An Independent-minded calendar of arts and events for Outer Cape Cod

Advertise in the Indie.

Reach more readers from Eastham to Provincetown.

Unchained news for Outer Cape Cod

The Provincetown Independent

Let us bring you the paper.

Your subscription supports real community journalism.

Cannabis Control Commission

    CANNABIZ

    The Pot Profit Puzzle, Part One

    Why local ownership is rare, growers may still get in the game, and the tax promise is enticing

    By

    PROVINCETOWN — When b\well opened here on Friday, Sept. 4, it became the second recreational (or “adult-use”) marijuana dispensary on Cape Cod. Nine more dispensaries are on a path to opening on the Outer Cape. They could be a boon to town finances, but it is still unclear whether the industry — so far dominated by larger players — will benefit local entrepreneurs.

    Local ownership is rare, so far, because of the difficulty of obtaining capital for marijuana businesses. Because marijuana has not been legalized at the federal level, borrowing from federally insured banks for any kind of pot business is not an option. It’s not even possible to get a mortgage for the property involved. Having to buy everything with cash up front is a bigger barrier to entry than any regulatory hurdle, said Karen Nash, an owner of b\well.

    bwell
    B\well has opened at 220 Commercial St. in Provincetown. (Photo Paul Benson)

    Nash said her business is being financed by “90 percent Provincetown investors, meaning they live here year-round, are business owners here, or have second homes here.”

    Nash lives in Provincetown. Only one of her investors, Judy Mencher, is listed on b\well’s provisional license. Mencher has a home in Provincetown.

    Curaleaf is the other adult-use dispensary on the Cape, and it stands a few blocks away from b\well. The Curaleaf chain has 90 dispensaries and operates in 23 states. The cash to develop that business has not come from local investors. According to the New York Times, Curaleaf “is led by one of Russia’s most influential financiers, and backed by another.”

    Almost every business that is pursuing a retail license to sell pot on the Outer Cape is also pursuing either a cultivation license or a production license, or both.

    There are two reasons to vertically integrate like this, said Nash: the margins in retail are thin, and the supply is still unsteady.

    “The supply side has been coming online more slowly than the retail side,” said Nash. “Prices have fluctuated — the wholesale price is up to $4,100 a pound right now in Massachusetts. In Oregon, there’s an oversupply, and the price has crashed to $900 a pound.”

    Pot can’t be sold across state lines, so each state is essentially setting up a separate industry with separate supply chains.

    “Even in a mature market, it’s going to be more like a restaurant — the sales numbers are large, but the profit margins are relatively small,” Nash said. Almost every operator is trying to be vertically integrated in order to build a better profit structure.

    Going Vertical

    Cultivation licenses allow for up to 100,000 square feet of marijuana plants, either outdoors or indoors; production licenses allow for the conversion of raw marijuana flower into edible foods and concentrates. Developing a retail operation and one or both of these other businesses at the same time magnifies the complexity, the time involved, and the up-front costs of getting underway.

    Curaleaf has retail, cultivation, and production operations in Massachusetts. B\well has a retail license and is pursuing a production license. Almost all of the other retail applicants on the Outer Cape are also pursuing cultivation licenses, although in nearly every case that cultivation would take place off Cape. Salty Farmers of Eastham is the exception; if approved, its cultivation operation would be in Eastham.

    The High Dune Craft Cooperative in Truro recently submitted applications to the Cannabis Control Commission for a specialty cultivation license. David DeWitt, a farmer in the co-op, said what they’re pursuing is a “social equity license.” DeWitt, who also works for b\well and has worked for Curaleaf, said such licenses “are meant to create a way into the business for people who might not have millions and millions in cash.

    “My old business partner Tim McCarthy worked with Sheila Lyons and [state Sen.] Julian Cyr to figure out how outdoor farmers could get back in this,” said DeWitt. He credited both Cyr and state Rep. Sarah Peake with helping pass the legislation to create these new kinds of licenses. (Lyons was a county commissioner, and is running for the office again.)

