Marijuana business hard to figure
First-year estimates wildly different
The business plans of the state’s 20 medical marijuana licensees are a study in sharp contrasts. Each of the companies was set up to grow and sell marijuana for medical use, yet many of their first-year projections about revenue, plant production, and customers are wildly different.
For example, New England Treatment Access, which plans to open a Brookline dispensary, is forecasting that it will grow 2,400 pounds of marijuana at its cultivating facility in Franklin during the first year. By contrast, a Holyoke firm going by the name of Debilitating Medical Condition Treatment Centers is projecting that it will grow only 25 pounds. The average for all 20 firms is 480 pounds.
Despite its low production, the Holyoke firm estimates nearly $3.8 million in sales in its first year. By contrast, Good Chemistry, a firm opening a dispensary in Boston, expects to grow 588 pounds of marijuana yet bring in only $3.5 million in revenue. On a per-ounce basis, the Holyoke firm expects to collect a whopping $9,400 an ounce compared to $373 an ounce at the Boston company.
Brighton Health Advocates of Fairhaven is projecting its revenue will exceed expenses by nearly $1.9 million in its first year, while Medical Marijuana of Massachusetts is forecasting expenses will top revenues by nearly $1.3 million at its location in Mashpee. Overall, 11 of the 20 companies expect to lose money in their first year and nine expect to make money.
The numbers all come from filings made by the companies in their license applications, which are posted on the state Department of Public Health’s website.
Most of the controversy surrounding the approval of medical marijuana licensees has focused on whether the Department of Public Health properly vetted the applicants and checked out their claims of community support. There has been remarkably little scrutiny of the actual business plans of the applicants and whether they are realistic.
Some of the differences in company projections can be attributed to differing approaches. New England Treatment Access, for example, which was awarded two licenses in Brookline and Northampton, plans to grow its marijuana at a 60,000-square-foot facility in Franklin. The enormous size of the facility probably explains why it expects to grow 2,400 pounds of marijuana for its Brookline shop in its first year.
Yet other facilities closer in size are expecting to harvest very different amounts of marijuana. Debilitating Medical Condition Treatment Centers is using a 12,000-square-foot building to harvest an estimated 25 pounds of marijuana, while Brighton Health Associates in Fairhaven says in its application that it plans to use 10,000 square feet of space to grow 1,180 pounds.Officials at the Department of Public Health declined comment on the numbers contained in the applications.