The long-awaited launch of Maine’s recreational cannabis market will likely fall short of expectations, with some shops unsure if they will even have marijuana to sell, much less the THC-infused food and drinks readily available on the state’s existing medical market.

One state-approved shop said it may skip opening day altogether, its owners unsure whether they will have any products to sell Friday, the state’s first official day of adult-use sales. Retailers blame a licensing backlog for the expected shortages. Regulators agree, but say that’s what happens when you try to launch a new market during a global pandemic.

“We were so happy to get our state license, but we can’t stock the shelves,” said David Page, an owner of Coastal Cannabis Co. in Damariscotta. “As much as we want to do opening day, and we really, really do, we’re thinking we might sit this out, and maybe give the supply chain a chance to get going. We want to do this right.”

Retailers say they will have a limited supply and variety of marijuana. Most expect to sell out quickly, even after instituting first-day purchase limits. Only one shop has the faintest hope of stocking any infused edibles. Limited supply and pent-up consumer demand created by the four-year road to recreational sales will mean high prices on almost all products.

As of Sunday, Maine has licensed seven retail stores to open Friday. To supply those retailers and protect recreational consumers, the state has licensed seven growers, four manufacturers and one lab to cultivate, manufacture, and test the marijuana products bound for the adult-use market. One city, South Portland, has two licensed retailers, and one town, Fairfield, has two manufacturers. Other licensees are spread across the state, and the only licensed testing lab is in Kennebunk.

That’s a far cry from what consumers, producers and even regulators expected when Maine legalized adult-use cannabis in 2016.

“Much like everything else in this world, it’s going to look a lot different than we originally anticipated,” said Erik Gundersen, director of the Maine Office of Marijuana Policy. “There is going to be limited access, (fewer) stores than we originally envisioned. It has taken longer for applicants to get through the system. There’s the potential for limited product and limited supply.”

DELAYED REACTION

After three years of delays under former Gov. Paul LePage, several legislative tweaks and a couple of contract stumbles, Maine had planned to the launch the adult-use market last spring, but the coronavirus pandemic forced Gundersen to announce a delay. The state needed to figure out the public health logistics of how to safely launch during a public health crisis, Gundersen said.

Steve Pulos, manager of all the Theory Wellness retail locations in Maine, and South Portland store supervisor Chloe Wright are preparing for opening day at their shop near The Maine Mall. Theory Wellness is the only establishment that has a chance to stock edibles on opening day, though owners say that remains a long shot. Brianna Soukup/Staff Photographer

The market wasn’t ready to go then anyway. Maine didn’t have a testing lab licensed to conduct potency or public safety tests on recreational marijuana. Like any adult-use business, labs need both local and state licenses to operate. After COVID-19 hit, very few host communities were conducting any government business this spring, much less issuing marijuana licenses.

While waiting for Kennebunk to approve the lab, Nelson Analytical, Gundersen worked with other state agencies, including the Maine Center for Disease Control and Prevention, to develop pandemic-related control measures for marijuana businesses and consider how to launch the market, with its potential for big opening day crowds, amid a pandemic.

In the end, the state’s COVID-19 checklist for opening day will require shops to do much the same thing any other business must do in these times – limit the number of people in a shop, require everyone to wear a mask, and maintain a six-foot buffer between people. With that settled, Gundersen faced a decision: Now that Maine could safely launch the adult-use market, should it?

Given how long voters had waited, and the rate at which the industry was burning through its limited capital waiting for sales to begin, Gundersen decided on a slower, softer opening, even though it meant fewer stores and limited product availability, rather than wait for a fully realized market opening that might not happen until sometime next year.

“We understand it’s not going to be the big celebratory day I am sure industry and consumers were hoping for,” Gundersen said. “It will be a slower start, yes, but that’s not necessarily a bad thing considering our priority when we launch is to do it as safely as possible … and of course, we fully expect the industry to grow.”

Industry analysts such as the Brightfield Group say it usually takes about 18 months for a recreational market to stabilize and produce enough supply to meet public demand. Until then, however, the price of legal adult-use “flower,” or the dried cannabis bud that people smoke, will be high. Prices will fall as more growers come on line.

But for now, Maine has licensed only seven recreational growers. Three are affiliated with already licensed shops that will begin sales Friday. That means most if not all of their harvest is likely to be used to supply their own stores. Two others are intended to supply retail shops that are still awaiting a final license, which means their harvest may be claimed, too.

That leaves just two adult-use growers – Room 5 in Detroit and Gele LLC in South Portland – to supply the retail shops that don’t have their own recreational grows now, such as Coastal Cannabis, and bolster the product supply and selection of the shops that do, such as Theory Wellness and SeaWeed Co., both in South Portland, and Firestorm Cultivation in Bangor.

