Let’s Celebrate Commoditization and the Birth of “Big Cannabis”
Chris Driessen, President of Organa Brands U.S., home to the largest brands in cannabis, discusses why we should treat cannabis as a commodity, just like coffee or sugar.
I now buy legal cannabis by the ton. I negotiate the price of dried, ground marijuana as if it were just another commodity…because it is. Cannabis is simply an amazing agricultural commodity and precious raw material input — dropped into a not-so-complicated equation, designed to produce profit.
Just two years ago I was paying some $2,000 a pound for world class marijuana, now that price has fallen by two thirds and I pay roughly $600 a pound. This is great news for our purchasing department, but not so much for our wholesale prices. Alas, this was inevitable, it’s simple economics. It makes market expansion all the more critical. If you are not growing, you’re dying, or soon will be. More money in the market invites more competition, which motivates us to innovate, scale and ultimately find efficiencies in our processes or be chewed up by the competition.
At Organa Brands I oversee an entire house of brands that makes everything from cannabis vaporizers to THC tablets, edibles and dabs, even energy drinks. I expect that before long our CBD products — many of which have no THC — will be stocked at convenience stores, gas stations, Costco and Walmart.
Fortunately, that’s where my experience lies. Before entering the world of cannabis, I had spent years as a printer salesman, selling millions of dollars of commercial printers to clients throughout the Rocky Mountain region. The commercial printing business is cutthroat, as any Office Manager with a decent sized copy machine will attest. The hardware is sold for the narrowest of margins, or even below cost, while the emphasis is put on the consumable commodity, the ink. Seem familiar? If not, what kind of cellphone do you have? You likely got the phone on the cheap or even free, as long as you signed up for the lengthy service contract. Guess where the money is made?
There are purists who shun the idea that if (when) marijuana goes mainstream, it is a disaster. They believe it’s a cave-in to big capital, big corporations, to profiteers and all things sacred of this undoubtedly magical plant. I couldn’t disagree more. If we are to unlock and share the medicinal and wellness properties of cannabis, why not champion the professional distribution of our favorite plant? Why not embrace enterprise resource planning software platforms, hi-tech manufacturing techniques, tighter inventory controls, agricultural efficiencies and crisp profit and loss statements?
The best homage we can make to this amazing plant is to produce the finest cannabis oil possible, to place it in attractive, finely tuned packaging — both alluring to adult consumers and childproof — and offer it to consumers nationwide. The greatest contribution I can give to this industry and this amazing plant is to make sure it finds its way into as many lives as possible. We can scale our businesses larger, scrutinize costs and expenses, pour over financial reports and become the solid start-up that transforms into a legacy company that withstands the ups and down of the business world.
I believe we should celebrate national cannabis brands like Organa Brands, because we are able to incorporate up and coming products and place their innovative oils, edibles and medicines into our nationwide distribution network that reaches some 1,200 dispensaries in 10 states (and counting). We should support and encourage each other to become a tribe of companies, a community of cannabis enthusiasts that collectively have the market power of “Big Cannabis”. While that name scares many, it simply means that our industry has “made it.” It means we are here to stay, that we withstood the test of time and government prohibition. We have found a permanent home in the world economy.
When people criticize what they fear is the “homogenization” of marijuana I can only laugh. Is there any better way to celebrate diversity of brands and up and coming entrepreneurial know-how than to offer those superior cannabis products a launch pad? A launch pad that guarantees their product can be sold from Boston to Berlin, from San Francisco to Sydney?
It has been this same process of consolidation, a natural evolution in any maturing industry, that led the O.penVAPE team to look beyond vape pens and incorporate a whole new range of products, a whole new range of possibilities. That’s why earlier this year we rebranded as Organa Brands — literally a house of brands.
For years, the company where I work was known for its O.penVAPE pens. We sold some 6 million of our cartridges and earned a strong customer following and loyalty with budtenders nationwide. Was that the result of some fortuitous “lucky break” or the natural result of dozens, then hundreds of employees working weekends, staying late and attempting to find a route to success in the highly competitive cannabis industry? I’ll let you answer that one, because I already know.
Our downtown Denver corporate office looks more like a tech startup in Silicon Valley than a mega cannabis conglomerate. We have trendy coffees that self brew on demand, organic snacks and the requisite office pets and ping pong table. But don’t let the laid back atmosphere or tunes playing on the Sonos fool you. Our office is stocked with brilliant minds ready to go toe-to-toe with big tobacco, big alcohol and big pharma. We relish the opportunity to measure up against other, more mature industries. To do that we must first pass through the inevitable commoditization of our products, compression of profit margins and weather the oncoming storm of consolidation.
I don’t make any medical or health claims about cannabis, but I know that a deep feeling of wellness and peace accompanies the cannabis products we produce. Every day I receive letters of thanks. If this deep wellspring of consumer support leads to the nation’s first national chain of dispensaries, or million-acre cultivation facility, or a multinational consumer products cannabis company, I say we should all celebrate.
Chris Driessen is the President of Organa Brands U.S.