The Cannabis Industry Archives

The Cannabis Industry

It’s Getting Harder to Succeed in This Sector — but That Was to Be Expected

By Joseph Bednar August 17, 2023

What’s Next for Cannabis?

Payton Shubrick says she understood she was entering an increasingly challenging market for cannabis sales when she opened her doors last year.

By the time Payton Shubrick opened the doors to 6 Brick’s Cannabis Dispensary in Springfield last fall, she was well aware of how challenging the business was becoming.

“The market is getting tougher across the board in Massachusetts,” she told BusinessWest. “Gone are the days when you could open a dispensary and just have people lined up. Gone are the days when cultivators could guarantee sales. We’re seeing that you must earn customers’ loyalty and have a competitively priced product and have decent quality to do well in the Massachusetts market.

“I’ve been able to see growth with my company, despite coming online in September of 2022, when prices had just fallen by over 30%,” she added. “So we essentially started with less-than-ideal conditions, but it’s not all doom and gloom.”

Because Springfield set out a long, rigorous process to open a dispensary, Shubruck had time to witness a total evolution of the Massachusetts cannabis market; when she first applied for a permit, the few dispensaries that were open saw an early ‘green rush’ of customers; though the industry’s onerous tax and regulatory burdens and tight profit margins never made it easy money, exactly, the early shops took advantage of a clearly favorable supply-and-demand picture.

“We essentially started with less-than-ideal conditions, but it’s not all doom and gloom.”

By the time Six Brick’s opened, the landscape was considerably more cluttered; prices, as Shubrick noted, were falling; and some shops were struggling.

Those struggles have turned into actual contraction. The first Western Mass. dispensary to close, back in December, was the Source, on Strong Avenue in Northampton, a city with nearly a dozen retail cannabis shops. But it was Trulieve’s departure from the market that will resonate more broadly; the national company closed its three retail locations in the Bay State at the end of June, and is also closing its 126,000-square-foot growing, processing, and testing facility on Canal Street in Holyoke — another city that invested heavily in the new cannabis trade.

“These difficult but necessary measures are part of ongoing efforts to bolster business resilience and our commitment to cash preservation,” said Trulieve CEO Kim Rivers said. “We remain fully confident in our strategic position and the long-term prospects for the industry.”

At the same time, several proposed cannabis facilities in Western Mass., including one planned for the former Chez Josef banquet house in Agawam, have been scrapped due to an inability to secure financing amid dramatically changing market conditions.

“The market is correcting itself,” Shubrick said, reflecting a throughline seen in all states that legalize cannabis. “A lot of folks raked it in during the green rush. But only 24% of cannabis companies in the U.S. are profitable. So you actually have to view this as a business. You can try to increase volume and think that’s going to fix the problems, but the market has matured in a real way. And now, other states are coming online.”

High Stakes

Erik Williams, chief operating officer at Canna Provisions (see sidebar on page 20), explained that a typical dispensary needs to take in about $6 million in top-line revenue annually in order to break even. “A whole bunch of companies are not there. They’re sitting on big tax bills without the cash flow, and they’re going to close under the weight of taxes; we’re seeing that right now across the state.”

He also noted the 24% profitability figure, and said anyone coming into the market should be aware of it.

Steven Lynch says cannabis businesses doing things the right way and for the right reasons will survive any contraction in the sector.

“There’s a survivability factor we’ve written about from day one. We were the second adult-use-only store in Massachusetts to open [in Lee], and there’s definitely a sort of glory time which happens with every new market, where the demand outstrips the supply, and businesses are just opening their doors and slinging weed,” he said. “They saw pie in the sky, and they have not operated their business with real-time controls over every dollar they’re spending. It’s a tough thing.”

Simply put, too many cannabis businesses in Massachusetts based their business plans on supply-and-demand figures that no longer exist, he added. “There’s a lot more competition. The pie is always growing, but competition is far outstripping the growth of the pie, so you’re seeing price compression.”

Williams agreed with Shubrick that a dispensary must be run like a business from day one, with hard decisions around every dollar spent — or the enterprise will fail.

“If you’re at the point where you have to readjust everything, it’s almost too late,” he said. “Really tough business decisions need to be made across the board. We’re seeing how other companies are failing, and one of the first analyses is what it takes to be profitable as a standalone dispensary. A bunch of different people have run a bunch of different numbers, and when it comes down to it, the consensus is $6 million.”

So, how does one succeed in this environment? Shubrick has some ideas.

“At Six Bricks, we have a clear focus on who the customer is, and we’re focused on our competitive advantages, which are the cannabis experience over transaction, having knowledgeable staff, and being an option for conscious consumers who want their dollars spent close to home,” she explained, noting that the pandemic years taught people the value of spending their money with local businesses, and those lessons could carry over to cannabis. “There’s still a lot of work to be done with social equity for businesses, but consumers can support more a more equitable industry by what brands they support and where they spend their money.”

Erik Willaims

“There’s a lot more competition. The pie is always growing, but competition is far outstripping the growth of the pie, so you’re seeing price compression.”

Steven Lynch, director of Sales and Marketing at SaveTiva Labs, agreed about the appeal of strong, local brands.

“I see a lot of parity with when the big-box stores, the Home Depots and Lowe’s, first came to the market. It was great because they had these big stores you could go in, but ultimately, you’re not going to get the service that you’re going to get from your local hardware store,” he told BusinessWest. “So you saw a lot of stores go away initially, but then you saw a whole wave of small mom-and-pops come back into the market because they did things completely from a quality, service, and educational standpoint.

“I think that’s what’s going to happen in cannabis,” he went on. “The people who had no business doing this, or got into it for the wrong reasons, will fall by the wayside, and the people that that are doing it for the right reasons, the right way, are going to continue to flourish.”

Blazing a Trail

For Shubrick, ‘the right way’ is reflected in the 6 Brick’s tagline, “people, plant, and purpose.”

“People — how can we help show that cannabis can be a part of an individual’s wellness routine? Plant — how can we make this more of a cannabis experience than a transaction?” she explained. “And lastly, purpose — we want to be a viable option for those in the community that want diversity of price point and diversity of products. I can’t overemphasize the community aspect of it. You can try marketing to pull customers out of Connecticut, but it’s the local community that’s going to show up every day, whether they’re buying a pre-roll or a present for a friend.”

