that cannabis delivery options are sparse-to-nonexistent in the Berkshires. As it turns out, there is a reason for that. “The current regulations make it an unviable business,” according to Sanders. Regulations include the need to have two drivers, which adds another expense to the business model. Ultimately, the long geographical distances between potential customers and additional expenses in fuel and two staff members make the model untenable as it stands. The fact that the region has so many dispensaries, and thus many people are relatively close to a store at which they can buy cannabis products in person, also likely suppresses demand for delivery service.
Theory Wellness ran a three-month trial for delivery, but ultimately discontinued the service locally and from its Chicopee location, although they are exploring the possibility of offering it elsewhere in the state. There are delivery options in other regions of the Commonwealth (Farnsworth products are available via a service called BudBus, and Canna products through a service called Rolling Releaf, both serving greater Boston, for example), but these offer limited, if any, coverage of the Berkshires. Worth noting is that all of the respondents’ dispensaries offer online pre-ordering, and in many cases preordering gives customers priority (such as a “fast lane” line) over walk-in customers. None of the dispensaries interviewed for this article currently offer delivery, but roughly half noted a willingness to work with third-party delivery providers if the situation presented itself and/or offer delivery on their own if circumstances changed to make the service viable in the region.
Social Consumption
Notwithstanding the occasional whiff you may catch at concerts, it is illegal to consume cannabis in public places in Massachusetts. If, however, you long for an Amsterdam-style cannabis cafe to open near you, you’re in luck—or will be, eventually.
The social consumption of cannabis was part of the 2016 ballot question that legalized adult cannabis use in 2016, but the actual implementation of that element is in the hands of the state’s Cannabis Control Commission. Plans dating to 2019 called for a pilot program that would test-drive cannabis cafes in 12 communities across the Commonwealth, including the City of North Adams. However, in May of this year, the CCC opted to scrap the pilot program in favor of a new regulatory framework that Commission member Nurys Camargo says should allow the CCC to create social consumption “a little quicker, but this is still not going to be done overnight.” At the time of this writing, the CCC’s Social Consumption Working Group appears to have completed its scheduled public listening sessions, but has released no additional information, and has not identified a projected timeline for the approval of social consumption licenses.
“Currently, cannabis companies looking to reach a diverse 21+ customer base rent out private spaces for promotional and other events in order to have consumption remain compliant,” according to Packer, but they cannot charge for admission or sell cannabis products in those spaces. Some of the respondents indicated an interest in pursuing social consumption licenses if the regulations allow for profitability. As Sanders put it, “If the model from the state is overly restrictive, it will more than likely be another unviable business.” However, given that all the dispensaries interviewed expressed the value for the industry of continued normalization of cannabis use, there is reason to be optimistic.
Dark Clouds
When asked what concerned them about the future of the industry here in the Berkshires, most respondents identified challenges related to the large number of dispensaries operating in the area, including a potential contraction in the market and subsequent potential business closures. “I am concerned for people just entering the industry,” said Girard, noting that it’s an expensive industry to break into and there is only so much business to go around.
Winstanley added that the proliferation of dispensaries means increased competition and the resulting suppression in prices causes smaller margins. As a result, “there is a risk of companies having difficulty hitting their bottom lines and staying operational.” Sanders noted her concern that “we have yet to address the federal illegality of cannabis and the impact of 280e [a federal tax provision that prevents legal cannabis businesses from deducting business expenses from gross income, resulting in higher tax bills] and Host Community Agreements [the agreements between municipalities and cannabis businesses, which often place additional conditions on those businesses].”
Silver Linings
Despite the aforementioned headwinds, respondents were broadly optimistic. Sanders is “excited that the industry continues to gain traction and normalization.” Farnsworth noted that the largest growing user segment is people aged 65 and older. Further, consumers are beginning to recognize the differences in quality. “This product discernment, as one experiences with wine or food, or even clothing, is important,” he said. “Farnsworth believes deeply in quality.” Respondents also cited the continued innovation in the industry. “Passionate cultivators, scientists, and chefs are always looking for new ways to use the plant,” according to Helms, resulting in unique product offerings that sometimes incorporate local ingredients.
Winstanley identified the recent recommendation from the U.S. Department of Health and Human Services that cannabis be rescheduled from Class 1 (high potential for abuse/no accepted medical use, for example heroin or LSD) to Class 3 (moderate to low potential for physical and psychological dependence, for example Tylenol with codeine or testosterone). He added, “At the end of the day, progress is complex, and those operating for the right reasons will succeed.” Girard’s optimism springs from the cutting-edge nature of the industry and the longevity of his team. “Our shortest-tenured employee is 90 days but besides him, as a new hire it’s over two years,” he said. “We have a good thing going and we strive to keep that good thing going.”
Packer identified the Berkshires itself as a strength of the regional industry. “The Berkshire region is in a leading position in the Massachusetts cannabis industry and has become a destination for in- and out-of-state cannabis customers. The Berkshires is well known for world-class culture, excellent food, and beautiful landscapes, and we are proud to be a part of this well-known and sought-after nature+culture community.”
It’s unquestionable that cannabis has become a significant engine in the Berkshire economy. Despite increased local and out-of-state competition, the pace of innovation and stringent testing means that Massachusetts products are typically of a higher quality than those offered elsewhere. The downward pressure on prices derived from that competition is a benefit for consumers, and ultimately for an industry that is still competing with an unregulated illicit market. The slow progress of more friendly state and federal regulations is progress nonetheless, and will continue to offer new business opportunities for the industry’s entrepreneurs. The Berkshires has long been known for offering an outstanding visitor experience, including world-class cultural venues, tremendous healing and wellness offerings, incredible outdoor recreation and natural splendor, and a farm-to-table culinary culture to match. Those points of attraction have brought people to our region for centuries and continue to draw visitors even as international travel is on the rise in the aftermath of the pandemic. It’s easy to see cannabis integrated into the Berkshire experience, adding another aspect to the Berkshire joie de vivre.
