With the 10th State joining the wave of adult-use legalization, the Cannabis Ecosystem continues to evolve. We’re already seeing companies like MedMen continue on the path to successful growth. While I want to support the rise of cannabis companies across the states, it seems as though the power struggle will lead to the advent of Cannabis Wal-Marts (Canna-Marts?) and InBev-Canna Umbrellas with the biggest players rising to the top…
How do you feel about the current cannabis environment in your state? Do you see your state and local governments making attempts to protect small business growth, promote license wars for territory, or easing the barriers for “Big Marijuana” companies to swoop in and acquire?
That’s the cool thing about cannabis; it has a quality ceiling that not only hasn’t been reached yet, but requires extensive care to even come close, accompanied by a strong demand for world-class quality. ‘Big companies’ tend to focus on, ‘Volume’, and ‘Production Speed’ - rather than quality. There will always be a larger market for superior quality in this industry. Especially in regards to product being produced with the intent of being classified as a medicine.
We will undoubtedly see things like “Canna-Marts”, etc. However, they will be exactly what they are - the Walmart of cannabis. They will make plenty of money & take a slice of the cake, but overall, companies which employ true world-class quality standards, will hold the highest stake in this industry.
The people who are passionate about this plant, and strive for world-class quality, are the ones who will rise to the top. Yes, they will eventually sell ‘Cigarette Packs’ of pre-rolled cannabis, in gas stations, etc. Yes, there will be large companies with huge stock yet subpar quality. Will these people rise to the top? I don’t believe so.
What brought this topic to mind is mostly what I see as those companies navigating the middle road between Big Boxers and Craft Cannabis (forgive these awful terms). Instead of having a single entity creating a Wal-Mart-like vertical, you have bigger companies following an InBev/Miller-Coors model of acquisitions to keep farming away from the mass production model.
Instead they purchase the farm, let the farmer grow and brand a product, and then support and grow that smaller business as a parent company. I agree that quality is the winner here, for the most part. However, the technologies out there between lighting, fertigation systems, enviro-sensors, even analytics and operational software like our product (supergrower) have made growing at scale much more manageable, allowing for quality in bulk.
This is precisely the issue with my position. It is absolutely possible to establish a large-scale operation which also incorporates world-class quality standards. I’m not sure if that will happen, though. If history repeats itself, it won’t.
However, if someone manages to achieve this, then there’s no issue in my opinion. I fully support and endorse any company who employs world-class quality standards in the production of this safe, recreational drug/potentially revolutionary medicine.
All I want, is for this drug to be distributed in a safe and controlled fashion, to the masses. As well as calculated efforts towards educating users (and even future users whom we don’t want using in the present moment, i.e. - children) on the recreational and medicinal benefits of this drug. I think, proper, decriminalized global regulation & distribution, can help to remove the taboo from cannabis; decreasing the use amongst our adolescents to a great degree.
I’m going to remain the optimist and say that we’re not too far off from seeing quality at bulk or with scale. I find the biggest unknowns are the state’s environments and legislation that alter the landscape the most. Limited licenses and companies with means of acquiring multiple licenses make it a really tight race to even have the right to produce, and then you have to actually produce.
Investments in innovative lighting solutions, like yours, and other methods of growing smarter, help with making the path to success more feasible, provided the upfront costs are affordable for smaller operations.
Hi there supergrower_matt. There are definitely initiatives working to protect and enhance small grower independence in the industry. I would encourage you to take a look at the California Appellations Project which is one of these initiatives trying to set regional varietals in NorCal. Whether this type of project is successful in protecting heritage farmers remains to be seen, but efforts are being made to do this.
I believe that big players like Big Tobacco are going to make a play on several businesses and consolidate them as an alternative income streams. However, as you have seen in the alcohol industry where you have mainstream beer brewers and craft beer brewers, there will be a space for everyone to play in. Coca-Cola and Pepsi are sitting on the sidelines watching the beverage space from a distance and they will buy out a cannabis-infused beverage brand when the time is right for them to get into the market.
Like many of you have said, quality will be the overriding factor but not everyone can afford top quality. You will have your top end, high-quality product and you will have your budget conscious, low-quality product. It will all come down to how these businesses market themselves to their respective target markets and differentiate themselves in the marketplace from their competitors.
At this early stage, you are seeing Constellation Brands buy a stake in Canopy Growth and Molson Coors Brewing buying into The Hydropothecary Corporation, this is probably an investment in ensuring supply and quality cannabis ingredient for their beverages as they undergo a product diversification strategy in the near future.
As for state and local governments, they will issue as many licenses and tax everyone in the vertical chain from grower/cultivator to processors to dispensaries where possible because these licenses and taxes are revenue to them, especially for many cash-strapped states. There will be criteria and rules set for an even playing field for those that apply for a license in the various states, with the odd tweak over time as the industry evolves and matures. It will be interesting to see states compete for cannabis businesses to set up operations in their state by being the lowest cannabis tax state in the very near future.
Federally, with Jeff Sessions gone this is one less barrier to Federal approval of the cannabis industry as a whole as they too are looking for an alternative and/or new tax revenue stream as well.