Though Springfield’s licensing process was slow and rigorous, she noted, it’s a plus for operators that there’s not a shop on every corner, as opposed to cities like Holyoke and Northampton that allowed many more licensees.

“We’re the third-largest city and have only four dispensaries; that does prevent what we’ve seen in Worcester and Northampton, which is a race to the bottom in terms of providing a product. Many customers are saying they want it as cheap as possible. The reality is, that hurts the entire supply chain and drives prices so low, it compromises quality.”

That ‘race to the bottom’ has occurred in other states where cannabis was legalized, but the assumption is that the market will eventually level out — and not everyone will survive.

“A lot of folks made the assumption that cannabis companies just open the doors, and people show up,” Shubrick said — and at the earliest-opening shops, like NETA in Northampton, they certainly did. “I never anticipated 100 people show up on day one. I knew it would be a slow climb. The first 15 companies to open their doors, some of them now have to make a comeback because the product wasn’t great or they didn’t have the right people.”

It’s not an unusual track in other business sectors, she added. “Car dealerships and restaurants rise and fall, and the same is happening in cannabis. A lot of naive operators thought they were untouchable because there was this pent-up demand and a thriving black market. But that’s not the case. Couple that with the realities of 280E, and this is not for the faint of heart.”

She was referring to Section 280E of the Internal Revenue Code, which forbids businesses from deducting otherwise ordinary business expenses from gross income associated with the ‘trafficking’ of Schedule I or II substances, as defined by the Controlled Substances Act; cannabis is a Schedule I substance.

According to the National Cannabis Industry Assoc., “federal income taxes are based on a fairly simple formula: start with gross income, subtract business expenses to calculate taxable income, and then pay taxes on this amount. Owners of regular businesses often derive profits from these business deductions. Cannabis businesses, however, pay taxes on gross income. These businesses often pay tax rates that are 70% or higher.”

“Most companies spend a dollar to get $1.10, and you’re ten cents up,” Williams said. “Here in the cannabis business, because of the 280E tax situation, you need to make $3.50 for every dollar you’re spending just to break even. That changes the math in a really big way.”

It also changes the way cannabis companies do business, he added, returning to those earlier thoughts about closely tracking all spending. “Being tight with advertising dollars and watching ROI on every dollar you’re spending is super important.”

Canna’s model, as a vertically integrated company that cultivates product as well as selling it, helps stem those tides, he noted. “Doing cost analysis is a little different, but you also are putting things through your stores at much higher margins. If you’re controlling your supply, you have more control over your business. We’re seeing it happen right now.”

Rolling with the Changes

Shubrick said it was worth navigating a thorough licensing process to open a cannabis shop, alongside her family members, in her hometown. “If I wasn’t selected in Springfield, I wouldn’t have picked up and gone to another city or town.”

It’s an example of the thoughtfulness that must accompany entering a very challenging cannabis marketplace in Massachusetts, especially now.

“Companies come in, and they’re not profitable, and they can’t pay back the tax bills. So they have to close,” Williams said, echoing not only the stories of the Source and Trulieve, but other casualties to come. “But their consumers don’t go away; they go elsewhere. So the lesson from the contraction of the market has always been that the survivors are going to do better long-term.”

Weathering the Storm: a Resilient Path Forward

By Meg Sanders

We are at the precipice of a significant contraction in the cannabis market, not confined to Massachusetts alone, but reverberating across the U.S. and even globally. As business owners navigating this turbulent landscape, it is essential to recognize the imminent challenges — in particular the ones staring down cannabis across the Commonwealth — prepare to face them, and, more importantly, cultivate a hopeful vision for the future.

Let’s begin with third-party vendors, the cogs in the machine that keep your cannabis enterprise running smoothly. We must ask ourselves: how do these vendors weather the storm if they lose 30% of their business suddenly? If a small vendor employing just six people experiences a 20% revenue loss from a key account, what could that mean for the business?

These are not mere speculations. These scenarios are unfolding right now, causing ripples across the industry. It’s a risk-management issue that warrants our immediate attention.

Meg Sanders

“It’s critical to identify how exposed our vendors are to the same downturn we’re grappling with, especially if their clientele consists primarily of cannabis companies.”

As we sail through these choppy waters, we mustn’t lose sight of the bigger picture. We need to question the depth and financial security of our vendor base, especially since many struggling businesses might not be able to pay their bills. The aftershocks of such downturns typically hit marketing, advertising, and street teams the hardest. But what does that mean for us, the business owners who rely on these very vendors?

Imagine your vendor pool as a ship’s crew, each playing a vital role in keeping your business afloat. What happens if your vendor’s ship starts sinking? The ripple effect could capsize your own vessel, and that’s a scenario we must guard against.

Indeed, there’s a sense of camaraderie in this industry. We are all in the same boat. When one sinks, we all feel the tremor. It’s critical to identify how exposed our vendors are to the same downturn we’re grappling with, especially if their clientele consists primarily of cannabis companies. The domino effect could span from your point of sale to merchant services, banking, all the way down to your graphic designer.

We have to play the long game, keeping our eyes on the horizon and the changing tides. Let’s envision a situation where you’re sourcing packaging from a company whose revenue is all cannabis-related. What happens when it loses 20% of its business overnight? What does that mean for your buying abilities, purchasing decisions, their supply chain, and your overall purchasing power and profit and loss (P&L) statements?

To chart a path through this storm, we must adopt a three-dimensional approach to risk management, particularly for those selling cannabis products wholesale to local companies. The strain on accounts-receivable departments is a testament to the rising pressures within the industry. Payments aren’t arriving on time, and some aren’t arriving at all, affecting everyone from packaging and label companies to small cannabinoid providers and cultivators.

But amidst this storm, there’s hope. And here’s the silver lining: we can mitigate these risks with strategic planning and robust backup systems. By identifying alternative vendors, knowing their offerings and lead times, we can prepare for any disruptions in our sensitive systems. We need to ensure that we’re not left without a resource simply because we didn’t think far enough down the track.

