Massachusetts and Illinois exemplify how wholesale prices frequently trend upward in expanding medical cannabis programs that transition to adult-use markets. However, the fact that each state has its own unique quirks means that the extent and duration of price inflation will vary.
In Massachusetts, adult-use sales began in late November 2018. Demand in the medical program was expanding rapidly already, with sales volume to patients increasing by more than 50 percent from 2017 to 2018.
Massachusetts medical cannabis businesses that expanded into adult-use could transfer some inventory to the recreational sector, tightening supply overall. Accordingly, the state’s quarterly spot index rose from $2,600 to $2,952 per pound during Q4 2018 to Q1 2019.
However, as more cultivators gained adult-use licenses, state data shows that wholesale prices trended downward as production increased. Weekly wholesale prices in Massachusetts rose to more than $3,000 per pound late in Q1 2019 but declined in April and May. As of June 14, the state spot index was averaging $2,887 per pound for Q2 2019.
As of late May, Massachusetts only granted 18 adult-use retailers permission to begin sales. As such, there is limited shelf space to fill, and access to the licensed market is not widespread, allowing production to catch up to demand.
Illinois’ rollout of an adult-use cannabis industry may proceed differently given current medical market conditions and the state’s plan to begin recreational sales quickly. Illinois’ medical cannabis program saw significant growth in 2018, when dispensary sales rose by almost 60 percent over 2017. Revenue growth accelerated in early 2019 as the state’s dispensaries and producers repeatedly set new monthly sales records.
In Q4 2018, Illinois’ spot index averaged $3,033 per pound. It opened 2019 by rising 3.7 percent to average $3,145 per pound in Q1. Prices almost reached $3,200 per pound in April but declined in May. As of June 14, the state’s spot index was averaging $3,099 per pound for Q2.
Legislation legalizing an adult-use cannabis industry in Illinois calls for sales to begin in January 2020. The state’s 55 medical dispensaries will be permitted to begin sales right away if they qualify for licenses and may also apply to open a second storefront. The state’s existing growers, of which there are about 20, will be allowed to expand, but no new cultivators will be licensed until July 2020. With about 100 adult-use retailers possibly opening their doors early next year and medical sales booming, cultivators could struggle to produce supply adequate to meet demand in a state with a significantly larger population (12.7 million in 2018, according to the U.S. Census Bureau) than Massachusetts (6.9 million in 2018).
Overall, Cannabis Benchmarks’ historical data shows that the transition to a legal adult-use cannabis market has resulted in wholesale flower prices behaving uniquely state-to-state, depending on various factors such as how many businesses are licensed, the prevalence of outdoor cultivation, and regulatory burdens. For example, in Colorado, wholesale rates were not observed to decline steeply until about two-and-a-half years after the opening of recreational sales in 2014. However, Oregon saw a steep decline less than 18 months after its first licensed retailers opened.
Adam Koh is the editorial director for Cannabis Benchmarks.
Regular cleaning and maintenance of cannabis extraction equipment is key to ensure optimal performance and yield. Here are four things to consider when developing your cleaning and maintenance protocols.
1. Identify key components that make up your extractor.
These likely include extraction and separator vessels, solvent supply tanks, lines and connections, temperature controllers/chillers, and compressor pumps.
Familiarize yourself with each component and gain an understanding of how they work together to perform the extraction. This knowledge will help you to identify unique parts within each component that become dirty or worn during use and will need to be periodically cleaned or replaced. Understanding the system will also aide in troubleshooting should any problems arise.
2. Determine the cleaning/maintenance needed by each component and the frequency at which it needs to be performed.
To keep your extraction system running properly and avoid downtime, determine what cleaning and maintenance needs to be performed and when. Much of this information can be found in the user manual for your extractor, including recommendations on timing. However, differences in run parameters can impact wear and tear, so it is best to closely monitor your equipment and set a schedule based on your specific needs.
Regular cleaning of your extraction system is critical for optimal performance. Don’t cut corners—perform all cleaning procedures to meet or exceed manufacturer’s recommendations. Common cleaning procedures include performing extraction runs with no cannabis present, rinsing separator vessels and connecting lines with ethanol, and checking downstream lines/filters for carryover of cannabis extract. Proper cleaning will minimize the occurrence of many common problems including clogged lines/valves, poor separation and low yield. If you use the same extractor to run multiple strains (e.g., high CBD strains and high THC strains), it is best to thoroughly clean in between extraction runs to minimize cross-contamination.
Scheduled maintenance is also very important. For example: maintenance of a CO2 gas compressor pump. On a weekly basis, the oil level and running oil pressure should be checked and recorded. Changes in noise level or vibration while running also should be noted, as this could indicate a potential problem. Every month, the pump should be inspected for any loose connections and/or leaks, and the belt tension needs to be checked. The oil filter should be changed every six months, and the diaphragm replaced every 18 months. These activities will ensure that the compressor pump will operate reliably and minimize downtime.
3. Set a schedule and keep a maintenance log.
Once you identify what needs to be done and when, create a maintenance calendar for each extraction system you’re running so you know when routine maintenance should be performed. Ensure each extractor has its own logbook, and document all maintenance activities for easy reference.
4. Keep a supply of replacement parts/consumables on hand.
Anticipate maintenance needs–for any parts that may become worn or break over time (valves, belts, o-rings) or consumables (filters, oil, coolant). It is advantageous to keep a supply of these materials in house. This allows for quick repairs and minimizes extractor downtime. Keep an inventory log of spare parts and replenish as needed.
Dr. Rachel Loeber is chief science officer at Minnesota-based LeafLine Labs.
In 2008, GIE Media—the parent company of Cannabis Business Times (CBT)—ranked No. 1 in Publishing Executive magazine’s “Best Magazine Companies to Work For.” That is part of the reason I joined GIE when it acquired CBT in 2015, and I see the positive influence that a ranking has on interview candidates that come to the company.
The company was rated for its employee benefits, company culture and opportunity for advancement, and it was evaluated by its employees, in addition to company management.
I realized that in the cannabis industry, where competition is fierce for talented, loyal employees, such a ranking could go a long way in helping great cannabis companies attract great talent.
So, I am pleased to announce that Cannabis Business Times and its sister magazine Cannabis Dispensary (CD) are launching the “Best Cannabis Companies to Work For” studies exclusively for both cultivation and retail (medical or adult-use).
The study is being conducted in partnership with the Best Companies Group, a research company that specializes in selecting and recognizing great workplaces—the same company that named GIE Media a “Best Magazine Company to Work For.”
For CBT, it’s exciting to acknowledge companies that are creating great workplaces for their employees.
And one of the best aspects is that it is entirely free to enter.
If you have 15 or more full-time or part-time employees and operate a licensed cannabis cultivation and/or dispensary business in the U.S. or Canada, you can enter to be ranked among the “Best Cannabis Companies to Work For.” Plus, if your company ranks as a “Best Cannabis Company to Work For,” you also will be featured in CBT (if you’re a cultivation business) or CD (if you’re a medical or adult-use dispensary).
To enter your company and learn more, visit BestCompaniesCannabis.com and register by Sept. 6.
We look forward to learning about all the future “Best Cannabis Companies to Work For” and sharing the details on what makes those companies so great.
Cannabis Business Times’ interactive legislative map is another tool to help cultivators quickly navigate state cannabis laws and find news relevant to their markets. View More