Happy Croptober
The Normalization of weed has had an unintended effect, at least for those looking to capitalize on cannabis. Price compression.
Back in 2020, when the pandemic hit, cannabis businesses were awarded the luxury of being deemed essential businesses. Well, maybe not initially. Here in Denver former mayor Michael Hancock told us on March 23 at 2pm that all liquor and cannabis shops would be closed for the foreseeable future. I distinctly remember this because by 2:15pm there was a block long line stretching down my street from the corner liquor store. The same scenario played out at every liquor store and dispensary in the city.
He rescinded that order two hours later.
That period, although horrible for many people in terms of family members and wages lost and businesses shuttered, was a boom time for cannabis.
Contrary to popular misconceptions, cannabis business owners did the responsible thing and reinvested in their businesses. More grows were built. Then all of that came on line in mid to late 2021. At the same time the federal government stopped giving out stimulus checks. Then inflation hit in late ’21. The bulk of the cannabis consuming population, which skews younger and poorer, had a decision to make. Put gas in the car or buy weed… they chose gas.
When they did come in they bought lesser priced items and fewer of them. At the same time inputs for cannabis businesses were getting more expensive. While other businesses could raise prices with inflation, cannabis operators had to lower them because of a glut of product.
I tell this story because at least once a week I hear myself saying it to someone. People who are not in the industry aren’t aware that many cannabis businesses, especially those in mature markets, are struggling right now. This isn’t a “woe is me” tale, but one that needs to be told to the general public, in light of the coming flood of outdoor flower.
Folks need to hear that cannabis businesses are suffering from undue testing burdens, punitive taxation measures, and regulations that harken back to a time when this was all new.
We all knew that normalization would lead to more competition and price compression. That’s the way capitalism works. What isn’t working right now is a 20th century framework for a 21st century industry.
OTHER NEWS
Ohio is looking to become the 24th state to fully legalize cannabis. Hopefully they can do better than Alabama.
New York wants to reign in illegal dispensaries by issuing more retail licenses. Good luck!
Connecticut’s market continues to grow, albeit slowly. Par for the course for “ The Land of Steady Habits”.
SHAMELESS PLUGS
If you haven’t listened yet, what are you waiting for?!!? The Sea of Green podcast has a new episode. On that note, if you feel you have something to say or a story to tell, hit me up and let’s have a conversation that everyone else can hear — it’ll be fun, trust me.
“The sea refuses no river”
Thanks for reading,
d
