Not only are they shuttering retail stores, but they are closing all production and cultivation facilities in those states as well – again, the only one left is in Massachusetts. Curaleaf cited a “difficult operating environment” in these states, due to massive oversupply of flower which has led to a dramatic drop in wholesale prices, and competition from the black market. These problems where consistent in all three states they plan on leaving. California is infamous for these issues, Colorado has seen prices plummet in the last few years, and Oregon is one of the most oversupplied markets in the country.  

Company representatives state that they will “place a laser focus on cash generation in its core revenue-driving markets moving forward.” CEO Matt Darrin says Curaleaf will place greater efforts on expanding operations in newer markets across the US. “We’re seeing the growth opportunities and the greatest opportunities in markets that may not be the markets where some of that took place years ago. So as the industry matures, we are focused on the markets that are generating strong profits and are very stable markets.” 

What happened in New Jersey? 

Last week, it was announced that Curaleaf would be kicked out of New Jersey’s recreational cannabis market over “labor practices”. Basically what this means, is that NJ officials voted against renewing Curaleaf’s license to grow and sell weed because the company did not properly notify the state’s Cannabis Regulatory Commission about employee layoffs. The company was in the process of shutting down two of its NJ locations. 

Thank you for stopping in. Head over to the Cannadelics Weekly Newsletter for direct updates; and get access to awesome deals on cannabis buds, vapes, edibles, smoking devices and equipment, cannabinoid compounds, and some psychedelic products! Go get high responsibly!

But in an interesting change of heart, The Board of the New Jersey Cannabis Regulatory (CRC) reversed course, and voted during an emergency meeting on Monday to reapprove Curaleaf’s adult-use recreational cannabis license renewal. So, their license that was set to expire on April 21^st, will be reinstated, and their recreational stores in Bordentown, Bellmawr, and Edgewater Park can continue operations.  

Curaleaf’s dispensaries have generated more than $5 million in tax revenue dollars for the state of New Jersey, according to the company’s chief compliance officer, James Shorris. He also added that the “company has bargained in good faith with New Jersey employees who have joined the United Food and Commercial Workers Local 360.”  

That being said, the company has had a spotty record with labor issues in the past. Last year, the National Labor Relations Board issued a citation to Curaleaf for refusing to work out a deal with unionized workers in Chicago, Illinois and Phoenix, Arizona. Many states are implementing laws that require companies to bargain with employees if the majority of them want to discuss unionizing.  

The future of cannabis  

Although legalization is overall a good thing (people getting arrested for cannabis possession is ridiculous, I think we can all agree to that), the bottom line is, the industry is not generating nearly as much revenue as anticipated, and businesses are struggling. Pretty much everyone in the supply chain including cultivators, extractors, dispensary owners, and even those operating ancillary businesses like software and technology are feeling the pain of this stressed market.  

But the problem is not demand, people are still buying weed in the same numbers, if not more so, than in years prior. There’s been a huge uptick in middle-aged to older Americans who use cannabis products as well. So it’s not that people are losing interest in weed, although the culture has changed dramatically, it’s because of numerous different elements that make it difficult for weed business to make a profit – mainly taxes and the still-thriving black market.  

Cannabis businesses are notoriously overtaxed. Then factor in the many other costs and fees associated with operating a weed business, and it translates to higher prices for consumers. Higher than what they would find from a street dealer or unlicensed (black-market) dispensary. And because these unregulated distributors have access to all the same products, sometimes better ones, than legal dispensaries, that makes for an extremely hostile and competitive environment for any trying to operate an above-board cannabis business.