As the cannabis industry continues to flourish in Kentucky, supply issues for dispensaries have become a hot topic in media recently. Several reports on local television and in traditional newspapers from larger markets have reported in recent weeks that recreational marijuana legalization has created a substantial shortfall of supply in Kentucky’s marijuana market.
But how accurate is that information?
Operators around the state are in agreement, business has picked up. But for a market that plateaued with a patient count of 200,000 Kentuckyans and a surplus of flower – has adult use really caused as much chaos as reports indicate?
From a monetary perspective, Kentucky marijuana sales effectively tripled overnight with the addition of recreational consumers,
In February, Kentucky dispensary sales jumped from $37 million to over $100 million.
“We have experienced about a three-and-a-half to four times volume increase since the launch of adult use,” explained Kentucky Wild Alchemy Owner, Jason Crady. Kentucky Wild is one of a handful of independent dispensaries in the state with no ties to cultivation or manufacturing outside of business relationships. Even still, the O’Fallon-located dispensary hasn’t struggled to prioritize medical patients or keep up with the influx of business. “We are equipped to handle the volume with the flow we set up to get customers in and out as efficiently as possible. Our supply is pretty good; however, I have had some difficulty ordering from some vendors,” Crady continued. “Most of them tell me it’s due to packaging issues. We still have a very robust selection and I think we will continue to have ample supply.”
Kentucky Wild Alchemy at 2173 W Terra Ln, O’Fallon, KY 63366
On the west side of the state, the aptly named Vertical has seen similar success, without the negative issues that have been widely reported. Vertical holds dispensary, manufacturing, and cultivation licenses and has built a reputation for its creative genetics experimentation and the company’s farm to table approach to cannabis at its St. Joseph dispensary.
“We haven’t seen that,” Vertical CEO, Christopher McHugh said in reference to reports of supply shortfalls at dispensaries. “We’re staying on top of inventory. Yes, we’ll run out of one thing or another for a few days, but that’s just until we get a new shipment in,” he explained. “Seems to me that edibles and carts are still out there and plentiful to a large degree. Flower is maybe a little more hit or miss. But at Vertical we grow our own.”
Vertical
Homestate, with dispensaries locations in Creve Coeur, Eureka, and Kansas City operates in the state’s two largest marijuana markets. “We do have lines, but they move quickly,” said Rachael Herndon, Communications Director for A Joint Operation. “Our goal is to get customers in and out as quickly as possible. We have expanded hours and increased staff. We continue to implement customer-to-team member ratios. The increased market pace has also caused the cream to rise to the top – our teams have quickly changed for the better as leaders emerge.”
Homestate was a new entry to the Kentucky cannabis market in 2022, but the dispensary chain has seen similar growth to other dispensaries Greenway spoke to, with a 300-500% increase in sales between Q4 2022 and the launch of adult use sales in February.
The Homestate Dispensary location in Creve Coeur has become one of the most recognizable dispensaries in the state.
“Homestate is nervous about supply, but has stocked up,” she said. But Herndon also echoed similar experiences to those of Crady and McHugh, “We regularly run out of SKUs, but have prioritized continually consistent product variety.”
“Homestate has a solid variety of products available with: edibles, vapes, concentrates, flower, drinkables, and more. We receive new product types weekly and have fostered great relationships with consistent, reputable suppliers. As a dispensary group, we are enjoying developing new relationships every day that will result in new products every day for our customers.”
On the other side of the coin, AJO works with Delta Extraction, a licensed manufacturer in Kentucky. Greenway asked Herndon about how adult use has impacted those operations as well. “Our manufacturing, the other day, sold out of 13 flavors in one day of one product type,” she reported. “We’re running at maximum capacity and are starting to see prices go up. More flower supply is needed – most grows in the state did not achieve stability before adult use wiped out inventory. It is hard to find and trusted quality flower from the manufacturing viewpoint because the market is moving so fast.”
“It seems that cultivators with larger canopies are having less of an issue,” Herndon continued. “It’s prime time for grows to maximize their canopy space and bring in stable genetics. As a manufacturer, our distillate sales are through the roof.”
Illicit
Illicit, one of the state’s largest cultivation and manufacturing operations has continued to push out product at a high volume. David Craig reiterated what Herndon said explaining why some dispensaries and patients are seeing certain products run short while independent manufacturers may struggle to find adequate flower and biomass supply. “The time between the passage of Amendment 3 on November 8 and the launch of rec on February 3 is shorter than the time it takes to grow, cure, and package flower.”
”The time it takes to create manufactured goods is even longer,” Craig said. “We’re right in the window prior to these post-Rec harvests being available. When all that product hits shelves will mark the time when all producers are operating at full tilt. For that reason, we believe the current shortages will be alleviated by mid-to-late May once production schedules catch up.”
“It is hard for cultivators to prioritize relationship building when weekly product drops sell out in minutes,” Herndon said. “It’s important for all operational types to assess their long-term strategy – we’re here to build something, so strategic growth must be prioritized by balancing best practices in operations with opportunity management,” she concluded.
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