    A craft marijuana cooperative can include multiple outdoor farms, indoor farms, and production operations. The High Dune Co-op currently consists of four farmers in Truro: DeWitt, Peter Staaterman, Deb McCullough, and Stephanie Rein, who is a member of the Truro Select Board.

    When it comes to cultivation, “All there is right now is the big guys,” said DeWitt. “It has to do with the transition from the medical-use rules into the new adult-use rules. Early on, they only let people who had already applied for medical licenses apply for adult-use. They gave them a six-month head start. And in order to do medical, you had to be fully vertically integrated: grow, process, manufacture, package, sell, all under one roof. It favored huge players at the outset. You had to have a half-million in the bank or they wouldn’t even look at your application.”

    The Cannabis Control Commission and the state government are trying to reshape that market now. Nash said she believes the CCC wants the market to be more diverse.

    Tax Revenue

    Regardless of the composition of the businesses, tax dollars are expected to benefit towns where they are located. First, all marijuana license holders are obligated to negotiate host community agreements with the towns they are in. In the case of retail licenses, towns are allowed to ask for 3 percent of revenues as a community impact fee, to be used to mitigate any problems arising from the industry (examples include traffic, congestion, policing, fire, or other needs). This is in addition to the 3 percent of revenue that is collected by the state and returned to towns through the local option tax.

    Six percent of retail revenue could wind up being a lot of money.

    Curaleaf opened on Feb. 6, 2020, and had to close on March 24 as part of the statewide coronavirus shutdown. It opened again on May 25. That means Curaleaf was open for seven weeks in the first quarter of 2020, and for five weeks in the second quarter.

    The tax revenue to Provincetown from those seven weeks of sales in the first quarter was $53,500, according to Assistant Town Manager David Gardner. That reflects about $127,000 a week in gross sales for those seven weeks.

    Early returns show that the tax revenue from the five weeks of the second quarter that Curaleaf was open will be about $54,000. At 6 percent of gross revenue, that means Curaleaf was selling about $180,000 of product a week in those five weeks.

    Based on the earlier, lower sales figures, a full 13-week quarter could represent $100,000 in revenue to the town. At the higher sales number, it could be $140,000 per quarter.

    Editor’s note: The print version of this article erroneously stated that b\well was pursuing a cultivation license; in fact, it is pursuing a production, not cultivation, license.

     

    CANNABIZ

    Two Wellfleet Pot Shops Hope to Open Within Months

    New dispensary in Provincetown begins online sales Friday

    By

    Updated on Sept. 30, 2020

    WELLFLEET — The former South Wellfleet General Store sits vacant with tarped windows and dilapidated shingles, guarded by a chain-link fence and construction tape.

    A similar sight can be found two and a half miles north at the corner of Main Street and Route 6, where a chain-link fence protects a newly refurbished former bank building.

    The two sites are set to become Wellfleet’s first marijuana dispensaries.

    Both Cape Cod Cannabis, at 1446 State Highway, and the Piping Plover, at 10 Main St., have received provisional licenses from the Mass. Cannabis Control Commission (CCC) and look to open their doors sometime this winter.

    The provisional license is the third of four major licensing steps established by the CCC, which clears planned dispensaries for final inspections before they are authorized to open.

    The Piping Plover received its license last winter.

    Andrew Long of A.P. Long Carpentry in North Stonington, Conn., shows off the curved reception desk that will be inside the entrance at Piping Plover at 10 Main St. Long says he is a part-time Wellfleeter, hired by Rob Letendre’s Pleasant Point Builders to do carpentry on site. (Photo Teresa Parker)

    “At this stage, we are just looking to wrap up construction,” said Zachary Ment, the company’s founder and managing member. “Once we have that, we will have an inspection by the CCC, which will get us onto the docket for the final license.”

    The building that the Piping Plover is moving into was built in 1860. It formerly housed the Cape Cod Bank and Trust, which is why Ment first registered his business as “The Old Bank LLC” on CCC application forms.

    Ment said the building “has a lot of connections with local people,” which is why he decided to restore it rather than knock it down. “It was in really, really bad shape,” he said. “We are literally rebuilding the place from the inside out.”

    He is also installing solar panels and increasing the thickness of the walls to accommodate spray foam insulation.

