Moving From Medical to Adult-Use in Massachusetts: Sira Naturals Looks Ahead to Broader Market

Moving From Medical to Adult-Use in Massachusetts: Sira Naturals Looks Ahead to Broader Market

The July 1 adult-use start date looms, and medical cannabis businesses are getting ready to convert.

May 23, 2018

Sira Naturals is one of Massachusetts’ 24 medical cannabis retail companies expected to lead the state’s blossoming marketplace into a new era of adult-use sales later this year. After voters approved Question 4 in 2016, the state’s Cannabis Control Commission began drafting the transition from medical-only to a blend of regulated medical and adult-use retail—the first of its kind on the East Coast.

In the greater Boston area, Sira’s CEO, Michael Dundas, began planning his  company’s transition early.

Founded in 2013, the vertically integrated Sira Naturals (formerly known as Sage Naturals) went on to open three medical dispensaries in Cambridge, Somerville and Needham. “Our mission is to provide premium cannabis, sustainably grown and sold with integrity,” Dundas tells Cannabis Dispensary.

Adult-use regulations went into effect in March, according to the Secretary of the Commonwealth of Massachusetts. In late May, the state’s Cannabis Control Commission approved 205 cannabis businesses for the next phase of the adult-use licensing application process—including Sira Naturals. Approved companies must now submit additional application materials, pass a criminal background check and obtain a signed letter of agreement from local officials in the community where a particular cannabis business is planned. 

The state regulating agency began the adult-use application process by welcoming active registered medical dispensaries, like Sira, and those businesses that qualify for “economic empowerment” licenses (companies owned by Massachusetts residents who live in areas disproportionately affected by marijuana arrests).

From that point, the state has 90 days to approve applications. As long as things move according to plan, that will bring business owners and regulators to July 1—the presumed “start date” for the state’s adult-use market. Dundas says the work that his company undertook to become a compliant medical cannabis business will make this impending transition as smooth as possible. The retail market conditions are already in place; it’s just a matter of tilting to a broader customer base and  a tighter set of rules.

“It’s relatively straightforward,” Dundas says. “Most of the products we create now will require minor modifications in order to be sold on the adult-use side, but we plan to co-locate two of our facilities—meaning that two of our facilities, in Cambridge and Somerville, will provide both medical and recreational products. We will have a … physical separation between the space in the retail facility for medical and for recreational.”

According to the Massachusetts regulations, 35 percent of a store’s cannabis inventory must be guaranteed for medical patients (if a dispensary is going to co-locate its services in that way). The two customer bases will be permitted in the store at the same time, but Dundas says that retailers will need to create distinct sales areas for both.

Furthermore, on the manufacturing side, Dundas says his team will need to fine-tune the products to new adult-use requirements—"namely, 5 milligrams per serving, [and] up to 20 servings per package. That is not a requirement on the medical side.”

“Going from medical to adult-use will be easier than going from adult-use to medical,” Dundas says. “There was a heightened training requirement on the medical side, which has prepared our patient-facing or customer-facing sales agents well."

But after spending a few years building the Sira dispensaries and developing business models, Dundas says his team is well-equipped for the transition ahead. The Cambridge location opened in March 2017, and, since then, the Sira staff has gained valuable experience in customer service with its patient base. Adding in recreational customers will bring a new set of challenges—a broader customer base to educate and, without a doubt, a sharp increase in statewide demand—but Dundas says that the state’s robust medical regulations have given existing businesses a guide in navigating the market conversion ahead.

Even though Massachusetts’ medical law was approved by voters only in 2012, the state has taken cues from regulatory decisions that came before it in other markets. Massachusetts lawmakers spent time in Colorado, where they dove into the nuts and bolts—the positive and the negative—of that state’s own precedent-setting adult-use market. (“After nearly a year’s worth of research, we knew that marijuana policy was complex—but we were still surprised by the scope and breadth of the issues that had arisen as Colorado implemented their ballot law,” State Sen. Jason Lewis said last year.) 

The move offered Massachusetts legislators an opportunity to tighten regulations, and Gov. Charlie Baker became vocally involved when he pushed for renewable energy standards.

“Going from medical to adult-use will be easier than going from adult-use to medical,” Dundas says. “There was a heightened training requirement on the medical side, which has prepared our patient-facing or customer-facing sales agents well. There will be additional training related to the compliance aspects of adult-use. We will be co-mingling adult-use customers with medical customers; there’s a whole class of products that we will carry for medical patients—which adult-use customers are not allowed to obtain. There will be compliance training. There will be sales training; the sales process will be a little bit different, but not too different from what we do for our medical patients.”

According to Arcview Market Research statistics, adult-use spending in Massachusetts will leap toward the $1-billion mark in just the first few years of regulation. For the companies that entered the regulated cannabis space in Massachusetts, the move to adult-use is a lucrative entry point to a state market that is at the forefront of East Coast cannabis. Medical dispensaries already operating in the state have been granted a leg up in what will no doubt become an increasingly competitive marketplace.

“Relative to the way the medical program was originally rolled out back in 2013, which did have some bumps along the way, the roll-out of the adult-use program has been remarkably smooth,” Dundas says. “The Cannabis Control Commission set an extraordinarily aggressive timeline in order to implement its regulations—which included [writing] draft regulations, going out to public comment, coming back and revising those regulations, promulgating them and then setting forth an application timeline.” (Peruse the archive of Cannabis Control Commission documents here.) 

“Incredibly,” Dundas continues, “they have hit every single deadline that they’ve set for themselves. So, I think that, despite there being a broad and eclectic stakeholder community here in Massachusetts, often with divergent interests, the Cannabis Control Commission has done a really good job of assimilating all of those different interests into a body of well-reasoned regulations and, again, hitting every benchmark on time.”

Top photo courtesy of Sira Naturals