Amid cannabis supply concerns and lackluster adult-use sales, Connecticut’s own homegrown multi-state operator, Fine Fettle, sees potential in the state’s nascent recreational cannabis market.
“Is it too expensive? Sure. Is the menu maybe not big enough? Sure,” Benjamin Zachs, Fine Fettle COO, said. “But this program got off without some of the major problems that people have seen in other markets. Are we pushing forward equity faster than other states? 100%, that answer is yes.”
On the first day of legal adult sales in Connecticut, Jan. 10, the state’s seven retailers made about $359,000 in sales. By the end of the month, the total sales reached about $2 million. Comparatively, Vermont made $2.6 million in its first four weeks of adult use sales last fall, while Rhode Island had about $786,000 in adult use sales one week after that state’s market opened on Dec. 1, 2022.
To give more context to those figures, Connecticut has a population of about 3.6 million to Vermont’s 645,500 and Rhode Island’s 1 million. Connecticut also has about 50,000 registered medical cannabis patients, to Rhode Island’s 16,500 and Vermont’s 4,302.
“Overall I think sales have been pretty good. They haven’t been blowing the doors off the water, but the market has definitely increased from 50,000 patients that we had, but we also are competing with the legal market in Massachusetts and a legal market in Rhode island,” said Zachs.
For the time being, the adult use market in Connecticut has yet to surpass the medical market, but that is likely to change as more operations get off the ground.
“I think that people who thought that this was all just gonna go off without a hitch were unrealistic. There are markets that have been open for 10 years that are still struggling and figuring things out,” said Zachs. “I wish the lottery was fairer toward the applicants. They’re clearly working on that in the bill they’re putting forward.”
The proposed law, HB 5730, was filed about three weeks ago. It would set a one-application limit for any single individual or entity that submits to future cannabis license lotteries.
“The equity joint ventures were a novel idea. They created a map to make this work, and to grow jobs within those areas,” said Zachs.
The Social Equity Council gave final approval to Fine Fettle to open its Manchester dispensary at its Feb. 7 meeting, making it the first new dispensary since the market opened.
“Manchester is done and ready and good to go, so that’s really exciting,” said Zachs. “We’re super proud that it’s gonna be the first equity joint venture open in the state.”
Aside from the licensing lotteries for social equity and general applicants, prospective operators were able to partner with larger companies or financiers to create Equity Joint Ventures.
The state allows existing license holders and other financiers who may not otherwise qualify for social equity status, to partner with candidates that do qualify as social equity applicants in order to forgo the lottery process. The catch is that the social equity applicant must have a majority stake in the company.
Fine Fettle is already serving both medical and adult use customers in Newington, Willimantic and Stamford.
Fine Fettle recently received zoning approval from the Town of Old Saybrook for another adult use dispensary. The Town of Bloomfield also recently approved zoning for Fine Fettle’s proposed cultivation facility.
“Finding real estate in Connecticut and going through all these processes is not simple,” said Zachs. “Now we’ve got to get to work on building a grow and getting more products to market and building a bigger, more expansive cannabis program overall in this state.”
In contrast to Connecticut, Massachusetts has 267 retailers and 102 cultivators as of the Bay State’s Feb. 9 meeting of the Cannabis Control Commission. Fine Fettle has experience with this difference, operating an adult use retail store in Rowley, Massachusetts and a vertically-integrated operation on Martha’s Vineyard.
“They have stores and businesses closing now, but it was a boom at the beginning, with $60 eighths and stores just crushing it,” said Zachs. “And we’ve seen over time that it’s dwindled now to the point where the market is unbelievably competitive.”
At this point, Connecticut only has four cannabis growers, who are now supplying the adult use and medical markets. Last summer, the Social Equity Council approved 16 cultivator licenses. Five months later, after appealing rejections in court, 11 more prospective growers received the SEC’s approval. Along with four micro cultivator licenses that were awarded last year, the state’s bud supply could dramatically grow, but only if those newly-licensed growers are able to get their businesses up and running, let alone produce its first crop.
In the short term, the start of legal recreational sales has taken its toll on the supply in the state, which recently reaffirmed that it was still limiting adult use sales to a quarter of an ounce (7 grams) per transaction.
“Now with such an influx of consumers our wholesale prices have gone up,” said Zachs. “We’re figuring out the new normal, so there are definitely growing pains and I am expecting to see prices come down over time, but there needs to be an addition of cultivators to the market.”
In recognition of the current state of the market Fine Fettle sent a mass email last week noting the increased prices across the market, which is being driven by a shortage in supply.
Trulieve, which operates a dispensary in Bristol, has also noted the supply problems on its website.
“We are painfully aware of the limited product inventory across the state of Connecticut right now, and we are working closely with all producers and growers to restock our supply as quickly as possible. Our suppliers are doing everything they can to replenish product inventory across the state and we thank them for their tireless efforts,” said the statement on the website directed toward customers. “On behalf of the cannabis community, we apologize for any inconvenience and will provide updates to our email/text subscribers as products are restocked.”
All things considered, Zachs said he is optimistic about the market’s future.
“I think the intent has been pretty darn good,” he said. “And I think we’re seeing things grow and evolve and change, which is a huge step that we should take as a win.”