Vermont estimates the state’s new adult-use marijuana market will top $220 million in annual sales by 2024.

But getting there might be a slog, once sales begin next year.

In a recent report to the Legislature, the state’s Cannabis Control Board (CCB) proposed that Vermont’s adult-use marijuana program focus on small outdoor growers – in particular, those with up to 1,000 square feet of growing space.

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The idea is to make the new recreational market more accessible to individuals who until now have operated underground in the state’s legacy market, especially those operators disproportionately affected by the war on drugs and policing.

The small-is-beautiful approach also dovetails with Vermont’s reputation for locally made artisan products, such as maple syrup, cheese and craft beer.

The CCB’s recommended focus on smaller operators, however, could have an impact in a state already running on a tight deadline to implement rules, issue licenses, grow plants and launch sales.

The market’s anticipated launch comes after Vermont in October 2020 became the 11th state to legalize adult-use sales.

The state’s vertically integrated medical cannabis dispensaries, which are owned by multistate operators, will get a head start in the new market.

Recreational sales are expected to begin at those dispensaries in May 2022.

Newly licensed cultivators, by comparison, are expected to launch by May, with new retailers going online on or before October.

Slow ramp-up

A CCB-backed analysis – using available data and assumptions – shows the adult-use market could experience a slow start, with supply problems hindering sales in the first year.

The model – provided by Denver-based law firm Vicente Sederberg – shows the supply of cannabis flower well below anticipated demand until early 2024, when the supply-demand situation is forecast to become more balanced.

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Geoffrey Pizzutillo is not worried.

Pizzutillo, the executive director of the Vermont Growers Association (VGA), has been working closely with the Cannabis Control Board as it puts the finishing touches on proposed rules that will require legislative approval.

The VGA, largely composed of legacy marijuana farmers, supports the CCB’s small-grower recommendations.

“We would rather start a little bit more slowly by bringing in Vermonters, leading that way, as opposed to having what we’ve seen in some other states where out of the gate on the first of day of retail sales there are 50-, 60-, 70,000-square-foot indoor facilities producing flower,” Pizzutillo said.

Besides, Pizzutillo said, the legacy market is already fulfilling consumer demand.

He would rather Vermont focus on getting licensing right by onboarding as many local growers as possible.

“Let’s be successful by transitioning those people as quickly as possible,” he said.

Brynn Hare, the CCB’s executive director, also supports small, outdoor growers based on the large energy demands of indoor cannabis cultivation.

“That may have an impact on the supply available on the market at given times, but we are working through ways to ensure that supply meets the demand throughout the year,” she told MJBizDaily via email.

Supply hiccups not new

Vermont wouldn’t be the first state to have supply issues after launching a new market.

Maryland’s shelves were empty within days of opening medical cannabis sales in December 2017.

Hawaii’s two medical marijuana dispensaries closed within days of opening in August 2017 after a testing bottleneck disrupted supplies.

Vermont projects adult-use retail sales will be $10 million by the end of 2022.

The adult-use market will begin to ramp up in 2023, reaching $103 million in sales and then doubling in 2024 to about $220 million.

From there, sales are projected to plateau.

Vermont adult-use marijuana projected retail sales by category

Category20222023202420252026
Flower$2,844,867$47,283,629$103,716,829$111,005,765$100,512,745
Pre-rolls$379,810$5,550,094$10,985,150$11,563,101$10,470,078
Concentrates$717,817$5,246,967$11,250,602$11,563,101$10,470,078
Vape pens$3,495,638$26,267,469$56,452,824$57,815,503$52,350,388
Edibles$1,506,387$12,343,104$27,967,892$27,751,441$25,128,186
Topicals$424,730$3,261,408$6,885,035$6,937,860$6,282,047
Other accessories$740,457$3,804,381$4,672,029$4,625,240$4,188,031
Total retail sales$10,109,706$103,757,052$221,930,361$231,262,011$209,401,553
Adjusted so total sales are reduced in months where supply does not meet total demand.

Total medical and recreational sales are projected to hit $222 million by 2026.

Sales in the state’s medical program are expected to decline as the recreational market grows.

The CCB projects sales of medical products to be $12.5 million at the end of 2026, down 21% from expected sales at the end of 2021.

Flower No. 1

Like other recreational markets, flower is expected to dominate recreational marijuana sales in Vermont.

After an expected slow start for the first two years, flower sales are projected to hit $100 million or more by 2024 and will account for close to 50% of the market, with the vape and edibles categories taking up most of the remaining market share, according to the state’s estimates.

Vape sales likely will reach $56.4 million in 2024 with edibles sales almost half of that at $27.9 million.

State projections also show the market reaching full growth by 2025.

The board’s recommendations for licenses and fees were sent to the state Legislature for approval to meet deadlines already written into the state law.

Andrew Long can be reached at andrew.long@mjbizdaily.com.