Long known for its apples and peaches, the town of Hancock may have found a new cash crop: cannabis.
Hancock already profited hundreds of thousands of dollars from its stake in the Maryland arm of Trulieve, the largest cannabis company in the United States, and company executives anticipate the town will see greater earnings as legislation legalizing cannabis for recreational sales went into effect on July 1.
Hancock initially brokered the deal with Harvest Health and Recreation, a medicinal cannabis operation, in 2016 to sponsor the company’s medical marijuana growers license in exchange for a 5% stake in Harvest DCP of Maryland, the Maryland branch of the company.
And according to Steve White, the CEO of Harvest Health and Recreation, Hancock maintained its minority stake when Trulieve purchased his company in 2021 in a deal valued at $2.1 billion.
“The idea was hatched in late 2015, and it was the first time ever across the country that a municipality directly took a stake in the marijuana industry,” White said.
In 2022, Maryland voters overwhelmingly approved the recreational legalization of marijuana cannabis on a ballot initiative in November. Now as of July 1, cannabis is available statewide for adults 21 years and older from licensed dispensaries.
How much more will Harvest and Hancock bring in?
White said he expects Harvest DCP of Maryland, which currently grows and processes cannabis in two town-owned buildings and owns three cannabis dispensaries elsewhere in the state, to double its profits under the new legislation because of the expanded market.
Increased sales, he said, translate to increased revenue for Hancock.
“It should be true that Harvest DCP of Maryland is more profitable with adult-use sales, and recreational sales, which would then mean that Hancock, as a partner in that entity, would benefit from the additional customers that we see,” White said.
White declined to comment on the specifics of the contract between Trulieve and Hancock. It is not clear if Hancock receives 5% of the total profit of Harvest DCP of Maryland, but White said “Hancock is a true partner, which means bottom line dollars are split.”
“And so typically, in that kind of arrangement when you’re in a partnership, it’s not $1 at the register, it’s $1 that goes into the bank that isn’t then reallocated for expenses, is then split amongst the partners or members of an LLC.”
Will Trulieve expand?
According to a report from the Maryland Cannabis Administration, Trulieve is “eligible to serve adult consumers beginning on July 1” at three locations elsewhere in the state. White said the company is looking for another location but is not considering Hancock.
With the additional sales, White said Trulieve may “invest additional dollars” into the growing and processing facilities in Hancock to meet the statewide demand, but current sales projections indicate this may not be necessary.
Because cannabis is illegal at the federal illegal, Hancock became ineligible for select federal grants when it assumed an ownership stake of the cannabis company in 2016, White said. He added that to overcome this “risk,” the deal was brokered to “permanently tie Harvest DCP to Hancock” — regardless of how big the company became.
“They take on risk, by knowingly entering into an arrangement that is federally illegal, And so you have to be able to give them some reason why this could be worth the risk that they’re taking and for them, it was a simple equation.”
How has the money been used so far?
Town officials, including Mayor Roland Lanehart and Town Manager Michael Faith, did not respond to several requests for comment since The Herald-Mail spoke to Steve White on June 22. Town officials previously suggested they were in the midst of contract negotiations with Trulieve.
Since the deal’s inception, Hancock spent $213,933.80 made from its ownership stake to revitalize buildings and businesses on Main Street, Town Manager Michael Faith told The Herald-Mail in a previous interview. The town funneled the money through a downtown revitalization and business development grant program, Faith said.
“There’s several places downtown that got grant money and they’re using that money to fix up their storefronts. And fix up their properties,” Faith said. “So we’ve seen a pretty big impact … storefronts being redone, windows replaced, you know, structures, fixed roofs fixed, you know, all kinds of things.”
Faith told The Herald-Mail that the money Hancock makes from its ownership stake in Harvest sits in an account separate from the town’s budget. He noted that though town officials are optimistic they will see their revenue stream flood, “we’re not going to budget for more revenue from Harvest.”
“We don’t rely on that money for anything, if we get a disbursement of extra money,” Faith said, “we try to figure out what the best use of it for the town would be.”
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