Home Economy Cannabis cultivators across R.I. loaded with product, audit finds

Cannabis cultivators across R.I. loaded with product, audit finds

By

Christopher Allen

-

04/12/2024

Cannabis — AN AUDIT RELEASED FRIDAY of the state’s cannabis cultivator market found that 24% of the total square footage of production space was not being utilized./ PBN PHOTO/MIKE SALERNO

PROVIDENCE – A recently conducted audit of the state’s cultivator license moratorium and its effects on the 65 licensees showed the industry has plenty of excess capacity to serve the current market, the Cannabis Control Commission learned Friday. Right now, 97,500 square feet of cultivation space is not being utilized, according to the audit, representing

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PROVIDENCE – A recently conducted audit of the state’s cultivator license moratorium and its effects on the 65 licensees showed the industry has plenty of excess capacity to serve the current market, the Cannabis Control Commission learned Friday. Right now, 97,500 square feet of cultivation space is not being utilized, according to the audit, representing 24% of total space. The state's cultivators had a combined 5 million grams of unused inventory over 2023, said Cindy Miller, senior economic and policy analyst with the R.I. Office of Cannabis Regulation, who told the commission that the predicted demand of adult recreational use “has been overestimated." “More product has been grown and processed than sold," said Miller, noting the 584% increase in wholesale production in 2023, resulting in a 57% increase in cannabis flower and trim held on reserve. “[The cultivators] have room to increase production to meet current and future demand...There is a need in the market to sell what has already been grown or harvested." The adult use sector has driven the state’s cannabis market since recreational legalization while medical sales have steadily declined, according to the audit. Total medical registrations fell to roughly 9,000 as of February 2024, which Miller credited in part to the lack of significant price differences, and the "time-consuming process" and fees related to obtaining a patient card. Last year the R.I. Department of Revenue estimated adult use sales of cannabis would reach $76 million this fiscal year, with more than $15 million in total state and local tax revenue. According to the “seed to sale” tracking system used by the OCR, total retail sales grew 24% in 2023. The office predicts a 2% growth of monthly sales through 2024. But falling retail prices continue as the industry waits for the CCC to issue the remaining 24 retail licenses allowable by statute. Carly Gregory, who holds a "micro" class cultivator license with Green Angel LLC, feels the audit was proof of a still oversaturated sector, even as a number of licensed cultivators previously on the sidelines are now coming online. "What's happening is not indicative of a competitive free market," she said. Gregory said the goal of regulators should not be to ensure adequate supply, but “to support the community of cultivators,” who she said were not being protected. “We truly are the backbone of this market," she said. The moratorium will be in effect for two years after the commission issues its final rulings. Chairwoman Kim Ahern said they will reconvene on April 26 to give time for additional public comment. “We do care about this industry succeeding and thriving,” she said. Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com