Massachusetts MMJ Market Estimates: $5M-$80M

How big will the Massachusetts medical marijuana market be once dispensaries open? It’s a hotly debated question in the MMJ industry.

Estimates are all over the board, with some experts predicting annual sales of just $5 million and others projecting revenue of nearly $80 million.

That’s an unusually large gap in estimates for a new market, highlighting differing expectations for Massachusetts’ medical marijuana industry and making it difficult for entrepreneurs to make financial projections.

Marijuana Business Daily projects that revenues will be in the middle of the range at the start, with initial annual sales of around $40 million based on several factors including average patient spend and dispensary revenues in similar markets.

The $5 million estimate is simply way too small.

With up to 35 dispensaries allowed in Massachusetts, that would equate to average revenues of $143,000 per center when all are open. That’s an absurdly low number in even the smallest medical cannabis markets. If that’s the case, most dispensaries would not be able to stay in business. Even if only some dispensaries actually open in the first year, they will likely generate way more than $5 million in collective sales given potential demand.

On the other hand, estimates at the top of the range appear way too high, at least initially. Sales of $80 million annually would mean each dispensary is pulling in an average of more than $2 million in revenues – much higher than the national average.

It’s not out of the question, but it will likely take time to ramp up to those numbers.

And few dispensary applicants are planning on such strong sales right off the bat.

Andrew DeAngelo, who helps run Harborside Health Center in California and has applied for a dispensary license in Boston, told the Cape Code Times that his business plan calls for 50 patients a day at the start. He estimates that patients will spend about $90 per visit, for a total haul of $4,500 per day.

That would put revenues at between $1 million and $1.6 million depending on how many days a week the dispensary is open. He expects the patient base to grow by 50% the first year, 25% the second year and 10% the third year. Under that plan, the dispensary wouldn’t top $2 million in sales until the second year at the earliest.

Of course, much will depend on how many patients sign up for the program. The state’s official estimate is 2% of the population, or around 127,000 patients.

That’s a wildly optimistic, best-case scenario, at least when looking at other MMJ markets.

More likely, the patient base will be in the tens of thousands to start the first year and will grow over time.

Daily News | Briefs | Dispensary/Retail Store Business News | Massachusetts Medical Cannabis Business & Marijuana Legal News

 4 Comments

  1. MMJ December 18, 2013
    • chrisw December 18, 2013
  2. Fernando December 22, 2013
  3. Marijuana Dispensaries December 23, 2013

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