Northland Botanicals received its retail license on the first possible day, but without an in-house grow himself, or plans to even apply for one, owner Mark Humphries is unsure what he will have available to sell on opening day. His small Stratton shop is a converted pharmacy that used to support the general store next door, which Humphries also runs.

“From the moment I got the license, all I’ve done is hunt for product,” Humphries said. “It’s cutthroat out there. I’ve had one guy give me a quote, and it’s pretty crazy, but I don’t have much choice. I figure I’m one of the first to get a license, so I’ve got to open, no matter what, even if I have to take a loss on every sale. In time, with more grows, I hope it gets better.”

HUNTING FOR SUPPLY

Even those stores with in-house grows are trying to find more supply so they can offer their customers a better selection and stay open beyond the Indigenous Peoples’ Day weekend, formerly known as Columbus Day. Some are negotiating trades between in-house grows to diversify their product menus. Meanwhile, licensed growers are harvesting everything they have, as fast as they can.

Mohammed “Mo” Ibrahem, owner of Firestorm Cultivation in Bangor, urges customers to be patient about supply issues in early days and instead celebrate the fact that the cannabis market is opening at last. Brianna Soukup/Staff Photographer

That’s not as much marijuana as you’d think. The first growers only got their licenses Sept. 8, meaning that even they won’t have the three months needed to grow marijuana from start to finish, clone to harvest. Instead, they will turn to the medical market to stock the shelves on opening day, taking advantage of a legal caveat that allows a one-time medical-to-recreational plant transfer.

Most adult-use growers started growing marijuana under the state’s medical program in hopes they could time it just right to buy their own medical marijuana from themselves, once they got their adult-use licenses. But nobody knows where they are in the line of more than 100 growers still awaiting their state license to grow recreational marijuana.

Some have hit the license lottery, while others are sitting on medical harvest, wondering whether they should sell to their patients or to a licensed recreational grower. Some medical providers are making a lot of money from selling medical plants into the adult-use supply chain, but others who hope to make that same jump could end up helping future rivals and running out themselves.

But the transfer provision hasn’t turned out to be a cure-all because it only allows the transfer of plants, not products.

That is because Maine taxes adult-use cannabis twice, first at the wholesale level and again at time of sale. If medical caregivers were able to sell infused foods or beverages, or even THC concentrate, into the adult-use market, the state would lose its chance to levy an excise tax of $335 per pound of marijuana flower.

There was a bill pending before the Legislature that would have changed that, but lawmakers adjourned because of the pandemic before taking it up. As a result, adult-use growers have no choice but to buy whole plants from their own medical grows or a willing medical provider as soon as they land their recreational license and hope to get it ready for sale by Friday.

The SeaWeed Co. sign in their shop in South Portland on Wednesday. SeaWeed Co. is one of several seven adult-use cannabis stores that will be opening on Oct. 9. Brianna Soukup/Staff Photographer

Retailers usually need about a month to trim, dry and cure marijuana flower, enter it into the state’s track-and-trace system, send it to the state’s one testing lab and place the final product in a labeled package for sale. It can be done faster – in as little as a week – if the seller is willing to sacrifice quality. With no more than a month to work, such businesses have been working around the clock to convert their harvests into salable product.

That should have been good news for John Lorenz, the owner of Sweet Relief Shop in Northport, who is the only one of the first wave of adult-use retailers licensed to operate both a recreational shop and medical shop on the same property. The businesses share the same name, and the same address, but will be run out of separate buildings.

That should make things convenient, but there’s a catch: Sweet Relief’s license is just for selling, not growing. His grow license is still pending. Until he nabs an adult-use grower’s license, Lorenz must source adult-use marijuana from a wholesale grower, even though he has a thriving medical grow.

To use the plants that he grew himself, Lorenz would have to sell his medical plants to a licensed adult-use grower, who would then sell them back to Lorenz for use in his recreational shop.

“Isn’t that crazy?” Lorenz said. “Somebody selling my own plants back to me! Wonder what they’ll charge me.”

Pickings get even slimmer when it comes to recreational concentrates. Maine has licensed only four manufacturers to date, each one destined to function as the in-house lab for a vertically integrated adult-use operation. Of these, only one has the commercial kitchen certification needed to create THC-infused foods, or edibles.

