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Updated: March 14, 2024

Is the bloom off the bud? World’s largest cannabis company is quietly exiting Maine rec market

marijuana plants File Photo / Courtesy The Maine adult-use cannabis market is growing by double digits. But some fear it's become saturated, and merchants are making less per gram of product. Curaleaf, which reported a 2023 loss of $281.2 million, is in the process of selling its only adult-use cannabis store in Maine, at a South Portland shopping plaza.

Maine's recreational marijuana industry faces growing pains, and one symptom may be the departure of a major retail force from the market.

Curaleaf, the world's largest cannabis corporation, has agreed to sell its sole adult-use store in Maine.

The deal is pending and the company won't discuss terms. Neither will the potential buyer, Foliage Cannabis Co. But it's already working out of the Curaleaf space at 343 Gorham Road, South Portland.

The storefront is the second for Foliage, which has been doing business less than a mile away, at 446 Western Ave., for over a year.

The sale was mentioned March 6 when Curaleaf Holdings Inc. (TSX: CURA, OTCQX: CURLF) released its quarterly and year-end financial results. Curaleaf didn't say much — only that during the fourth quarter of 2023, the company "entered into an agreement to sell our Maine adult-use store."

Curaleaf indicated it will sell the Gorham Road store to Foliage once its conditional license for the new location is approved as an active license, a spokeswoman for the Maine Office of Cannabis Policy, Alexis Soucy, told Mainebiz. The conditional license is due to expire in October.

Meanwhile, the two companies have arranged for Foliage to use its name and brand at the Curaleaf store, she said. However, the location continues to appear as a branch of Curaleaf on its website.

The sale of the South Portland store is remarkable for a company that entered the state's recreational market so enthusiastically in April 2021, just six months after it opened.

At the time, Curaleaf's general manager in Maine, Scott Reed, said, "We have been proudly serving the Maine medical market with top-quality, locally grown flower, and exceptional customer service for nearly a decade, and we look forward to expanding those offerings to our adult-use customers."

Photo / William Hall
Foliage Cannabis Co. now occupies a former cannabis store owned by Curaleaf, behind Cornerbrook Plaza at 343 Gorham Road, South Portland.

Reed is now the co-owner of Foliage, and on Wednesday explained that he left Curaleaf in July 2022 when the company downsized. He and business partner Scott Lever have bootstrapped the starts of both Foliage stores.

"We're self-funded, so we're different from a large company with lots of investors," Reed said. "We can be nimble."

In its results last week, Curaleaf reported 2023 revenue of $1.35 billion, up 6% from the 2022 total, but posted a 2023 net loss of $281.2 million, equal to 39 cents per share.

The New York-based company owns and operates 145 retail locations, in both the recreational and medical markets, and has 21 cultivation sites, according to its website. There's a Curaleaf presence in 17 states including Maine, and the company employs 5,600 people globally.

It is by far the largest cannabis cultivator and retailer in the world, based on annual revenue and a current capitalization of $4 billion.

Buzz kill

The Office of Cannabis Policy on Friday released data showing sales of adult-use, recreational marijuana totaled $18.01 million last month — soaring 28.3% from sales in February 2023 of $14.05 million.

But Maine merchants continue to make less money on the recreational cannabis they ring up.

The average price per gram of usable cannabis was $7.30 in February, the OCP said, down nearly 10% from $8.05 a year ago. The decrease may not seem especially sharp, but it's been steady, falling in seven of the past 12 months.

That trend may explain why some businesses are getting out.

Twenty licensed businesses — 11 cultivation facilities, four manufacturing sites and five retail stores — exited Maine's recreational cannabis market in 2023, according to Soucy.

Usually, Maine had been adding licensees. There was no net loss of cultivation facilities from 2022 to 2023, and there was a net increase of 13 manufacturing facilities and 27 retail stores in that time, according to Soucy. 

The shift is in line with the 2024 outlook a Portland cannabis consultant recently gave Mainebiz.

Sales are expected to continue to climb in Maine, said Jacques Santucci, president of Opus Consulting Group, which does work in the cannabis, hospitality and tech industries.

But as the recreational market becomes saturated and competition increases, not every cannabiz will survive.

"There are more distressed companies, in Maine and other states, mostly in mature markets," he said. The market has reached a saturation point in Portland, which has 29 stores, not including those in surrounding cities and towns. 

"There are not that many cannabis buyers," even with the influx of summertime customers, according to Santucci.

Reed, too, is cautious.

Foliage is currently looking for a third location, perhaps on the midcoast, he said. (The company already has a conditional license for a recreational shop in Rockland.) 

"But now you're starting to see some consolidation" in the recreational market, Reed said. "Especially in Maine, this industry is not for the weak of heart."

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