Rec or Medical? That is the question...
By Jason G Litalien, Esq
Published August 1, 2021 at https://www.flipsnack.com/JibbahZine/issue-4-tkszeaitk5/full-view.html on Page 37
Almost daily, I get a call from someone interested in growing cannabis in Maine and they want to know if they should go Rec or Medical. I advise everyone to stick with medical and there are several reasons. Cost and profitability are the two biggest reasons and regulations is the usually the third.
With the passage of several bills last month, it seems that the groups that set out to fight big-canna were successful at stopping a repeat of what we have seen in other states. The most important change, I believe, is changing OMP rulemaking to major substantive rules, thus creating more oversight and ensuring that the small-scale caregiver still has a voice. Hopefully this will prevent the implementation of many of the proposed rules that OMP put out in January, including requiring METRC for small-scale caregivers.
Cost and profitability go hand-in-hand. You need to keep costs down or increase revenue if you want to be profitable. I work with small-scale caregivers mostly, so I do not see people coming in with millions of dollars to throw at a retail store and then wait 5 years to make a profit. Most of my clients are just getting started and medical is a perfect place to start. The initial investment can be as little as a few thousand dollars and the rewards can be enormous. If you want to open a rec store, then do it after you have had a successful run in medical.
Could you go straight to opening a rec store, sure you can, but why would you? First, you need to find a town that allows rec stores, this is a hard enough task on its own. Portland and South Portland are saturated with retail marijuana stores and Portland charges obscene licensing fees, $10,000 a year for a rec store license and $5,000 a year for a medical store license! If you open a small-scale caregiver business and work from home, you do not have to worry about those fees.
Rec weed has to be tested, tracked with METRC, there is an excise tax on the wholesale and a sales tax on the retail, all of which make it more expensive, meaning that you need to charge much more to make the same profit. Getting a med card for under $50 a year will save your clients the $50 probably on their first order, because your product costs far less.
Then we have delivery! Rec is illegal to deliver, so if you want to run a legitimate marijuana operation, you can only deliver medical weed to clients with medical cards. This is a huge advantage, because your clients can be anywhere in the State, not just those that find your store online. If I can get a product for less money and have it delivered to my house, why would I drive to a rec store and pay more? I know price is not the only reason, but this article is focused on the business side, not the user side.
Small-scale caregivers, whether they are cultivating or reselling, serve an important role in getting medicine to Mainers. I have many clients who do not cultivate, they buy from others at wholesale prices and then resell to their clients. That is a huge advantage for medical, because you do not need $100k in product on your shelves whenever someone comes in. If you live close enough to your supply line, then you can keep a small amount on hand and buy more as you sell more. It allows you to grow your business slowly and without shelling out as much money up front to start it.
Medical is faster to get started, has less oversight, can be more profitable if run properly, allows for greater expansion, is a proven business model in Maine, and if you read last month’s article, then you also know that in most situations your town cannot stop you from operating a small-scale caregiver business unless you have violated an ordinance or law. I cannot think of a reason why I would choose rec over medical.
Every situation is different, and this article is for informational purposes only, this is not legal advice, and you should consult a qualified attorney if you have a legal question.