MAY 2023 MARKET DATA & ANALYSIS
The Massachusetts Cannabis Control Commission (CCC) issued May 2023 adult use sales data this week. May sales, at $128.7 million, were up 2.6% from April 2023 sales of $125.4 million and up 6.4% from May 2022 sales of $120.9 million.
Average daily sales jumped 6.1% in May 2023 after a dip in April. The March sales surge is common across most states; it is seasonal in nature, as well as being attributable to the month’s 31 days compared to February’s 28, and drawdowns are expected in the following month. January through April total sales were all adjusted upwardly.
The CCC also provides information on the number of licensed cannabis businesses with permission to operate in the state. The table below shows the monthly progress on license issuance and includes only licenses with permission to commence operations.
The number of retailers showed a marked increase in May 2023, with 15 more stores allowed to operate in the state. Cultivation licenses were unchanged in May, as were all other categories. The state appears to be reigning in cultivation in the wake of multiple reports of failed indoor growing operations. Those seeking licenses may also be having second thoughts about moving their applications through to completion given the unfavorable market environment. Growing cannabis in Massachusetts is a fraught and expensive enterprise with not just the climate, but also energy infrastructure raising production costs amid an epic sell-off in prices.
Average Retail Flower Price
CCC reports the average retail price per gram of flower fell to an all-time low at $6.05 in May. Extrapolating from wholesale pound prices, the average wholesale gram price is $2.99, indicating a 50% markup at retail.
Wholesale Price Analysis
Massachusetts wholesale spot price has staged an impressive 21.7% rally off the all-time low in March 2023. There’s about a $500 spread between Massachusetts’ spot wholesale price and those of Maine and Rhode Island. The expectation is that Maine, Massachusetts, and Rhode Island wholesale prices will converge at some point; the question is whether Massachusetts prices will gain another $500 per pound or if Maine and Rhode Island spot prices will fall $500 per pound – or whether they will meet somewhere in between.
Reports out of Massachusetts and in the press indicate larger growers are reducing or eliminating cultivation capacity due to falling prices, which makes good business sense given the cost of utilities, labor, and real estate in the state and the new wholesale market reality.