@CoActive26 In light of how industries tend to ebb and flow on different wavelengths, I think that we’ll find all of those big and little players in the marketplace, but not all of them will have a field to play on.
I’m finding that there are 3 main pressures driving the market direction. Mainly, it’s government at this point. Licenses haven’t been given out to any and all cannabis business owner in many areas. California has already seen some early “license wars” as approved businesses are selling their licenses or being acquired and forced out by a larger company.
The second, in terms of quality production, is really from the consumer. We’ve already seen consumers moving away from flower and leaning heavier on other available products. While commoditized cannabis will likely be available, I don’t see that as having a strong hold on the mainstream consumer. It may work for large-scale extractions and secondary product manufacturing. This goes to support what you referenced about Coke/Pepsi waiting on the sidelines and watching for other future purposes.
The third shaper is the presence of companies like Constellation and Molson Coors taking large ownership of leading cannabis companies like Canopy. Controlling the controller and shaping the portfolio of brands acquired gives them a risk-mitigated approach to dominating the industry as things continue to evolve.
I came across another interesting article to kind of steer this conversation a bit. It seems like people are leaning towards the quality end, but there is a push for a different angle too.
People are willing to pay for quality Canna, but there is a strong need for a standardized medical canna.
“even if Walmart Weed were to flood the market, those companies would be hard pressed to find takers for their substandard cannabis. A Civilized cannabis culture poll conducted by PSB research shows that most American consumers are willing to pay more for higher quality cannabis.”
We have seen all of these things before in horticulture.
There will room for any and every type of grower. The trick has always for the grower to find and cultivate there market.
As the big growers get bigger the small specialty growers are going to get a higher price for premiums.
I like the wine example. Every wants an inexpensive everyday wine. But, don’t you love the special occasion where you spend 10 times as much for something special.
I am visiting my son up in Alaska and I listening to people buying products around me. In my option, The consumers are buying product with much more confidence, than on my last visit.
The stores our also getting smarting in there marketing.
What I want to see is more documentation about the products, retail slicks. How do you educate the consumer on what to buy? How do you motivate the consumer? How do you handle consumers of different knowledge base and interests?
I still believe the market will have lots of tiers of growers. From micro boutique to big players and everything in between.
I think we are going to see specialty phase growers just producing vegetative stock to growers who will only finish the product like a cut flower growers. I don’t have to grow the tulip bulb to have a world class flower. I have to buy the bulb and and my recipe to produce a consistent product regardless of season.
I want to be able to buy clean stock and just grow. I want to blend both the science and the art of growing to produce a perfect product.
Anyone played with creating bonsai of cannabis?
See there is going to be room for everyone.
The other question is do I want to work in million dollar venture or a 100 million dollars. Scale is going to motivate some growers. The question the grower needs to ask? What type of life do I want to live. Plants and people our alike in all but one way. Plants don’t want or take weekends off. Farming is hard work regardless of scale.
Well, I wasn’t wrong about Big Tobacco making a play in the cannabis market. As has just been announced that Altria (makers of Marlboro branded cigarettes) are investing $1.8 billion for 45% equity stake in Cronos. It is no longer a matter of if but when. Big Beverage players like Coca Cola are denying their ambitions at this point in time but within 2 years they too will make a play for the CBD infused beverage market.
There’ll be room for anyone to play in the industry but it will come down to how companies differentiate their products for specific target markets. As cannabis becomes commoditized it will all come down to the quality of the final product(s) and what is done with the final product (beverage, edible, vape, tincture, etc. etc.) to give it it’s uniqueness in the market place. I foresee a cannabis marketplace similar to the alcohol industry where you have your mainstream brewers, then you have your craft brewers and followed by your specialized micro brewers. each group has their varying levels of product quality.
It’s an exciting time watching the industry evolve but there is more to change to come.
I could not have said it any better myself! As for now, they have a critical role in keeping pharma out and cannabis rising above prohibition. Once we make this hurdle, is when big canna becomes questionable in their future actions.
Matt, there is so much truth behind that! Many I spoke with feel the same, and even I am guilty. I will even pass up discounted for top tier! As consumers become wise with experience, artisanship will supersede bulk!
The big guys can buy in from the top, and make their cut of course. However, the companies that get acquired can (hopefully) continue to operate as independents under the umbrella, and deliver quality product.
Overcoming the prohibition hurdles is definitely the first step though. But the big guys are lining up for the when the flood gates open.
I’m going to go ahead and compare cannabis to the beer industry. Here in Colorado we have Coors in Golden which is a huge multinational corporation and distributor of mediocre at best beer. We also have over 350 craft breweries, some of which are extremely successful multinational distributors while still maintaining their culture like New Belgium, Oskar Blues, and Odell’s, and others make great unique beer and serve just their neighborhood with a taproom. The same thing will happen with cannabis. Not everyone wants a Banquet, Fat Tire, or a sour mango double IPA for every drink they consume, people want variety in price, quality, quantity, and availability. So I am not worried about “big marijuana taking over”, because it will just drive quality and innovation through the diversity of niche markets. I say bring it on, “big marijuana”!