    Ment is hoping to have construction wrapped up by October or November, he said, at which point he can get on the list for a physical inspection by the CCC, which he hopes will take place around December.

    Once the dispensary receives a final license, Ment can begin hiring staff and building his inventory. On the company website, other principals are listed as Michael Drayer, director of retail operations; Eddie Dominguez, director of security; and Trudy Vermehren, the owner of the Fox and Crow Cafe in Wellfleet, as strategic adviser.

    If everything goes according to plan, Ment said, the Piping Plover will open in January.

    Cape Cod Cannabis in South Wellfleet may open even sooner.

    That new dispensary, in the former South Wellfleet General Store, could open as soon as October, according to Executive Officer Allan Kronfeld.

    Cape Cod Cannabis received its provisional license from the CCC on Aug. 7, but has much less construction work to do than the Piping Plover.

    “The work is mostly interior and cosmetic,” said Kronfeld, adding that it does include installing the CCC’s mandatory security system.

    “Now, it’s just finishing renovations,” Kronfeld said. “The timeline will depend on [the CCC] for when the state will come inspect it.”

    Cape Cod Cannabis is also in the permitting process for a cultivation facility in Mashpee, where the company wants to grow marijuana to supply its own stores and sell wholesale to other dispensaries.

    “Our business model and overall objective is to be a vertical business,” Kronfeld said.

    Being a cultivation facility, the Mashpee location has to go through a different set of approvals than dispensaries do.

    Kronfeld said he hopes to see the Mashpee operation open by the fall of 2021.

    A third potential pot shop in Wellfleet, Nature’s Alternative, intends to open next to the Dunkin Donuts store at Cove Corner on Route 6. Its provisional license is still pending.

    The second marijuana store in Provincetown, B\Well at 220 Commercial St., run by Karen Nash, announced this week that it received its final license on Aug. 6 and would begin taking orders online on Friday, Sept. 4.

    Earlier this year, Nash told the Independent that her market research led her to believe that Provincetown would generate $30 million to $35 million in marijuana sales per year, enough to support six cannabis shops.

    The first marijuana store to open in Provincetown was Curaleaf, whose majority stakeholders are Russian oligarchs.

    HEALTH

    Medical Weed May Not Reach Outer Cape

    Lots of marijuana for recreation, but no assurances for patients

    By

    PROVINCETOWN — Recreational marijuana stores are coming to the Outer Cape in a big way, but it’s not clear that any of them will provide medical formulations of the drug to patients with prescriptions.

    Curaleaf opened its doors in Provincetown last week, and the Cannabis Control Commission (CCC) is currently reviewing five more applications for stores in Provincetown, as well as two in Wellfleet and two in Eastham.

    In its host community agreement with the town Curaleaf agreed “to provide free or reduced-cost medical marijuana to qualified residents of Provincetown.” But the host agreement did not lock in that provision in the event that the corporation, which is the largest distributor of legal marijuana in the U.S., decided not to conduct medical sales.

    Recreational and medical sales are conducted differently, and while it’s possible to do both at the same location, the state’s rules don’t make it easy. The financial rewards of selling recreational pot and the difficulties of dispensing medical prescriptions mean that most or all of these new shops could open as recreational-only, leaving medical marijuana patients without a local option.

    No Medical at Curaleaf

    Phyllis Ewen, an artist who lives in Cambridge and Wellfleet, didn’t realize that Curaleaf was recreational-only until she arrived at the store last week. Ewen has painful arthritis, and she prefers tinctures that can be carefully measured and dosed, and that take effect immediately rather than sneaking up on her later.

    “Fortunately, I don’t use particularly high doses of anything,” said Ewen, “and I did like what I found at Curaleaf. It’s a totally different line of products than the medical shop back in Cambridge, though.”

    For a customer, the first differences are dosage and price. The strength of recreational products is tightly regulated. Edibles, for instance, are almost all sold in packages that include 100 milligrams of the active ingredient THC, divided into 20 equal doses of 5 mg. Because it is prescribed by a doctor, medical marijuana can be much stronger, with doses of 25 mg or more being common.

