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Tuesday, September 27, 2022

Will CT have enough capacity to meet demand when recreational sales begin?

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When Connecticut launches a recreational marijuana market for adult use this year, it will balance two problems that plagued other states when it launched its programs: long queues at retail dispensaries and overproduction.

Experts said there will likely be increased demand to start, with supply initially coming from the state’s existing medical marijuana producers.

“Discovering supply can be a really big challenge and can be fraught with surprises depending on how the laws are structured,” said David Abernathy, director of Arcview Management Consulting, a global cannabis and cannabis company. “A lot of regulations are created as political concessions, and they are often created by people who often do not understand the mechanics of the cannabis industry very well.”

countries have taken uneven approach To license hemp and set different rules for how much marijuana can be legally grown.

said Abernathy, who serves on the boards of the Minority Cannabis Business Association and the Marijuana Policy Project. We’ve also seen countries where they don’t have enough supplies. Usually, this will resolve itself fairly quickly.”

An excess of legal cannabis in Oregon, for example, pushed the efforts of lawmakers there curb production. Nevada has the opposite problem. Governor Brian Sandoval declared a state of emergency in the first week of legal sales due to
marijuana shortage.

In its first full year, the Connecticut entertainment market could generate $250 million in sales according to some estimates.

“That’s nearly four times what it is today,” said Rob Hunt, a California cannabis business consultant. “The expectation in Connecticut is that you’re going to see a huge jump in revenue generation from the drug market to the adult use market and that’s going to happen very quickly.”

By year four, the Connecticut market is expected to generate $750 million in sales, but Hunt said he believes revenue will be closer to $1.25 billion.

Based on rough estimates, Hunt concludes that if you assume $250 million in the first year, about $125 million for the wholesale market and divide by $4,000 per pound, which he predicts will be the price in the near term, Connecticut would need approximately 31,250 pounds of flowers Dried to please the market to start.

“That will double to 2023 and 2024 before it starts to slow,” Hunt said, noting that other countries have seen similar trends.

Compared to California, for example, the recreational market in New England is different because the states are smaller and closer together, there is a greater chance for people to cross state lines to purchase cannabis.

“As more adult online use markets emerge in New England, it will be interesting to see differences in tax rates or product availability and whether that gives some states an advantage over their neighbors,” Abernathy said.

“We’ve also seen this in other industries,” he added. “A lot of Vermonters are going to New Hampshire to buy liquor because it’s cheaper there.”

Connecticut will open the initial licensing application period next month. It does not put a cap on the total number of licenses that can be issued or how much cannabis can be grown, but it does specify how much growing area is allowed – at least 15,000 square feet of growing space for growers and 2,000 to 10,000 square feet for small growers. Producers that grow medical and recreational marijuana must have at least 250,000 square feet of growing and manufacturing space.

The corporate licensing schedule can affect the show initially.

“If you license the retailers before the farmers, you could end up with a situation where the retailers are willing to go but there isn’t enough growing capacity that has come up online,” Abernathy said, adding that it takes time to set up a farming facility and get ready for it.

Growth can begin once producers obtain final licenses from the state’s Department of Consumer Protection. Depending on the method used, it takes anywhere from four and a half to six months to grow a marijuana plant.

Connecticut law also doesn’t stipulate how much cannabis people can buy at one time, but it does set legal limits on possession. Recreational users cannot carry more than 1.5 ounces of cannabis flower or 7.5 grams of cannabis concentrate. The law allows the DCP commissioner to “set lower temporary limits per transaction” to avoid a cannabis supply shortage or address public health and safety concerns.

Several Connecticut municipalities have imposed temporary or permanent bans on cannabis businesses and ordinances to limit where dispensaries can open. Initially, there may be long queues in retail stores, depending on the number of dispensaries that are initially open and the number of customers that show up.

In Connecticut, like other states with existing medical marijuana programs that have legalized recreational cannabis, early supply will come largely from the state’s existing medical marijuana producers. There are four licensed cannabis production facilities in the state — Advanced Grow Labs, Connecticut Pharmaceuticals, Curaleaf, and Theraplant — all of which are owned by out-of-state companies.

Medical producers can apply to participate in the recreational use market without going through the lottery process. Clinics wishing to convert to a similar hybrid retail license are not subject to the lottery.

In addition to the four producers, there are 18 medical dispensaries in Connecticut and approximately 54,000 registered patients through the state. Medical Marijuana Program. Registered patients can purchase up to 3 ounces of cannabis per month.

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