https://hightimes.com/business/how-cheap-can-legal-marijuana-get/
It could go lower.
I’ve always been taught that to fight the commodity trap requires innovation.
What I mean by that is this: if everyone is trying to compete on price, go a different direction and beat them with innovation. With innovation, you can increase your price and people will pay for it.
What kind of innovation? You tell me! Something unique that benefits the distributors or the dispensaries or the end user. It can be something super small, but solves a problem no matter how small a problem.
For example: If all the floss suppliers were competing on price, adding the cost of a plastic handle for the floss will increase the price of the product, but the handle innovation attracts new customers! They escape the commodity trap.
Or another example: When dishwashing detergent companies begin competing only on price, the idea of making a detergent “puck” or “pod” offers just a tiny bit more convenience to the customer and they can then increase their price and bring in new customers. They escape the commodity trap.
Or: Back when soda vending machines were all flat on the front, the tiniest of innovations brought forth the curved front. This did many things… 1) The plastic on the front could be thinner and cheaper yet stronger and more vandal proof due to the strength of the curve 2) The visual of the curved front brought tons of attention to the vending machine and the brands inside 3) The brand is elevated by innovation, the new fresh look of the machine attaches to the vibe of the brand. Once again, the commodity trap has been sprung.
Sometimes when your product becomes a commodity, the answer is not to lower prices. Find a reason to increase your price. Innovation.
Steve
Further, your innovation can take place in your manufacturing processes. What takes the most time to do, then brainstorm faster ways to do it or even omit steps while increasing production and quality.
Or innovate within your business model. Weed is cheap, but what tangential service can be attached to it that offers the distributor, dispensary or end user a convenience? Secondary revenue streams.
Anyway, just thoughts.
Dried flower is where the price is bottoming out, and from what I see, the market share is decreasing. Even loose hash is in a price war, but pens have remained fairly stable. I produce a commodity for businesses to add value through concentrating and making things convenient. People pay more for ease of use, which is why I think your product will do well.
So your customer is the extraction companies, correct?
Just 1, but yeah.
I think the middle of the road weed is in danger. High end will still command top dollar. I can get a deal from friends, but I am still buying Cannabiotix and The Grower Circle stuff at med price when I see it on a shelf and gladly pay for it.
Was in CO recently and stopped into Lightshade. Their house strain 1/8ths were awesome and was like $24 or so after tax. Vertical integration seems to be the future of our industry.