This contraction isn’t just a challenge; it’s an invitation to innovate. To think differently. To challenge the status quo. Industries shift, technologies evolve, and we must keep pace. We need to think about all the ways a contraction impacts everyone: vendors, landlords, municipalities. The effects when a cannabis company exits a market or closes its doors are far-reaching.

Even as we’re witnessing companies in Massachusetts entering receivership, it’s not a time for despair. It’s a time for planning, for taking stock of where we stand and where we aim to go. Think about your ‘what-ifs,’ and devise your backup plans. Be ready to replace a critical item on your menu if it goes away. Be prepared to find an alternative source if your main provider hits financial turbulence.

This is not a doom-and-gloom narrative. It’s a story of resilience, of weathering the storm, and emerging stronger. It’s about recognizing opportunities amidst adversity, shoring up your P&L, and seizing the chance to negotiate better pricing with your vendors. Many might be willing to partner with you to push through these challenging times in that way, and the worst thing that happens is they say no. That’s just good business practice, no matter the state of the industry. Always make sure you’re checking where every dollar is going, from your expenses to getting quotes on best prices.

So, in these uncertain times, let’s remember one thing: hope is not lost. Even in the face of contraction and economic downturn, there’s an opportunity for those vigilant and ready to adapt. And as we navigate this storm together, we can create a more resilient, more robust industry ready for a brighter future.

We are, after all, in this together.

Meg Sanders is CEO of Canna Provisions in Holyoke and Lee.

Grand Opening Slated for HONEY Dispensary

By BusinessWest Staff July 1, 2022

Cannabis Daily News Events Luxury Living News Sports & Leisure The Cannabis Industry

NORTHAMPTON — HONEY, a recreational cannabis dispensary, located in the former home of Sierra Grille, will stage its grand opening on July 9 at 1 p.m.

Visitors can enjoy all day music, fresh popped kettle corn, and performances by the local hula hoopers, wing dancers, stilt walkers, and aerialists. There will be a fire performance at 8:30 p.m.

HONEY is owned and operated by Volkan Polatol and Kevin Perrier. In opening HONEY Northampton, Polatol and Perrier have teamed up with HONEY Brands, originally founded in California, which produces full spectrum, distilled cannabis oil in vape cartridges.

“We are thrilled to partner with the HONEY brand,” Perrier said. “It’s telltale black-and-gold packaging has become synonymous with the best cannabis hash oil on the market today. And now, consumers on the East Coast can try it for themselves. We’re also proud to be able to make the HONEY hash oils from our own facility at Wemelco Industries in Easthampton.”

In addition to HONEY vapes, the dispensary also carries the highest-testing flower and a huge selection of brands from across the state. The location’s innovative LED tunnel, color-changing displays, and chill playlist all create a relaxed, club vibe, and budtenders are on hand to give expert advice on all products.

Region’s Cannabis Industry Blooms with Intriguing Ideas

By Joseph Bednar April 14, 2021

Cover Story The Cannabis Industry

Creating a Buzz

Every week, it seems, brings news of another cannabis establishment opening its doors or planning to set down roots in Western Mass. So, how does one stand out in an increasingly crowded field? For this issue, we talked with three women who own or co-own new enterprises in the region. By emphasizing facets of the business from sustainable growth to community gatherings to social equity, they make it clear that not all ‘pot shops’ are the same — that, in fact, there are many ways to make a mark on an increasingly robust cannabis ecosystem.

Helen Gomez Andrews and Chris Andrews of the High End

Sustaining a Plan

The High End Takes a Natural Approach to Edibles and Much More

Stephanie McNair of Turning Leaf Centers

Budding Connections

Turning Leaf Centers Plants Itself Firmly in the Community

Charlotte Hanna of Community Growth Partners and Rebelle

Hire Calling

Community Growth Partners Builds on Model of Social Equity

By Joseph Bednar April 14, 2021

The Cannabis Industry

Hire Calling

Charlotte Hanna of Community Growth Partners and Rebelle

Charlotte Hanna calls it “moving from bullets to buds.”

That’s how her company, Community Growth Partners (CGP), has characterized the renovation of the former Yankee Hill Machine plant in Northampton, once used to manufacture rifle silencers and accessories, into a cannabis cultivation and manufacturing facility.

But it also signifies something even more powerful, she said — an ongoing partnership between CGP and Roca, an agency that helps young men traumatized by urban violence to build emotional and workplace skills and forge a new path.

CGP has been employing Roca clients for more than a year at its flagship cannabis retail store in Great Barrington known as Rebelle, and will create about 50 more such jobs at the 23,000-square-foot building on Ladd Avenue in Northampton later this year.

It’s a way, Hanna said, to create pathways into a fast-growing industry for populations that were negatively impacted by the marijuana laws of the past.

“I like to call it just and equitable capitalism,” she added. “It’s a for-profit venture, but we’re trying to do things in a way that positively impacts people. I think the cannabis industry is the perfect industry for that. Our country put a lot of people in jail because of cannabis; a lot of wrongs need to be fixed. It seemed like a perfect opportunity to build this social experiment to see if we can have a company that does well, but also does good.”

Growth Opportunity

Hanna was seeking a career change when she began researching opportunities in the cannabis field.

“I’m a relative newcomer to the business,” she said. “I started exploring the industry in 2018, figuring out where the licensing opportunities may be. I’m based in New York City, and my home state, at the time, was very restrictive, with no opportunities to get into the business — so I turned my attention to the closest state to my hometown, where licensing was just opening up.”

Early in her career, she worked with grassroots organizations on social-justice issues, but found it difficult to live in New York on a nonprofit salary, so she pivoted to Wall Street, where she worked in finance with Goldman Sachs for a decade, followed by ventures in real-estate development.

Cannabis is what she calls the third phase of her career — and one in which she can once again work for social justice, this time in the form of social equity through employment. She was familiar with Roca from time spent in Boston, but didn’t know the organization was active in Western Mass. until, while driving in downtown Holyoke one day, she spotted a man wearing a Roca T-shirt, pulled over, and asked him about it. As it turned out, Roca had recently opened an office in Holyoke, and she stopped by.

