Maine’s long-awaited adult-use cannabis market opens Oct. 9, and while a handful of retailers plan to launch sales on opening day, many more have opted to delay their launch into the market to finalize license approvals and ensure a great customer experience when they do open their doors.
Ramping Up Operations
AAA Pharmaceutical Alternatives, a licensed medical cannabis caregiver serving patients in central Maine from its Manchester dispensary, is awaiting final approval on its conditional adult-use cultivation, product manufacturing and retail licenses. Founder Aaron “Roy” Scalia expects to launch his expanded grow operation at the end of November or the beginning of December, with the adult-use store opening next spring, and he is perfectly fine with this timing.
“Historically, this is a time of the year when sales go down,” he says. “You don’t have a lot of vacation money flooding into the state this time of year. Everyone is getting ready for winter and hunkering down.”
Between the slower time of year and the ongoing COVID-19 pandemic, Scalia predicts a slow start for Maine’s adult-use cannabis market.
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While it awaits its final adult-use licenses, AAA Pharmaceutical Alternatives is ramping up operations so that it has enough supply to ensure a smooth transition from medical to adult-use sales. The company built a new 5,000-square-foot cultivation facility this year on the same property as its medical dispensary, and Scalia plans to sell his harvest wholesale into the adult-use market until he gets his own manufacturing and retail facilities underway.
Scalia is training AAA Pharmaceutical Alternatives’ staff to serve an expanded customer base, and the company is implementing Metrc, Maine’s adult-use seed-to-sale tracking system.
“That’s a lot of the reason why I’m holding off, because … I want to make sure that we’re doing everything that the state wants us to,” Scalia says. “I want to make sure that we have everything in order.”
When AAA Pharmaceutical Alternatives’ dispensary does open for adult-use sales, Scalia plans to adjust the logistics of the store to accommodate additional security measures, including a staff member at the door who will check IDs before allowing customers into the dispensary. He will also designate one door as an entrance and one as an exit to ensure a steady flow of traffic in one direction.
“We have a relatively small store, so I want to make sure everything is mapped out correctly so that people aren’t getting jammed up with people running into each other,” Scalia says.
To keep staff and customers safe during the pandemic, AAA Pharmaceutical Alternatives is allowing 12 total people in the dispensary at a time, with a staff member counting people in and out at the door. A state mandate requires employees and customers to wear masks inside the store, and staff cleans high-touch areas, such as doorknobs, tables and countertops, often. Scalia plans to carry these protocols into the company’s transition to adult-use sales.
Overall, though, he isn’t in any hurry to make the switch.
“Right now, I have a booming medical business at my store,” Scalia says. “We’ve been medical for the past five years, and this year’s my best year ever. It’s kind of hard for me to vacate something that’s making me a lot of money and go into the same type of business that has probably three times the amount of regulation as medical does without any guarantees that it’s going to be a booming business.”
Watching and Waiting
Sweet Dirt, another one of Maine’s medical cannabis operators that holds multiple conditional licenses in the adult-use program, is also taking extra time to prepare for adult-use sales while watching the market open very closely.
“We are watching how things transpire in the first couple weeks, and more importantly than that, we are making sure that we have secured enough product so that we can ensure that our customers have a great experience on day one,” CEO Jim Henry says.
Henry expects Sweet Dirt to make its first adult-use sales within the next few weeks, once the company finishes the final touches on its first store in Waterville and receives its final retail license.
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Sweet Dirt holds five conditional adult-use licenses for cultivation, manufacturing and retail, and hopes to receive three more conditional licenses within the next few weeks.
The company is monitoring the local press and opening day market trends closely, and is focused on securing enough product for its stores when it does choose to open for adult-use sales in anticipation of strong consumer demand and long lines at dispensaries.
“I think we’ll see the stores that are coming online first limiting what customers can purchase,” says Jessica Oliver, Sweet Dirt’s VP of Cannabis Operations. “We do know that there is a pretty substantial supply shortage.”
The Maine Legislature had contemplated a bill this year that would allow the transfer of medical cannabis products to the adult-use market, but the legislation was ultimately delayed when the legislature shut down in the wake of the pandemic.
“The product transfer [bill] was expected to pass before launch, [but] because the legislature didn’t get back together, that bill was not passed as of yet, so that’s just tied a hand behind the back for ramping up product to launch,” Oliver says.
Sweet Dirt remains focused on securing its final licenses and ensuring its vertically integrated supply chain is fully operational. The company plans to continue hiring and expanding over the course of the next 12 to 18 months, and Henry hopes Maine’s cannabis industry can be a driving force to help the state out of the current economic recession.
“We’re looking forward to more municipalities participating so that more jobs can be created,” he says. “We’re looking forward to seeing our competitors be successful so the industry as a whole can be successful. This is not a monopoly. This is very much a partnership, and we’re looking forward to that.”
Henry expects the program to take time to roll out, based on similar adult-use rollouts in Illinois, Massachusetts and Canada. He anticipates high demand and supply problems over the course of the next several months or even years.
“I’m certain that the supply problems will shake out over time and it’ll settle down, but we certainly think that at least over the first months and certainly year that supply problems will be an issue,” Henry says.
