After the Rhode Island Cannabis Act was passed, Spencer Blier, CEO and founder of cannabis cultivator Mammoth Inc., says he saw the number of cannabis “brands” a shopper could find at the state dispensaries soared from between 20 and 30 to over 60.
Now, 10 months after Rhode Island legalized recreational cannabis, the state’s 60 cultivators are struggling with falling prices as demand is not matching the growing supply while they wait for the R.I. Cannabis Control Commission to issue the remaining 24 retail licenses.
Only time will tell if demand catches up, said Blier, who spoke on a four-person panel during Providence Business News’ 2023 Business of Cannabis Summit on Sept. 7 at the Providence Marriott. The panel discussion was one of two that took place at the summit and focused on these opportunities and challenges faced by Rhode Island cannabis business owners.
While Rhode Island’s cultivators must overcome several obstacles, panelists agreed the state is still well-positioned to help its businesses remain adaptable.
Cultivators within Rhode Island have been facing competition from nearby Massachusetts, which launched its retail cannabis market in 2018, as declining prices because of an oversupply have hit both sides of the border.
Also, cultivators and retail sellers in Rhode Island have been strained by the state’s slow regulatory rollout, which at one point prevented dispensaries in Rhode Island from advertising while those in Massachusetts had no restrictions.
But Blier said that the slow issuing of the remaining 24 retail licenses could prevent a further drop in prices for cultivators.
“The best way to avoid that kind of price crash we’ve seen happening in Massachusetts is to make sure … there is some serious thought put into spacing these [licenses] out so that the retail stores aren’t price battling with each other, and the cultivators aren’t suffering the prices going lower and lower,” Blier said.
While the current cultivation market within Rhode Island is competitive, Stuart Procter, co-owner and laboratory director of PureVita Labs LLC, said branding is very important for businesses to thrive.
“There’s very little differentiated product … it’s very much people’s understanding word of mouth,” Procter said.
He also noted that increasing public awareness about cannabis is crucial because it helps boost brand recognition, which can also give businesses greater pricing power.
“Public education is really important and trying to get people to understand the products will enable branding to be more powerful,” Procter said. “That’s how you can drive up price because people know they want a brand, then the saturation of the market becomes less critical to businesses and their own ability to price products.”
Advertising and improving the public’s overall understanding of cannabis can also help capture any potential demand from new users.
“There’s a huge populous out there right now that are unaware of what cannabis actually is and how it works,” Procter said. “Reaching the general public is one of the biggest challenges we face in a safe way … it’s a double-edged sword because you want to get the information out but target the people who need it.”
Blier said that allowing retailers to advertise has helped boost awareness for both his own business and Rhode Island’s recreational market. But because advertising restrictions remain on cultivators, it is more difficult for them to market their products.
But panelists agreed this will likely change.
Armand T. Lusi, president of the Rhode Island Cultivator Industry Association and a member of the R.I. Cannabis Advisory Board, said allowing cultivators to have equal advertising opportunities will be a crucial priority to fulfill the commission’s commitment to social equity.
“Cultivators have been disproportionately impacted; for example, 60 cultivators pay $1.27 million in license fees, and we can’t advertise,” said Lusi, who is also principal of Evergreen Gardens LLC. “My focus is going to be purely on the cultivator because we provide more product than the dispensaries.”
Kimberly Ahern, chairwoman of the R.I. Cannabis Control Commission and who delivered the keynote speech at the summit, said equity will be one of her primary focuses as the commission continues developing regulations and issuing the remaining retail licenses – including several that are reserved for social equity applicants.
“Additional efforts are needed to reduce barriers to ownership and participation in the cannabis industry for individuals and communities most adversely impacted by the enforcement of cannabis-related loss,” Ahern said.
Ronald Crosson, chairman and social equity officer of the Cannabis Advisory Board, said he and fellow members of the board will work on gathering information to fully understand how to address the root causes of social equity issues within the state’s cannabis market.
“There needs to be some type of advisement to see how we can create a system or create solutions that can address the needs of the businesses,” said Crosson, who is also executive director of Urban Ventures Inc. “One of the things I’d like to do is put context behind … what does social equity mean? And what does it mean to be disproportionately advantaged?”
