6 minutes reading time (1123 words)

The Flip to Adult Use: Jushi Eyes Political Climate, Retail Trends When Expanding in Newly Legal Cannabis Markets

What are some best practices for cannabis businesses looking to make the switch from medical to adult-use sales in newly legal markets?

For multistate cannabis operator Jushi Holdings Inc., it all comes down to navigating each state’s political climate and retail trends while maintaining control of the supply chain through vertical integration and implementing an omnichannel approach to reach patients and consumers.

With more than two dozen medical and adult-use dispensaries nationwide, Jushi is currently evaluating opportunities to transition from medical to adult-use sales—or strengthen its adult-use presence—in several of its markets.

“There are so many different variables that you can leverage the playbook, but you also have to have a different strategy in each market,” Trent Woloveck, Jushi’s chief commercial director, tells Cannabis Business Times.

In Virginia, for example, Jushi opened its first medical cannabis dispensary in December 2020, and has seen patient growth over the past year with the passage of a medical cleanup bill during the last legislative session and the legalization of flower in the state’s medical cannabis program.

Now, the company is paying close attention to the rollout of Virginia’s adult-use cannabis program after the state passed a legalization bill last spring.

While the legislation’s cannabis possession and home-grow provisions took effect July 1, much of the bill is up for reenactment, meaning that it cannot become law unless the General Assembly approves it again during the 2022 legislative session.

Further complicating matters in Virginia is a change in gubernatorial leadership, with Gov.-elect Glenn Youngkin taking office Jan. 15.

RELATED: New Governor, Reenactment Clause Could Mean Changes to Virginia’s Adult-Use Cannabis Law

A commercial adult-use market is slated to launch Jan. 1, 2024, but Woloveck says the regulatory details are up in the air as the General Assembly considers three pieces of legislation: a medical cleanup bill, legislation that would establish an early transition pilot program to allow Virginia’s existing medical cannabis businesses to serve the adult-use market, and the reenactment bill.

“It’s imperative that we continue to push forward on all three of those pieces to ensure public safety for the people of the state of Virginia,” Woloveck says, adding that he does not foresee Youngkin rolling back legal possession or the launch of commercial adult-use sales in the state.

“Gov.-elect Youngkin has made that very clear, that he will sign whatever comes out of the House and the Senate on a bill that comes to his desk,” Woloveck says. “He’s made the comments around it needing to be reworked in the sense that there are some social equity things that don’t work for the Republicans in Virginia, along with the unionization of cannabis, as well, that doesn’t work for the Republicans. Those are two things that are on the radar that we can help re-craft and put in something that will appease both Democrats and Republicans. … I think you’re going to see very middle-of-the-road legislation come out that Gov.-elect Youngkin will hopefully be pleased with and implement that into the commonwealth.”

As Jushi’s team members await more details on what a commercial adult-use market in Virginia will look like, they are investing in their operations in the state, where they operate two dispensaries in Manassas and Sterling. The company plans to open an additional four stores within the next six months, anticipating growth in the medical market as well as the upcoming launch of adult-use sales.

RELATED: Inside Jushi's Virginia Expansion: Q&A With Executive VP of Retail Brendon Lynch

“I think for us, we’ve been very methodical in looking at and understanding markets,” Woloveck says. “We’re very retail-centric when we move into any new markets, and so looking at and understanding the market dynamics, where it’s at from a maturity perspective, whether that’s in medical or adult use, is super imperative for us.”

Jushi recently entered the Massachusetts and Nevada markets through M&A, and Woloveck says being vertically integrated in those more mature markets was important to help the company scale and maximize its return on investment.

RELATED: Jushi Further Expands Nevada Footprint Through Agreement to Acquire Vertically Integrated State Operator NuLeaf

“We’ve seen in Massachusetts and Nevada [that the] adult-use market … is large and has a foundation, but now, as we come into a supply-and-demand curve [where] supply is catching up with demand, we start to grow that pie, if you will, and take from the illicit market, gain revenue dollars, and most importantly, gain grow profit dollars as more people come into the regulated market,” he says.

Photo courtesy of Jushi
Jushi is vertically integrated in Virginia's medical cannabis market with cultivation operations.

Jushi also has vertically integrated operations in Pennsylvania’s medical cannabis market, where the company is focused on scaling up its cultivation and processing operations to supply its 18 operational dispensaries and, eventually, an adult-use market.

“Going big early is important to us to maintain our market share in medical, but then be ready for that flip to an adult-use market, as well,” Woloveck says. “So, we continue to plow forward in setting up distribution points but also ensuring vertical integration in imperative states where we know growth is going to continue to happen … with a flip from medical to adult use.”

While there is no cookie-cutter approach to expanding medical-only operations to serve a broader adult-use market when a state legalizes, Woloveck says being able to scale and bring standardized, high-quality products to patients and consumers is one way Jushi ensures that it is always ready to make the leap.

“Making that capital investment to build out that business based on our best estimates of when those flips are going to come [is] important,” he says. “I think knowing and understanding how to operate at scale, bringing semi-automated processes around dry, around cure, around packaging [can] really remove those bottlenecks as you scale from 10,000 to 15,000 square feet of canopy to 75,000 to 100,000 square feet of canopy.”

Also critical to Jushi’s success is understanding retail trends and offering patients and consumers what they want in the cannabis retail experience, Woloveck says, adding that “retail storefronts are still imperative to the success of the business.”

Jushi’s customers can shop in store and interact with the company’s sales associates to make purchasing decisions, and express pick-up is available for those who know what they want and prefer to order ahead online. Curbside pick-up, drive-thru services and home delivery are also becoming increasingly important, Woloveck says, especially during the ongoing COVID-19 pandemic.

“It’s an omnichannel approach with having different, multiple types of interaction with the patient and/or the consumer, and those touchpoints are still very, very important because of the education that still needs to be had by patients and/or consumers in a lot of these markets,” he says.


© Cannabis Business Times

Coalition to Regulate Marijuana Like Alcohol Turns...
Gov. Newson Calls For Cannabis Tax Reform, More Re...

Related Posts

By accepting you will be accessing a service provided by a third-party external to https://www.mjlink.com/