“I’m excited to be very transparent about what we are and what we do, and I hope we find values-driven consumers who want to buy from a company that’s trying to do good.”

“I said, ‘how about entrusting your young people with me to work in the cannabis industry?’” she told BusinessWest. “I was surprised with how enlightened they were. They said, ‘we can’t believe no one has come to us before. We think it’s a great idea for our young people; we don’t have a problem with cannabis.’ That’s how I found them, by coincidence. No, kismet — it was meant to be.”

She’s a believer in supporting diversity in the cannabis business for the same reason the state established social-equity guidelines intended to bring opportunities in the industry to populations hard-hit by the U.S. government’s war on drugs that began in the 1970s.

Charlotte Hanna and members of Roca celebrate the start of construction at CGP’s Northampton facility.

“The war on drugs disproportionately impacted people of color,” Hanna said. “Great Barrington isn’t the most diverse place in the world, but I think we have good people who come from all backgrounds.”

For some of the Roca workers, it’s a long commute to that corner of the Berkshires, and some don’t have cars, so Hanna pays the agency to drive them back and forth. Northampton, as a second CGP site in Western Mass., may provide some flexibility in that regard. “The commitment at Roca runs deep,” she said. “They feel good about what we’re doing.”

So does Northampton, she said, praising the city for being especially friendly to cannabis businesses and not requiring a special-use permit as an additional layer of bureaucracy, simply a host-community agreement and a building permit. The site is also located in an opportunity zone, which confers additional tax advantages to businesses that invest economically in low-income neighborhoods.

“We’re going to be creating a lot of jobs here,” she said. “We’ll be staffing up with a lot of entry-level jobs from Roca, but also opportunities for management jobs; we’ll be building up our skilled extraction and manufacturing and processing teams as well.”

Taking Control

Hanna said she’s a fan of the Roca model of training, one that puts clients in lengthy, simulated work experiences and stresses job-readiness skills, so they’re ready to enter any work environment for further training in that field. In other words, Roca is teaching young people how to learn and be adaptable, so their opportunities are unlimited.

Cannabis seems to be an industry of unlimited growth as well — or, at least abundant growth, if the continuing proliferation of cultivation, manufacturing, retail, and other types of businesses is any indication.

While COVID-19 slowed the pace of fundraising and business development last year, Hanna said, she’s looking forward to opening the next phase of the CGP network. Besides the Northampton expansion, current growth initiatives include a wholesale and delivery license in Massachusetts, a pending craft-grow license in Illinois, and Rebelle’s new lifestyle-focused line of cannabis products and accessories that will launch in 2021.

“We always wanted to be vertically integrated,” Hanna said of the ability to control her own products from seed to sale. She pointed to the pandemic-fueled supply shortages in many industries last year as a good reason to take control of her own supply chain.

She added that opening the retail side of the business before the production side also helps the company learn what types of products customers want before they start making them.

“We live in a more transparent world than ever, and I hope consumers are more educated than ever,” she said. “I’m excited to be very transparent about what we are and what we do, and I hope we find values-driven consumers who want to buy from a company that’s trying to do good.” u

Joseph Bednar can be reached at [email protected]

Turning Leaf Centers Plants Itself Firmly in the Community

By Joseph Bednar April 14, 2021

The Cannabis Industry

Budding Connections

Stephanie McNair (left)and Nicole Desjardins say they want customers to stay, learn something, and enjoy the experience of buying cannabis.

It’s called Budstock.

As the first major community event staged at Turning Leaf Centers in Northampton, Stephanie McNair believes the three-day event — slated for April 16-18 and boasting the cheeky tagline ‘stock up on your favorite bud before 4/20’ — will help raise the new dispensary’s profile in a city that has rolled out the welcome mat for numerous cannabis enterprises.

Saturday will feature several music artists, as well as a food truck, in the large parking lot behind the King Street building, while inside, local artist Rodney Madison will display his works, and at the dispensary’s ‘craft bar,’ a series of workshops over the three days will teach visitors the finer points of concentrates, edibles, vapes, joint rolling, and more.

In short, it’s about education, entertainment, and community, said McNair, who opened Turning Leaf along with co-owner Mary Anne Gonzalez last month with the goal of not only inviting customers in, but asking them to stay a while.

“The cannabis industry in Western Mass. is evolving at a record pace, and with more and more cannabis retailers entering the market, it’s time to ‘turn the leaf’ to more of an experience, instead of the cattle-in, cattle-out type of doing business,” McNair told BusinessWest. “That’s why we have the craft bar, which is a place where customers can take time to educate themselves about our ever-changing products, gather with their friends, attend demonstrations, have rolling parties, and so on.”

As more dispensaries and other cannabis-related business spring up throughout Western Mass., McNair said it’s increasingly important for new enterprises to set themselves apart through price, product quality, and in other ways.

“We wanted to create a place where everyone can feel comfortable and have a good time and stay a while.”

At Turning Leaf, that means an emphasis on community and local connections, from events and craft-bar experiences to partnering with local growers and manufacturers to bring products to customers they can’t get at every shop.

“We’ve gained strong relationships with local craft growers and innovators, who are making more elevated products every day,” she said. “We’ve taken the time to cultivate a very eclectic menu with every product category, at every price point, with every type of cannbis consumer.”

It also means bringing needed exposure to local musicians and artists through indoor and outdoor performances and exhibits.

“Supporting our local community is something that is very important to us as a company,” she added. “We are looking to display and promote local artists and have event demonstrations and educational seminars in our space.”

Comfort Level

With a background in real estate and community-relations marketing, McNair found a business partner in Gonzalez with a similar vision for a cannabis business. “Being a Western Mass. native, I knew this was a place I wanted to be. It was just an easy fit for me.”

Central to that vision is a highly personal approach to product sales. “We wanted to create a place where everyone can feel comfortable and have a good time and stay a while. We have great parking, it’s easy to find, you can go sit at the craft bar and talk with our dispensary staff, and we want to make sure every customer leaves feeling completely satisfied with the products they’ve purchased.”