Like AAA Pharmaceutical Alternatives, Sweet Dirt plans to wholesale cannabis to other adult-use operators.
“We feel very confident going into 2021 that our plan of being a vertically integrated provider is going to be a successful one and will give us the ability to not only supply our own stores, but it will also be a mechanism for us to help supply the industry,” Henry says. “A rising tide lifts all boats, and our goal is [to see] a successful industry, not just success with Sweet Dirt.”
Preserving the Customer Experience
JAR Cannabis Co. is another one of Maine’s medical cannabis businesses looking to make the switch to adult-use, but co-founder Joel Pepin wants to take the time to do right by the company’s existing customer base.
JAR holds seven conditional adult-use licenses—two cultivation, four retail and one manufacturing—and plans to transition one of its existing cultivation facilities to the adult-use market later this month, once it receives final approval. The company will then wholesale product to other retailers until it gets its own adult-use dispensary underway.
“I think this will give us time to make sure, from an operations standpoint, that our stores can open after we have a really good plan in place so we can accommodate all the existing patients who have been shopping with us and we have the supply and product availability on the adult-use side,” Pepin says.
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JAR has transitioned to a new point-of-sale system in its existing dispensary to a vendor that is Metrc-compatible and that can be used throughout the company’s entire supply chain. Making the switch ahead of launching adult-use sales has allowed JAR’s staff to learn the platform ahead of the big day.
And while JAR will not open for adult-use sales on Oct. 9, Pepin looks forward to celebrating the historic day.
“For the first day, just as a momentous day in history, I look forward to visiting a couple of the shops to support them and to be there on day one of adult-use sales in Maine,” he says. “It’s definitely history in the making.”
Although local news outlets are reporting that the first day of sales could be underwhelming or disappointing with only a handful of businesses ready to serve the adult-use market, Pepin says there is plenty to look forward to.
“I think even if it is disappointing from the standpoint that there aren’t a ton of products out there, I do believe the market and the industry are going to respond very quickly with more stores opening, more cultivation coming online [and] more processing coming online,” he says. “I think whatever is available, even from a limited supply standpoint, the product quality will be there. I don’t think the quality will disappoint.”
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While dispensaries in Massachusetts and Illinois saw long lines around the block when their adult-use markets opened, Pepin says Maine’s retailers could have a different experience.
“I’m not sure I’m expecting something like that here in Maine, just because we have a very well-established medical industry,” he says. “For the most part, I would say most adults in Maine who want cannabis probably have it right now. I don’t know that you’ll see people lining up or camping out overnight or anything like that, but maybe I’m wrong.”
Overall, Pepin says ensuring a consistent shopping experience for existing medical cannabis patients will be the biggest challenge for medical operators making the switch to adult-use sales.
“Think of a medical patient shopping in a medical store, and that’s now adult-use—they’ll be able to go and shop in that store, [they] won’t need [their] medical card, but the economics might be a little bit different,” he says. “Part of the reason we don’t want to open on day one is we don’t want to all of a sudden have prices that are 25% more or 50% more than what they’re used to.”
Pepin is also concerned about providing consistent access to products that JAR’s medical patients have come to expect.
“If you’re a patient at our store and you purchase certain third-party edibles, a lot of those companies have not transitioned [to adult-use] or are in towns that have not opted in, [so they] won’t be producing products on the adult-use side,” he says. “So, if you’re coming in and you’re buying certain chocolate bars from us right now and then we go adult-use, you most certainly would not have those same edibles available, if any at all.”
Adult-use testing regulations may also prove challenging for the state’s medical operators, Pepin adds, as Maine does not require products to be tested in the medical program.
“We’ve been testing our current medical products the way we’ll need to be testing them when we go to adult-use, and we’re passing the tests and going through that whole process, making sure the sample collection procedure and taking the samples to the lab are all ironed out,” he says. “Just talking to the lab, there are a lot of products that aren’t passing, … so it’ll be interesting to see how other cultivators out there will respond to that and how they’ll perform with the testing.”
Packaging regulations are also different in the adult-use market, Pepin says, and JAR is in the process of evaluating each of its packages to ensure it has compliant barcoding and labeling on all its products.
Overall, though, Pepin believes the regulations are reasonable and that the Office of Marijuana Policy has done a good job with the program’s rollout.
“Not only do we have a great Office of Marijuana Policy, but … I think the regulations are really reasonable and do provide a lot of opportunity for industry businesses,” he says.
And he is perfectly willing to wait for the right time to enter the market to ensure JAR makes the most of this opportunity.
“We do believe in the regulated system—adults over 21 should have access to tested adult-use marijuana [and] the state [should get] the tax benefit from it,” Pepin says. “At the same time, you don’t want to transition too soon and alienate a customer base or have a user experience be completely different than what they’re used to. I think for a company like ours, the medical thing is working right now. We’re interested in transitioning over to adult-use, but we’re OK with taking a few months, seeing how the rollout goes, learning from other challenges that we see going on, and then making sure that once we do transition, it’s as seamless as possible.”