PROVINCETOWN — When Curaleaf opens the first recreational marijuana store on Cape Cod at 170 Commercial St. — perhaps next Wednesday, Jan. 29 — it will be a cash-only business. Possibly a lot of cash.
“Curaleaf cannot comment on revenue projections or the handling of cash revenue,” company spokesman Casey Sherman said this week.
But the numbers from other cannabis stores already open in Massachusetts suggest that the Provincetown shop could be pulling in as much as $90,000 a day.
Curaleaf, whose majority stakeholders are Russian oligarchs, is expected to receive its annual business license from the town on Jan. 28 and plans to hold a “soft opening” the following day, according to Assistant Town Manager David Gardner. A more formal opening will be in early February.
The state requires all marijuana stores to have strict security plans because they deal in such large amounts of cash. Gardner would not discuss details of Curaleaf’s security plan.
Elsewhere in the state pot revenues have been strong. New England Treatment Access (NETA), which opened the first recreational pot shop in the state in November 2018, produced $2.09 million in tax revenue for its host city of Northampton in 2019, according to the mayor’s office. Since Northampton’s cannabis tax and impact fee are six percent of gross sales (like Provincetown’s), that means NETA’s gross sales were $34.8 million in 2019 — or about $95,000 a day.
The Northampton pot shop, however, was one of the first two in the state. And it is located in a college town on a major interstate highway — not in a small town at the tip of Cape Cod. Location matters. Cultivate Holdings in the Worcester suburb of Leicester opened the same day as NETA in Northampton. Leicester’s pot tax receipts for the first quarter of 2019 were $193,328.26, a town official told the Springfield Republican. For the same period, Northampton collected $737,331.40 from NETA’s sales.
Closer to Cape Cod, Wareham collected $1.5 million in taxes from the Verilife store for its first full year of operation, said John Foster, Wareham’s finance director.
“So that’s a good amount,” he said, noting that the town budget is $80 million.
When it first opened, the Wareham store attracted so many shoppers that a shuttle bus had to transport people from off-site parking, he said. Now the shuttle is no longer necessary; people can find parking right on Main Street.
“I don’t even notice it anymore,” Foster said.
In Provincetown, Curaleaf predicted up to 250 customers a day, according to plans submitted to the planning board. Karen Nash, a Provincetown resident who has a host community agreement to open a dispensary here, said that’s got to be a low projection. The Cannabis Control Commission reported the average sale per person is about $40 statewide. That would come to at most $10,000 per day in gross sales.
“A company as big as Curaleaf would never come to Provincetown” for that amount of sales, said Nash.
Nash said her market research showed that 22 percent of Americans use marijuana. Based on that, she estimated that Provincetown would generate $30 million to $35 million in sales, enough to support six cannabis shops, she said. That’s a lot of money in a town where the entire lodging industry brings in $38 million a year, according to the tourism department.
Follow the Money
Whatever amount Provincetown generates in pot sales, it will all be cash. No credit or debit cards are accepted at most cannabis shops — although CanPay, a new debit app, is available at some. Most banks are reluctant to get into the weed business.
Only three banks in Massachusetts currently work with cannabis companies — not enough to handle the 466 marijuana businesses awaiting licensing in Massachusetts, Cannabis Control Commission Chairman Steven Hoffman told the Republican in November.
The GFA Federal Credit Union in Gardner accounts for about 50 percent of the business; the others are Century Bank of Medford and Baycoast Bank in Swansea, said Michael Fee, a Truro- and Boston-based attorney who represents the local High Dune Craft Cooperative. Curaleaf’s Casey Sherman declined to say which bank the company uses.
Because marijuana is still illegal under federal law, bankers must contend with onerous federal statutes to prevent money laundering, Fee said. Violations entail stiff penalties.
“It takes banks lots of time and it’s costly,” Fee said.
The Mass. Cannabis Control Commission, American Bankers Association, and the marijuana industry are pushing to make it easier for banks to work with marijuana businesses. Some bankers cite security as the rationale.
In July, Joanne Sherwood, chair of the Colorado Bankers Association, urged passage of the SAFE Banking Act in Senate testimony to make it easier for banks to handle marijuana money. (The bill has passed the U.S. House but is not likely to clear the Senate anytime soon, Fee said.)
Sherwood said in Colorado, with limited access to banking services, “large amounts of cash remain onsite in many of the cannabis-related businesses, which creates significant safety concerns…. On average, more than 100 burglaries occur at cannabis businesses each year in Denver.”
Tina Sbrega, CEO of GFA Credit Union, told the Worcester Business Journal in 2018 she was going to do business with marijuana companies out of concern for public safety. She said when Colorado first legalized cannabis, cash was stored in warehouses. Eventually, businesses even began to bury their cash.
Since then, a lot of small banks in Colorado have gotten into the game, Fee said. They are more nimble and willing to take risks. They have figured out how to monitor their deposits to watch for money laundering, he added.
Provincetown will soon see how all this plays out. Along with lots of cash, there may be a perennial line of customers snaking down Commercial Street.
“They are the first to open on the Cape, but it is also February, so we don’t know what their crowds will be like,” Gardner said. “But we are prepared to react to large crowds if necessary.”
Silence on Subpoenas
Back in October town administrators from all over the state were subpoenaed by U.S. Attorney Andrew Lelling, who wanted to see all their records related to host community agreements with marijuana businesses.
Provincetown, Wellfleet, and Eastham town administrators all received subpoenas ordering them to produce documents, emails, and any other correspondence associated with the agreements. Months after complying with the order, the administrators still don’t know the reason for the court’s order, nor have they had received any follow-up information.
“Not a peep,” said Jacqueline Beebe, Eastham town administrator.
U.S. attorney spokeswoman Elizabeth McCarthy said Friday her office cannot comment.
It’s widely believed that the subpoenas have to do with corruption investigations related to the Sept. 6 arrest of Jasiel F. Correia II, the mayor of Fall River, whom the U.S. Dept. of Justice has charged with “extorting marijuana vendors for hundreds of thousands of dollars in bribes,” according to the U.S. attorney. Lelling’s office alleges Correia, 27, accepted bribes from marijuana companies ranging from $100,000 to $250,000 in cash in exchange for host agreements.
Correia’s trial is now scheduled for May 4, McCarthy said.
Provincetown, Truro, Wellfleet, and Eastham select boards all have signed host community agreements. Truro, which was not subpoenaed, has a host agreement with the High Dune Craft Cooperative, a group of local farmers who wish to grow marijuana in Truro and Wellfleet. So far, only Curaleaf is fully licensed by the state on the Outer Cape.