Nicole Desjardins, marketing manager at Turning Leaf, said they want to demystify cannabis use and, for newcomers, take away any anxiety.

“A lot of it is addressing the stigma through community — to find out what you don’t know with other people and have fun,” she said. “You don’t know how to roll a joint? We make that accessible in a fun way. Instead of just walking away with what you purchased, why not walk away with knowledge from some people you shared an experience with?”

McNair said her own experience with the city of Northampton has been a positive one.

“They’ve just been so welcoming for us as a local business coming in, giving us their support,” she said, adding that Mayor David Narkewicz and city boards have been extremely helpful, as has the Greater Northampton Chamber of Commerce. “Our host-community agreement and our outreach with the city was just a really happy experience for us. Everybody in Northampton really wants to help you make your business successful, and it shows.”

Meanwhile, customer support has come from all over, including visitors from Connecticut and New York, McNair added. “They’re intrigued by looking at our craft bar and our space, talking to us about cannabis and local art … we’ve been well-received in the past few weeks.”

She’s not worried about the number of businesses setting up shop in Northampton and neighboring communities; in fact, she sees it as a plus, generating a growing energy in the local cannabis trade that promises to lift all boats.

“Northampton is definitely making its mark, just as they did with the restaurant industry. More is better, and people want choices. They’re making Northampton a destination for cannabis.”

Desjardins agreed. “Every business has a different profile, a different flavor. I think Stephanie is absolutely right — I don’t see it as competition; there’s enough for everyone. Northampton is a destination city.”

What’s on the Menu?

McNail said Turning Leaf will continue to hone its product offerings, always with an eye toward an eclectic menu of options culled largely from area producers — again, in an effort to build a local-first model.

“We’re really committed to supporting our local community,” she noted. “We want to highlight local growers as well as live music and artists, and we also have made a commitment to have all of our sales associates certified with responsible vendor training before day one, which is no small task. And we continue to provide them with education so they can give you the very best service when it comes to what exactly it is you’re looking for, or perhaps not looking for.”

And if you’re not sure, just belly up to the bar and ask.

Joseph Bednar can be reached at [email protected]

The High End Takes a Natural Approach to Edibles and Much More

By Joseph Bednar April 14, 2021

The Cannabis Industry

Sustaining a Plan

In Holyoke, Chris and Helen Andrews found a cannabis-friendly city that shares their passions for entrepreneurship and sustainability.

Helen Gomez Andrews and her husband, Chris Gomez, have been, as she tactfully put it, “cannabis enthusiasts for longer than we haven’t.”

But when their 5-year-old daughter was diagnosed with epilepsy in 2015 — and became one of the first medical-marijuana cardholders in New York — their interest in cannabis became intensely personal.

At the same time, Helen was starting to feel uninspired in her finance career; she spent 13 years growing a career in private wealth management at Lehman Brothers, Barclays, and Morgan Stanley.

Inspired by the triple-bottom-line approach to impact investment she had become increasingly aligned with, she was looking for a different sort of investment — and found it in cannabis, where the High End, a cultivation, production, and retail enterprise now under development in Holyoke, became the first cannabis company in Massachusetts to be certified as both a minority business enterprise and a women business enterprise.

During her last few years at Morgan Stanley, “I was looking for passion in my work life, and not finding it,” Andrews said. “The confluence of that and my daughter’s diagnosis, and my husband itching to do something different, really pushed us to take the plunge.”

To call it a major leap would be an understatement; the couple sold their home in Brooklyn to buy the historic Eureka Blank Book building on Winter Street in Holyoke and begin the long process of renovating it. A second site on Dwight Street will become the retail face of the business, as well as a coffee shop.

Oh, and they’re not taking any shortcuts, aiming to use a sustainable growing process known as organic living soil.

“People told us we’re totally crazy to do something so labor-intensive when there’s so much great technology around automatic cultivation, focused on the highest THC and highest yield,” she told BusinessWest. “But that’s a departure from what’s really important to us, which is low impact to the environment and the sustainable, clean growing of a plant, staying away from synthetic nutrients. We’re trying to create as natural an environment as we can.”

Feels Like Home

In seeking out a host community with abundant real estate and a business-friendly attitude toward cannabis, Holyoke was an obvious choice.

“It was five times cheaper the next-cheapest town — and then we discovered the history of Holyoke; it was so amazing how it was the first planned industrial city in the country, largely built by Irish immigrants,” Andrews said, which was appealing to her Irish husband. Now, this multi-cultural couple — Helen was born in the Philippines — is feeling right at home.

Also appealing is the city’s abundance of carbon-neutral energy generation. “It makes perfect sense in the cannabis industry, and perfectly aligns with our values. We’re building a truly sustainable company in a welcoming city.”

“As we learned about vertical integration and the economics of cannabis and edibles manufacturing, it made perfect sense to pursue cultivation. So we pursued the full vertical.”

Chris’ background is in restaurants and retail, and the couple’s initial vision centered on marijuana edibles, but has since expanded significantly.

“As we learned about vertical integration and the economics of cannabis and edibles manufacturing, it made perfect sense to pursue cultivation,” she said. “So we pursued the full vertical.”

As for the spacious former mill, “we put all our eggs in this basket,” she said. “We’ve been in Holyoke since January 2019, working to build this business and really embedding ourselves into the Holyoke community, which has such a strong entrepreneurial spirit.”

Indeed, Andrews serves on the EforAll Holyoke advisory board, helping other budding entrepreneurs find their way. “There’s such a rich, diverse history here, and Chris and I both feel very grateful to be a part of this community, and have found this to be a great city to build our business.”

The economic impact of COVID-19 certainly set the project back, but the extended timeline helped the couple streamline and become more “laser-focused” about their priorities. They’re licensed for 30,000 square feet of cultivation, as well as manufacturing and retail, and plan to apply for a research license as well.

“Last year was rough, but it’s finally starting to pick up some momentum,” Andrews said, adding that the hope is to open the dispensary and coffee shop by the end of 2021, and the cultivation and production facility later in 2022, with the first harvest arriving months later.

