Holyoke's cannabis industry moving from big players to smaller craft businesses

Holyoke has many vacant big, solid old warehouse and manufacturing buildings, excellent infrastructure with municipal hydroelectric and gas service, freight train service right through the industrial district, and is minutes from I-91. Many blue-collar workers live in the city and it sits along the "Knowledge Corridor" of colleges and universities with their researchers and such.Holyoke is also a "Gateway City" which gives it priority status for all sorts of economic development grants and initiatives funded by the state.And yet... Holyoke has gone through many things billed as the answer to the city's economic depression off the ground. Take the cannabis industry. When recreational marijuana became legal in Mass, Holyoke actively courted businesses to set up shop in the city, and many businesses took Holyoke up on the offer.In a recent MassLive article, Aaron Vega, the city's director of planning and economic development (and former state representative) says that the city issued 36 special permits related to growing and selling marijuana and today only 10 companies are in business.This isn't just a Holyoke problem. Massachusetts was the first state in the region to legalize recreational marijuana, so big cannabis grow/sell operations flocked to the state and set up shop. As Connecticut, Vermont, New York and Rhode Island all made retail marijuana legal,  Massachusetts stopped being a destination for legal pot and the cost of the product has dropped - a lot. An ounce of cannabis flower sold for $400 in 2021 and is now priced at $170.Statewide, gross sales revenue from cannabis sales since November 2018 has been $4.5 billion and the amount to cities and towns has been $912 million, which is terrific overall and which has brought real revenue into municipalities such as Holyoke - which collected $3.75 million in cannabis impact fees and which is expected to net $590,000 in 2024 from the cannabis sales tax. And lots more went to the state - $165.3 million this fiscal year, most of which goes to the Bureau of Addiction Services and is supposed to fund housing and recovery services for people with substance addictions. You can read the 2023 Cannabis Control Board's annual report here.As a result of the growing competition and regional availability, according to the Boston Globe, individual operators are seeing their profits plummet, even as the overall "pot pie" continues to grow. "It's a race to the bottom," said Kobie Evans, one of the owners of Pure Oasis in Boston.Shops in Boston, Northampton, and Easthampton have gone out of business, which is a normal market correction when one product becomes oversaturated. A grow facility that wanted to open in Agawam's old Chez Joseph pulled out because they couldn't get financing. Lenders said there wasn't enough potential return.Holyoke, however, didn't just plan on retail sales. The city issued permits for several indoor grow facilities, one of which said it would "supply the whole Northeast" but few of those remain today.Pleasantrees bought the old Sonoco packaging plant at 111 Mosher Street in 2020 and never built it out. They closed their Easthampton retail shop and sold the Holyoke property to investors in 2023 for a profit of $2 million. The new investors are betting that they will lease the site out for manufacturing or warehouse space. With industrial space now leasing for $7/SF, it's hard to see how the investors will recoup their investment.Rebecca Rivera, a broker with B&B Real Estate said investors today are looking to convert industrial space to residential. One such deal, which has been a long time in the making, is happening at 216 Appleton Street. Winn Development, favorite of historic preservationists for their sensitive work with old buildings, is converting the former Farr-Alpaca Mills into a 55+ affordable housing project which will contain 88 one and two-bedroom age and income restricted units. The project is estimated to come in at $35 million. Winn is accessing affordable housing tax credits, Gateway City funding, and MassDevelopment money along with a conventional loan from Bank of America.Trulieve was one of the first to invest in Holyoke for a grow site. They bought the massive block of mills at 56 Canal Street (most recently home to Conklin Office Furniture) for $3.2 million in 2019. They invested about $30 million in outfitting the building as a growing facility, which included installing steel supports for the heavy equipment in use. In addition to a growing operation, they offered testing and packaging.In 2022, a 27-year-old employee died at the Trulieve plant and the Florida-based company with facilities nationwide paid a $14,000 fine to OSHA for safety violations that resulted in her death. In 2023, Trulieve announced that it was closing all wholesale operations in Nevada, several retail operations in California, and the growing operation in Holyoke.Aaron Vega says that Trulieve is going to spend six months trying to find another cannabis grower to take the space and after that it will go on the market. Trulieve seems to be doing fine overall, with a reported $1.24 billion revenue in 2022 and new shops and facilities opening in other states.Around the corner at 1 Cabot Street, a Pot Mall is being built that will be a co-working space for small marijuana businesses that can share some of the major expenses that make the barrier to entry too high for small businesses.The mill is being redeveloped by owner Thomas J. Cusano and Sweitzer Construction. Cusano also owns mills in Turners Falls and Rochester, NH. If the Holyoke venture is successful, he'll replicate the plan in those locations.An employee who was laid off from Trulieve as it closed up shop said the profit in the business is now from small, craft growers, much like in the craft beer business.With Trulieve gone, there are still two cultivators (GTI and Milltown), four retailers, and one testing lab in Holyoke.