Analyst: Massachusetts Cannabis Store Count 'Is Growing Faster Than Sales'

Massachusetts has experienced an accelerated growth in cannabis stores, but this will not be the main catalyst for the state operators’ value.  

Companies will likely see the upside in the state coming “from expanded cultivation,” according to Cantor Fitzgerald analyst Pablo Zuanic.

What Happened: The Massachusetts cannabis market lacks stores, having only 15 per 1 million residents — the second-lowest in the U.S. next to Illinois, which has 7 stores per 1 million people.

Nevertheless, “the store count is growing rapidly," the analyst noted.

With around 217 adult-use stores in preparation at the moment, the density could reach 47 stores per 1 million people, staying only behind Oregon, Colorado, and Washington.

While Boston and the greater Boston area are in a high deficit of stores, with only two stores with adult-use sales in the city, this could soon change towards the other end.

Why It’s Important: According to the estimates, the average annual revenue per store halved to $9 million over the course of a year from Q1 2020 to Q1 2021.

“That said, we estimate the store count is growing faster than sales,” noted Zuanic. “We estimate MA rec consumption per capita at $133 (vs. AZ med consumption at $150), so we agree the market has room to grow (CO rec ex med is ~$350). But we see little room for revenue/store metrics to grow. For now, wholesale prices remain stable and healthy, as per Cannabis Benchmarks."

The analyst cited Curaleaf Holdings' CURLF footprint in the state, adding that with the “given store and cultivation caps, for the most part MA will remain fragmented unless the rules change."