Until the cultivation and production sides of the business come online, Helen and Chris are pursuing “a very differentiated, curated inventory according to our core values of ethical and sustainable cannabis,” she said. “So we’ve spent the better part of the last year and a half building relationships with individual farmers and small businesses. By the time our doors open, we’ll have some products from some amazing businesses that we can introduce to this market.”

Those products will include commonly sought-after items like cannabis flower to edibles. In regard to the latter, “the plan is to make some things everyone likes — chocolates, gummies, and mints — but also do something more elevated,” Andrews noted. “My husband has a network of culinary talent partners working on limited-edition chocolates. And, of course, we’ll have vapes and pre-rolls and all those other things.”

Have a Seat

Another reason for opening a coffee shop, she said, is to avoid the scenario she’s noticed at many dispensaries, with lines of customers circling the building, waiting patiently to get in.

“We thought we wanted to change that experience and be more welcoming with the coffee shop, to give folks in line somewhere welcoming and comfortable to wait, but also provide education.”

She wants the shop to be a place people can find information, as well. “They can stop by, collect some literature, and have a great cup of coffee or a delicious pastry — and Holyoke needs a coffee shop.”

It’s a city that also wants to continue growing its reputation as one of the region’s most cannabis-embracing communities, and this couple is happy to oblige, Helen said. “We’re excited and eager to go.”

Joseph Bednar can be reached at [email protected]

Market Grows for Hemp and CBD, but So Do the Challenges

By Joseph Bednar November 24, 2020

Special Coverage The Cannabis Industry

Natural Resources

Tim Van Epps with some of the ‘mother plants’ growing indoors at Heritage CBD’s Northampton facility.

Tim Van Epps volunteers with an organization called Fairways for Freedom, which helps combat-injured vets assimilate back into society through holistic initiatives and golf, teaching them the game and sponsoring trips to great courses around the world.

That’s where Van Epps, president of the Sandri Companies, first saw the benefits of cannabidoil, or CBD, a chemical compound made from the hemp part of the cannabis plant.

“I saw veterans who were taking 30 different pills a day, and a lot of these veterans are just using CBD now, and that’s it,” he told BusinessWest. “I saw 25 guys who were doctor-prescribed drug addicts, and now they’re on CBD, and their lives have changed dramatically. I saw what this could do. I saw what it did for one of my older brother’s sons, and for folks with stage-4 cancer. I’ve watched with my own two eyes what it’s done for a lot of people who had a lot of problems.”

He’s done much more than observe, however, launching a company called Heritage CBD almost three years ago with Sarah McLaughlin, a nutritionist and registered sports dietitian who had built a whole-foods company called Sun Valley Bars, sold it to Nature’s Bounty, and was looking for a new challenge in the natural-products world.

“We took the idea to start a hemp/CBD company in the carriage house on my property,” Van Epps said, and soon after moved to a 17,000-square-foot property on nearby Industrial Drive in Northampton, where the company now works with well over a dozen farms that grow hemp, which is processed into a mulch-like substance called biomass, then processed into the line of oils, lotions, tinctures, gummies, and other products Heritage sells today.

“We wanted to do everything, soup to nuts — or seed to sale,” he explained, but emphasized the company’s relationship with local farmers as a critical component to his vision.

From left, Heritage CBD founders Tim Van Epps and Sarah McLaughlin and President Jake Goodyear.

“Many have been hurt financially over the past 10 years, and for many, the next generation doesn’t want to go into the business, so farms out here are struggling,” he said. “We saw hemp as a value-added cash crop we could introduce to the farming community. This was all about jobs, first and foremost — creating jobs in Western Massachusetts.”

Michael Lupario’s vision was multi-faceted as well. With a degree in environmental science from UMass Amherst, he’s long been passionate about soil sciences and promoting cleaner, more sustainable ways to farm.

Meanwhile, his interest in plant-based medicine goes back to high school, when he learned to forage medicinal plants and experimented with making teas and oils. As president of Western MA Hemp, he now combines his desire to farm with the opportunity to bring plant-based medicine to a broader audience.

“My company’s focus has always been intertwining cannabis back to the larger pharmacopia that is herbal medicine — to not only show the efficacy of cannabis, but get back to this broader realm of plant-based healing,” Lupario explained. “There’s a lot of misinformation and confusion out there about hemp and CBD and cannabis, and we want to bring it to people and explain what we do and how it’s done.”

“There’s a lot of misinformation and confusion out there about hemp and CBD and cannabis, and we want to bring it to people and explain what we do and how it’s done.”

Like Van Epps, he’s seen plenty of people use CBD to relieve pain, anxiety, restlessness, and other conditions — some of the same issues for which medicinal marijuana is often used, but without the psychoactive ingredient THC (the stuff that gets users high), which is present in only the barest sense in CBD.

“I find a certain set of consumers are looking for that psychoactive side; that’s appealing for them. For others, it deters them from cannabis. Some can integrate it into their lifestyle with no problems, but others may be drug-tested on the job.”

Michael Lupario

Whether seeking out marijuana or CBD for chronic injuries or any number of other conditions, in many cases, “conventional medicine is not working, and they’re looking for something new — they’re willing to try anything,” Lupario said. “They just want to feel better.”

While providing products that many customers swear by — although the products themselves, because they’re not FDA-approved, are not allowed to make specific medical claims — companies like Heritage CBD and Western MA Hemp have set down roots (literally and figuratively) in a field that’s still rapidly changing, in ways both regulatory and otherwise.

Overcoming the Stigma

Jake Goodyear, who ran the Renewable Energy division at Sandri before moving into the role of Heritage CBD president, said it wasn’t initially a move he wanted to make.

“I was a skeptic,” he told BusinessWest. “I’d been brainwashed into the stigma around cannabis and marijuana. It took me a while just to get my head around the history of the plant — and then I got mad that my point of view was so twisted on this subject because of what I had been told my whole life. When I got over that, I realized there was a huge opportunity here, and there really was nothing negative about hemp and CBD, and there are a lot of positives.”

One of the first challenges was regulatory, as the federal government still listed hemp and CBD as a Schedule 1 drug, so Heritage was unable to access a bank account or merchant services for credit-card payments. That changed with the 2018 Farm Bill, though THC-rich cannabis remains federally illegal as a Schedule 1 drug. Still, the state has offered its own unique series of barriers.