Accessories that will be for sale behind the counter at SeaWeed Co. on Wednesday. Brianna Soukup/Staff Photographer

“It’s a race to see if we can get any edibles on our shelves by opening day,” said CEO Brandon Pollock of Theory Wellness. “We are not going to have everything we want, or as much as we want, on (Friday), but we’ll get there pretty quickly. We’ve got the advantage of having done this before, in Massachusetts, so we’re pretty confident we know what we’re doing.”

NO PRICE GUARANTEE

Theory Wellness plans to use the money it earns from its four Massachusetts stores to offset the low profit margins, if there are any profits at all, on its early-market recreational sales in Maine, he said. While its Maine operation is separate, the multistate operation yields back-of-the-house savings that will let Theory sell its local adult-use marijuana at medical prices, at least at first.

That won’t be the case for most of Maine’s retailers, in part due to a lack of licensed product at the market’s start, but also because Maine taxes its adult-use marijuana at a combined 20 percent and requires it to be tested, which runs about $350 a batch, while it taxes medical products at 5.5 percent for flower and 8 percent for edibles, and allows them to be sold untested.

Less than a week out from the first sales, Maine retailers are reluctant to say what they’ll be charging consumers Friday. In part, that’s because they don’t want to broadcast their opening day prices to their competitors. But it is also because they’re still cutting a slew of last-minute deals to secure extra supply, and have no idea what they’ll end up paying for it.

The black market price of illegal marijuana in Maine varies by location and quality, but it runs from $130 for an ounce of cheap weed to $320 for an ounce of top-notch marijuana. At a medical marijuana shop in Maine, the average price of an ounce is between $200 and $250. It’s still too early to say what the average price of adult-use flower will be come Friday, retailers say.

Steve Pulos, the manager of all of Theory Wellness Maine retail locations, sits behind the front desk of the new Theory Wellness retail store on Thursday. Theory Wellness, near the Maine Mall in South Portland, is one of seven retail stores authorized to sell recreational marijuana when the state market launches on Oct. 9. Brianna Soukup/Staff Photographer

Opening day inflation drove the price of an eighth of an ounce of marijuana in Illinois, which launched its recreational market on New Year’s Day, to a whopping $80. Although discounts are traditionally given for buying in bulk, buying a full ounce at that rate would have set the price at over $600 an ounce. On the street, an eighth usually runs about $35.

But even opening day prices in Maine are likely to remain lower than what you would pay for the same product in Massachusetts, the other New England state that allows recreational sales. The average price of an ounce of high-quality adult-use flower is about $340 in the Bay State, although prices vary from place to place and strain to strain.

It is unclear what a pandemic-era launch will mean for total sales. The state predicts the adult-use market will reach $118 million in sales in its first full fiscal year of operation. New Frontier Data, a private cannabis research firm, predicted the state’s first-year sales will exceed $180 million, given the state’s high self-reported consumption rate and bustling tourism industry.

New Frontier doesn’t make opening day predictions, claiming they measure product availability more than interest. For example, Michigan and Illinois both recently legalized adult-use cannabis. Michigan tallied $221,000 worth of sales on the first day, while Illinois recorded $3.2 million in first-day sales. Why? Michigan launched with three stores, Illinois with 37.

The lead-up to opening day weekend has been exciting, exhausting and incredibly frustrating for SeaWeed founder Scott Howard.

He is proud of his carefully manicured South Portland store, with its natural wood shelving, butcher block display tables, and the employee-drawn mermaid logo, but without a full product line of flower, concentrates and edibles, he worries about what kind of first impression the recreational industry will make on the cannabis-curious.

The Theory Wellness retail store on Thursday. Brianna Soukup/Staff Photographer

“I know these are challenging times for the state, but it is not even allowing us to be what we’d like to be, even after waiting four years,” Howard said. “We have very limited access to a very limited supply at a very high tax rate, yet somehow the state expects us to save the state budget and eliminate the black market.”

Firestorm owner Mohammed Ibrahem urged customers to be patient and be glad the market is launching, despite the pandemic. He has no doubt that Maine recreational marijuana will become as well known as its medical marijuana, in time, but he predicts the opening weekend and first few months could be a “rough and bumpy ride.”

“We expect to run out of almost everything,” Ibrahem said. “We’re harvesting and moving product through the system as fast as we can, but a lot of the shops in other states have run out at the start of the market, and they weren’t opening during a pandemic. We are in uncharted territory. Our patients on the medical side are used to more, but we’re just not there yet.”

At the start, however, Firestorm plans to institute a purchase limit of 7 grams, or about a quarter ounce, for flower. That’s enough cannabis to roll about 14 joints. The opening weekend limit is far less than the 2-1/2 ounce purchase limit set by state laws, but it means Firestorm can make its limited supply of bud last a little bit longer, Ibrahem said.

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