    It’s possible to just buy lots of recreational pot to reach that higher dosage, but that’s generally not the cheapest alternative. Also, medical sales are tax-free, while recreational sales are taxed at 20 percent. For people who use medical marijuana daily to manage pain, nausea, PTSD, or other conditions, the cost difference can add up quickly.

    While medical cannabis is important for patients, it’s not that easy for a dispensary to be both medical and recreational.

    “Co-located dispensaries are supposed to keep the user experience completely separate,” said Spencer Knowles, a member of the Cannabis on Cape Cod advocacy and networking group, and an executive at Sira Naturals. “They’re supposed to divide their space so that medical and recreational don’t mix at all — separate the customers, the staff, the product, even the inventory storage areas. They don’t have to have separate doors, but it’s pretty close to that.”

    Having enough space for two parallel operations isn’t the only challenge though, explained David DeWitt, a longtime pot farmer and founding member of Truro’s High Dune Craft Cooperative. There are also two different sets of rules. For instance, medical sales are all logged and tracked back to the patient in a statewide database, whereas nothing like that exists for recreational sales.

    There are about 60,000 patients in Massachusetts who are signed up in the Medical Use of Marijuana Program — a much smaller market than recreational, although arguably a more dedicated one. And the out-of-state tourists who flock to the Outer Cape in summer can’t participate in Massachusetts’s medical cannabis system, but they can shop at a recreational dispensary.

    In other words, choosing to be medical only on the Outer Cape means forgoing a lot of tourist-driven income, and choosing to be both medical and recreational takes a lot of space. DeWitt and Knowles agreed that the Outer Cape might not see a medical dispensary anytime soon. (In addition to his own businesses and the High Dune Craft Cooperative, DeWitt is also a manager at the Provincetown Curaleaf store.)

    ‘Medical Refugees’

    Rose Cain, a nurse practitioner who is licensed to certify patients for medical marijuana, has seen this problem before. She calls patients without a local dispensary “medical refugees.” The nearest dispensary to the Outer Cape is in Mashpee. Cain estimates that a quarter of her patients grow their own cannabis or get it free from friends; the rest are driving long distances, signing up with a delivery service, or buying outside the medical system.

    Cain also pointed to an aspect of medical use of marijuana that’s rarely present in recreational use. “The medical community is interested in all of the other bioactive compounds in marijuana strains, beyond just THC and CBD,” she said. “These other compounds enhance each other, and they’re all part of the healing effects. Recreational strains tend to max out the allowable cannabinoids with THC and aren’t especially cultivated for the diverse other molecules that medical patients are looking for.”

    As it stands, three of the businesses that are currently being reviewed by the CCC have told town hall they intend to pursue medical and recreational licenses, said Provincetown’s Assistant Town Manager David Gardner. None of them, however, is obligated to follow through, and none has promised to do so.

    In its earliest filings, Curaleaf was to be a medical-only shop on Harry Kemp Way. Then it was medical and recreational. Now it’s open with only a recreational license. When and if the pending licensees are approved by the CCC, the local licensing boards will be the first to find out if plans for medicinal pot are still alive or have fallen by the wayside.

     

     

    DEPT. OF COMMERCE

    New Year, New Jobs

    By

    Job applicants wait at Curaleaf
    (Photo Nancy Bloom)

    Provincetown residents Patrick Lamerson, Curt Sharp, and Johnny Butero (left to right), wait for their turns to be interviewed for perhaps a dozen jobs at Curaleaf on Commercial Street, which will open at the end of the month if it receives final approval from the Cannabis Control Commission. It is expected to be the first retail marijuana shop on the Cape. The pot company, which claims to be the largest in terms of revenue in the world, and whose major shareholders are Russian oligarchs, held a job fair on Jan. 6 to hire its Provincetown staff. According to the company’s Massachusetts president, Patrik Jonsson, the shop in Provincetown will ultimately employ 30 people in a mix of part-time and full-time positions. For the winter, the company is looking for six dispensary and two to three inventory associates, three team leads, and an inventory manager. —K.C. Myers

    ECONOMY

    Suit to Overturn Pot Shop Permits Fails

    Permission for Salty Farmers and Emerald Grove in Eastham is upheld

    By

    EASTHAM — A local resident’s attempt to overturn the special permits awarded to two marijuana businesses was dismissed by Barnstable Superior Court Judge Thomas Perrino on Dec. 23.