“Massachusetts policy gave us a license to grow hemp and process it into specific products like tinctures and gummies and soft-gel capsules,” Goodyear said, “but there was no regulatory pathway to sell them to market.”

For that reason, product sales at both Heritage and Western MA Hemp are largely online. Both companies emphasize multiple layers of third-party testing to ensure the products are clean, free of pesticides and toxins, and contain the ratios of ingredients they claim.

“I had a cannabis background — I was a fan of cannabis, both medical and recreational; it helped me a lot,” said Lupario, who launched his business a couple years ago with mentor and arborist Jim Sweeney. “He took me under his wing and provided some finances to allow me to put to use what skills and knowledge I had.”

The company also wholesales hemp flower and biomass to various processors for industrial uses; in fact, that’s the more lucrative side of the business while Lupario continues to grow his line of wellness products.

“It takes time to build a brand. We knew we wouldn’t be able to make our operating costs with what we made from these products … so what we don’t use in our products goes into the wholesale line,” he explained. “Because we grow our own material, we can keep margins down, have competitive pricing, and still create a really high-grade product.”

Trays of CBD-infused gummies are ready for packaging at the Heritage plant.

On a similar note, on a tour of the Heritage plant, Van Epps paused in the room where gummies are being infused with CBD to point out a rack of the gummy substance in bulk sizes without any CBD, which Heritage sells to cannabis companies that infuse it with THC, which he is legally unable to handle.

“Right now, this is what pays the bills, our bulk formulation,” he said. “We could morph into a candy company.”

McLaughlin said she brings a strong science background to her work at Heritage, citing the six different tests — checking for everything from pesticides to potency — each product has to pass along the production journey. “We wanted everything evidence-based. We really came at this trying to make the highest-quality product possible.

“It seems like a bit of a stretch from being a dietitian, but if you think about what a dietitian does, we study the effects of what you consume and how it affects your body, and this is no different,” she went on. “I saw all the potential and all the different areas CBD could help. And since we started, more and more research has come out about the positive effects of CBD. It’s exciting work, with incredible potential to help people.”

Van Epps said a growing public awareness about the benefits of CBD helps boost sales, but competition is fierce, too. “There are so many brands. What brands do you trust? We’re seeing lot of inferior brands that tried to get rich quick fall by the wayside.”

The key for Heritage, he added, is to stand out with quality products that are tested in transparent ways.

“We had a blank slate at first,” McLaughin said. “Anything known about formulating came from the black market, and you almost had to scrap it all and start over and understand there was most likely a better way of doing it.”

Altered States

More industry standardization would be another ‘better way’ to do business, said all those we spoke with. For instance, while Massachusetts limits THC levels in CBD to 0.3%, Vermont allows 1%. “In a perfect world, you’d standardize the rules across the country,” Van Epps said.

Added Lupario, “you’ve got to be able to pivot and deal with all the upheaval of laws and everything that comes with the ever-changing dynamics of the agriculture industry. You’re going to see that for the next couple of years until it settles down a bit; that will come with more federal oversight. We’re getting there.”

Van Epps said it’s been a tough year for some in the hemp industry, especially for farms that planted too much, too soon. “They thought it was a get-rich-quick scheme, and unfortunately, a lot of farmers got hurt by that. Farmers who didn’t bite off more than they could chew will tell you it’s a good business, worth investing in, and they see long-term growth. It’s exciting.”

Goodyear said less than 25% of American adults have tried a CBD product, so there’s plenty of room for growth; in fact, he sees the potential for Heritage to expand from about 20 employee today to 150 in a couple of years.

The trend toward greater public awareness is certainly good for business, Lupario said, but it also boosts his mission to give cannabis and hemp a stronger connection to natural, plant-based wellness.

“It’s another plant within the herbal pharmacopeia,” he said — one whose story continues to blossom in Massachusetts and beyond.

Joseph Bednar can be reached at [email protected]

Cannabis Industry Promises Workforce Opportunities

By Contributor November 24, 2020

The Cannabis Industry

Growing a Job Market

By Mark Morris

Jeff Hayden says the Cannabis Education Center was developed to train people for the hundreds of jobs being created in the industry locally.

When a new industry in Massachusetts reaches $1 billion in sales in only four years, it certainly gets people’s attention.

The Cannabis Control Commission (CCC) recently announced that, four years after legalizing cannabis for adult recreational use, and only two years after the first retail shops opened, this relatively new industry surpassed that $1 billion mark on Oct. 30.

“There are a lot of jobs that go along with a billion dollars in industry activity,” said Jeff Hayden, vice president for Business and Community Services at the Kittredge Center for Business and Workforce Development at Holyoke Community College (HCC).

Shortly after cannabis was legalized in the state, Hayden spoke with advocacy groups and business leaders in the industry, which led to establishing the Cannabis Education Center at HCC to provide training for in-demand occupations in the burgeoning industry.

“Our focus wasn’t on the product itself; we wanted to identify the occupations that make the most sense so we can train people for those jobs,” Hayden said.

After completing a core course to familiarize students with the cannabis industry, more concentrated training is available in four career tracks:

• Patient-service associates work behind the counter at a cannabis dispensary, interact with the public, answer technical questions, and provide information to registered cannabis patients, as well as recreational customers;

• Culinary assistants prepare cannabis-infused products such as gummy candies and baked goods infused with cannabis;

• Extraction technicians work in a lab assisting production managers in extraction, purging, oil manipulation, and quality control of cannabis products; and

• Cultivation assistants provide daily care of the crops from seed to harvest.

“Because HCC offers courses in business and customer service, culinary, chemistry, and agriculture, the career tracks for cannabis training line up well with the expertise the college already has,” said Michele Cabral, executive director of Professional Education and Corporate Learning at HCC, who worked with instructors to set up the cannabis course offerings.

As a community college, HCC doesn’t allow cannabis or associated products on campus. That means classroom instruction might involve using computer simulations to show chemical reactions, for example. When a physical demonstration is needed, legally approved items like hemp plants are used in class.

