Medical marijuana dispensaries have sprouted like weeds around Erie, with three new stores opening since February 2021.
But Erie's only medical marijuana grower/processor, Calypso Enterprises, has not been as successful in the past year. Its sales to Pennsylvania dispensaries have declined since March 2021, forcing the company to cut staff and only use about half of its recently expanded facility.
More:Weed growth: Erie's Calypso Enterprises doubles size of medical marijuana growing facility
Why have Calypso's sales stumbled during a time when Pennsylvania's dispensaries have seen their sales skyrocket? After all, the monthly amount of medical marijuana sold at the state's dispensaries increased from around $55 million in March 2020 to about $135 million in December 2021, according to the Pennsylvania Department of Health.
Calypso's sluggish sales are due primarily to the emergence of multi-state operators in Pennsylvania that are licensed as both grower/processors and dispensaries, so they can sell their own product, said Laura Guncheon, vice president of Erie Management Group's project management office. Calypso is an affiliated company of EMG.
"We started to see this trend in the first quarter of 2021, right when we were doing our expansion," Guncheon said, referring to Calypso's 50,000-square-foot addition at its 910 Downing Ave. facility. "There were a lot of mergers and acquisitions ahead of what people thought would be legislation to legalize (recreational) use of marijuana."
Though recreational-use legislation has stalled in Harrisburg, multi-state operators now own most of Pennsylvania's growing/processing facilities and many of the dispensaries.
More:Recreational marijuana coming to Pa.? Legislature takes first steps toward legalization
All four dispensaries in Erie County are owned by companies that also grow and process medical marijuana. They are:
- Rise Erie, which opened the first local dispensary, 2108 W. Eighth St., in April 2018 and opened a second location, 1950 Rotunda Drive, in February 2021.
- GoodBlend, which opened a dispensary at 2178 W. 38th St. in October.
- Curaleaf, which opened a dispensary at 7891 Peach St. in March.
No problem for Curaleaf being fourth Erie dispensary
Being the fourth dispensary to open in Erie didn't concern Curaleaf, said Steve Delich, the company's regional vice president of retail operations.
"As big as Erie is, seeing only three dispensaries operating was an opportunity for us," Delich said. "We were pleasantly surprised how quickly our operations ramped up. It's typically slow in a medical marijuana market."
Rise Erie also saw an opportunity when it expanded to a second location nearly three years after opening Erie's first dispensary.
Even the COVID-19 pandemic didn't hurt sales, though it changed how people purchase medical marijuana, said Tim Hawkins, commercial general manager of Pennsylvania and Ohio for Rise Erie's parent company, Green Thumb Industries.
"COVID changed our business overnight," Hawkins said. "Before the pandemic, we considered online ordering of our products to be the future. It quickly became 50% of our total business, even though customers must still come to the dispensary to pick up their product."
In an effort to further improve customer service, Rise Erie is building a drive-through at its Peach Street dispensary. It also will open an education center where people can learn about medical marijuana and how to apply to the Pennsylvania Department of Health for a Medical Marijuana Card.
The expansion of medical marijuana dispensaries in Erie has boosted the number of local jobs in the industry. Rise Erie employs 68 people, and about 75% of them are full-time workers.
Curaleaf employs 26 people, including five managers. GoodBlend, which didn't return messages seeking comment, said at the time of its opening that it would employ the equivalent of 24 full-time employees.
Calypso remains the largest local employer in the industry, with 109 workers. The number was as high as 135 in mid-2021 before sales declined, Guncheon said.
"We are committed to the Erie region," Guncheon said. "Not only do we employ local people but Calypso is the only medical marijuana organization that participates in the Neighborhood Assistance Program."
The NAP is a tax credit program that encourages businesses to invest in projects that improve distressed areas.
'Very small slice of the pie left over' for Calypso
Though Calypso now sells some of its products to Erie dispensaries, that hasn't always been the case, Guncheon said. There was a time last year when dispensaries in Erie and Crawford counties weren't buying any Calypso products.
"About 80% of the market is controlled by these vertically integrated multi-state operators, so there is a very small slice of the pie left over," Guncheon said. "We went into the retail marketplace to acquire a (dispensary) license and we couldn't compete with the dollar figures being thrown around."
Guncheon has discussed Calypso's situation with state Sen. Dan Laughlin, of Millcreek Township, R-49th Dist.
Laughlin, a proponent of legal marijuana, said one issue is that the state Health Department has not administered the medical marijuana program as well as it could have from a business perspective.
More:Top Pa. drug official denies blame for botched medical marijuana guidance
"The problem is that we can't force dispensaries to buy product from Calypso," Laughlin said. "But what we can do is pass a bill that would allow each independently owned grower/processor to have the ability to sell its own product."
But passing such legislation will likely take a year or longer, Laughlin said.
Calypso might not have that much time. Unless sales to dispensaries improve, it might have to sell to another company, likely a multi-state operator, Guncheon said.
"We are hanging out on a limb," Guncheon said. "We are up against huge conglomerates and we are this small guy trying to eke by."
Contact David Bruce atdbruce@timesnews.com. Follow him on Twitter@ETNBruce.