    Eastham’s Steve Wlodkowski filed a civil complaint on July 18, 2019, challenging the planning board’s approval of two recreational marijuana stores, one medical marijuana dispensary, and one cultivation facility. The permits had been granted on June 19.

    Judge Perrino ruled that Wlodkowski did not have standing in the case because he is not an abutter to the proposed marijuana facilities and, thus, not an aggrieved party.

    Harlen Howard and Jonah Turner of Truro, operating as Salty Farmers, plan to operate a retail cannabis store at 182 Brackett Road and a cultivation facility at 120 Holmes Road. A second company, Emerald Grove, owned by Timothy and Alex Jamoulis of Harwich, received permits to operate a combined retail and medical marijuana outlet at 3 Main St., unit 1, in the development known as Main Street Mercantile.

    All three locations either directly abut or are near the affordable rental development called Village at Nauset Green, off Brackett Road, now under construction.

    Brackett Road plaza
    Salty Farmers plans to open a retail marijuana store in this Brackett Road plaza. (Photo Ryan Fitzgerald)

    In his complaint, Wlodkowski argued that all of the proposed businesses would operate within 500 feet of a playground that is being built at the Nauset Green development. Eastham’s bylaws prohibit marijuana businesses within 500 feet of a K-12 school, “childcare center; public park; playground; or children’s camp.”

    “The main reason [I’m doing this] is to advocate for the people who can’t advocate for themselves,” Wlodkowski said in July. “As a community it’s up to us to follow our bylaws for our neighbors.”

    Eastham Town Planner Paul Lagg argued that the playground being planned for Nauset Green was not a public park but was for the exclusive use of the development’s residents.

    Fleisher Enterprises LLC owns the building at 182 Brackett Road, Farrell Electric owns the land at 120 Holmes Road, and Katrina Boucher owns unit 1 at 3 Main St. All were listed as defendants in the complaint, along with the two marijuana businesses and all members of the town’s planning board.

    Wlodkowski acted as his own lawyer in filing the complaint. He did not respond to a request for comment on the court’s decision this week.

    Both Salty Farmers and Emerald Grove have host agreements with the town and will pay a community impact fee of 3 percent of gross sales for the first three years of operation to help address any public health, safety, or other problems created by the businesses.

    Both businesses are in the process of obtaining licenses from the state Cannabis Control Commission (CCC).

    The CCC has its own regulations: “A marijuana establishment shall comply with all local requirements regarding siting, provided however that if no local requirements exist, then marijuana establishment shall not be sited within a radius of 500 feet of a public or private school, daycare center, or any facility in which children commonly congregate. The 500-foot distance under this section shall be measured in a straight line from the nearest point of the facility in question to the nearest point of the proposed marijuana establishment.”

    But the CCC does not further define the phrase “any facility in which children commonly congregate.”

    Wlodkowski’s complaint also cited the proximity of the Cape Cod Rail Trail. Olivia K. Dorrance, a spokesman at the state Dept. of Conservation and Recreation, said, “Contained within the Massachusetts state park system are parks, beaches, reservations, forests, and other properties that the [DCR] designates as parklands, which includes rail trails. However, the applicability of local zoning ordinances is a matter for a municipality to determine, not the DCR.”

    Wlodkowski also approached the state Bureau of Housing Development and Construction, seeking direction on the siting of cannabis businesses near playgrounds.

    In an email reply to Wlodkowski, the bureau’s Ben Stone said his department could not influence the decision.

    “While we understand the concern, unfortunately BHDC is not able to directly influence or change local zoning decisions,” Stone wrote. “We have also contacted the Cannabis Control Commission, who had the same response. We suggest continuing to work with the Eastham Planning Board and local government.”

     

    © 2024 The Provincetown Independent, all rights reserved.

    terms of service