“While we will not have cannabis or related products on campus, we will still do the job education has always done: share with our students the best knowledge we can provide and the best examples,” Hayden said, noting that students can get actual hands-on experience when they land internships or get placed in a job.

He added that the courses are designed to provide an entry-level workforce for the cannabis industry. Wages are usually comparable and sometimes slightly higher than other industries at entry level.

“Even more important than landing that first job is the ability to make a career out of cannabis, because the levels of compensation can be significant,” he told BusinessWest.

Whether a person is looking for an entry-level job or a second career, Cabral said cannabis can be a “phenomenal career track” for people who have never considered it before.

For example, someone with a sales background could train as a patient-services associate training to build on the skills they already have. Or someone with a science background and wants to work in a lab could train as an extraction technician to learn about cannabis-infused products such as skin creams and shampoos.

“This person with science and lab training would find an entire industry that is exploding, where they could have an amazing career,” she said. “Who knows? They could come in at entry level and work their way up to be the head of the lab.”

There’s much more to the industry than rolling a joint, Cabral continued, noting that cannabis-infused shampoos and skin creams are only two examples of the many different items that appeal to the general public. “These products are extremely clean, closely regulated, and environmentally sustainable. It’s not just about getting high.”

Elevating an Industry

Elevate Northeast, a nonprofit workforce-training and cannabis-advocacy group has partnered with HCC on career-training programs at the Cannabis Education Center.

Beth Waterfall, founder and executive director of Elevate Northeast, said the program at HCC is designed to help people become familiar and comfortable with the industry. “The coursework helps people see that this is real. There’s a place for their interests and their skills.”

Elevate Northeast’s main mission is to provide opportunities for people who have been marginalized or were disproportionately harmed by previous marijuana prohibitions. The CCC administers a Social Equity Program to provide assistance and training to encourage those impacted by the ‘war on drugs’ to pursue careers as workers or entrepreneurs in the cannabis field.

Waterfall said righting past wrongs is one of the mandates of the CCC. The Certified Economic Empowerment application process is a way to encourage people from neighborhoods and communities that suffered from the impact of the war on drugs to seek licenses to open cannabis microbusinesses. She added that establishing microbusinesses also prevents larger companies from dominating the cannabis market.

“I’m excited about the cannabis industry because, through programs like social equity and economic empowerment, Massachusetts has an opportunity to be a leader in business ownership by people of color and women,” she said.

Waterfall called HCC’s Cannabis Education Center a “wonderful” way to provide people with both an initial exposure and a deep dive into the cannabis industry, as well as helping people understand how they may fit into it. “Who knows? This exposure may encourage them to someday own their own business.”

While retail cannabis operations have launched in many Western Mass. communities, the city of Holyoke has been most active, currently boasting four dispensaries, with at least two more scheduled to open in 2021. Based on workplace needs identified by these companies, the job market for cannabis looks to be healthy through 2021.

“By rough estimate, I anticipate, within the coming year, we will have 400 to 500 workers in the cannabis industry, just in Holyoke,” Hayden said.

Because Western Mass. offers both skilled workers and cheaper land compared to the eastern part of the state, Waterfall sees real growth potential and cited Holyoke as quickly becoming a center of cannabis commerce. “The city needed innovation and needed jobs. Cannabis is doing that very effectively in Holyoke.”

Such strong demand for talent would normally be an opportunity for career centers like MassHire to be involved. That’s not the case, however; David Cruise, president of MassHire Hampden County Workforce Board, noted that his organization receives most of its funding from the federal government, which has not recognized cannabis as a legal substance.

“Until laws change at the federal level, we cannot be actively engaged in getting involved with job seekers in the cannabis industry,” Cruise said. While he is aware of the increase in local job opportunities in the industry, MassHire will be taking a hands-off approach to cannabis employment.

That presents a stark opportunity for HCC’s programs. In her conversations with cannabis-industry employers, Cabral found they are looking for workers who represent the diversity of their customers. One dispensary owner said clients can range from a 40-year-old woman craving a good night’s sleep to a younger person looking for a recreational product.

“The people who use the products are as diverse as the population in general, so that’s who we want to train, and that’s who the employers want to hire,” she said.

During training, Cabral reminds her students that success means following basics like showing up on time with a good attitude, effectively communicating with the management team, and putting their cell phones away. “These are real careers in real businesses that are trying to make money, so come ready to work.”

Hayden echoes that point and noted that, while it’s not surprising for someone who has an interest in cannabis to work in the industry, employers will expect them to put in an honest effort and have an open mind to learn more and grow. He also advised they pay attention to the little things that can make a big difference.

“One employer told me, he chooses his customer-service people by whether or not they walk into the room with a smile.”

Cultivating an Ecosystem

While the cannabis industry offers many career pathways, Hayden said it’s easy to forget about all the traditional back-of-house functions such as accounting, marketing, and data analytics that companies need on top of the industry-specific positions.

While it’s called the cannabis industry, Waterfall added, it’s really more of an ecosystem that encourages people to bring their diverse skills to it.

“While I run a nonprofit, I pay my bills by consulting with cannabis companies on marketing communications and business development,” she said, noting that she started out doing similar work, except her clients were lawyers and accounting firms.

While COVID-19 has made it difficult to get a clear sense of job growth, Hayden said the industry is just getting off the ground and still promises a strong growth trajectory.

“Like any industry, there will be ups and downs,” he added, “but the projections post-COVID are suggesting we could hit a billion dollars a year in a short period of time.”

That kind of success helps overcome some of the stigma of cannabis use, which Waterfall admits can be very strong, whether coming from family or community. While she has been educating her own family, some are still not comfortable with cannabis use.

“Then I hear from someone who tried an infused gummy and has never slept so well, or the person who told me she drinks a CBD tincture in the morning, and it makes her a better mom.”

Anecdotes like those help debunk the stereotypes and stigmas about who uses cannabis, and why. Cabral hopes more people come to understand this is a serious industry with products that can be helpful to a wide range of customers. As such, cannabis needs a committed workforce that also takes itself seriously and moves past old stereotypes.

“Jobs in this field can be extremely technical,” she said. “It’s not just go listen to Bob Marley and have a party.”

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