Massachusetts’ adult-use market will have various license categories, such as growing, manufacturing and retailing, but it’s unclear which sector will offer the best opportunities.
Retail applicants will face much more difficulty getting their applications across the finish line than those from the manufacturing and cultivation sectors.
But once they’re licensed, retailers will have an easier time opening than manufacturers and growers, observers said.
“The upfront costs of a retail build-out are less relative to other niches,” Krane said, “but navigating the actual application process is a lot harder because you’re going to face a tough challenge at the local level.
“In contrast,” he added, “a manufacturing or grow facility will have an easier application process, but the outright costs of buying land and the build-out are much more expensive, especially in cultivation.”
Cultivators must also factor in a requirementthat lighting at indoor grow sites over 10,000 square feet expend no more than 50 watts of energy per square foot.
That would essentially force large-scale growers to abandon conventional lighting for energy-efficient LED lights.
While LED lights are less expensive to use than conventional lighting, they cost far more upfront.
And many cannabis industry professionals – including Fine and Krane – said LED lights don’t produce the same quality of flower as conventional ones.
Small growers have a built-in advantage over larger growers, Krane said, because they’re exempt from the lighting-efficiency requirement.
“The front-end costs are going to be massive (for larger growers),” he added, “and the quality is just not there yet.”
“It could change people’s plans or cause people to re-evaluate the way they’re going to go to market.”
One of the best opportunities for larger growers that decide to open in Massachusetts may be in the wholesale market, Krane noted.
“There will be quite a bit of wholesaling,” he said, “especially in the early days, because a lot of companies won’t have the money to build out.”
While retail and growing businesses will face pitfalls, observers see cannabis manufacturing as a promising niche.
“I think there is more opportunity in the manufacturing niche then in the cultivation niche, mainly because there is so much more product variation,” Krane said.
“Flower is flower. Most retailers carry 20 strains tops. (But) with infused products, you have a lot more variety in the types of edibles available, plus vape cartridges and the other products available.”