Source: cannabisbusinesssummit.com
This article was written in collaboration with .
Legal cannabis is the fastest growing industry in North America. This comes as no surprise to those who have invested their heart, soul, and hard-earned dollars in this business over the past few years. By some measures, it’s the only industry right now that is seeing consistent growth, and with Canada approving its legalization measure, California overcoming the early growing pains of its adult-use program, and dozens of other states putting plans in motion to expand legalization, there is little to no indication that it will slow down anytime soon. Below are just six ways the industry is maturing just as quickly as it’s growing.
1. We Embrace Automation
You’d never hear a farmer touting “hand-shucked corn” or “hand-harvested wheat.” Why should cannabis be any different? While hand-trimmed buds might technically be “better,” the difference is marginal at best and machine trimmers get better every year. The argument boils down to some simple math: Can you afford to pay trimmers an hourly wage to finish one pound of cannabis every six hours? If it’s a choice between running a viable business and hand-trimming your flower, the decision shouldn’t be all that tough. And it’s not just trimming — there are dozens of automated solutions to reduce labor expenses and improve efficiency, including packaging, irrigation, and climate-control systems that many businesses are embracing to lower their cost of production.
2. No Longer is Cannabis One Giant Industry
As the business of legal cannabis matures, it’s splitting off into multiple sectors, each with its own unique needs and products. For example, farming and retail have little in common. Even with vertical integration, most cannabis companies have different managers for their production and retail divisions. While vertical integration remains the most popular route in states that allow it, many companies are becoming more specialized, which is also leading many trade events to become more specialized as well.
Business-to-business events are distinguishing themselves from consumer-focused shows. The National Cannabis Industry Association throughout the year, focused on different states and different sectors of the market, as well as its cornerstone political and advocacy events. There are also shows focused on retail, such as Marijuana Venture’s , as well as the , cultivation, investments, packaging, branding, and more.
At one point, it made sense to have everything lumped together, but at this stage of the industry’s development, trade events are becoming more specialized to provide both attendees and exhibitors exactly what they’re looking for. Long gone are the days when cannabis entrepreneurs could attend every event in the country. They simply don’t have the time or budget. They need to focus on the events that make the most sense for their business.
3. New Employee Acquisition Strategies
Other than the plant itself, the legal, recreational cannabis industry has zero in common with the previously illegal business. Hiring people who have never paid taxes or used commercial banks is a recipe for disaster — just ask dozens of struggling growers in Washington and Oregon. Successful companies realize the importance of managing employees and improving margins.
The best hires for commercial cannabis grows are those with controlled environment agriculture degrees or experience in commercial farming. If you’re opening a retail store, hire people who have real merchandising and management experience. When Jeff Bezos started Amazon, he hired former buyers from Costco, Best Buy and Target because he knew the company would need people who understood vendor relations, merchandising and product categories, not just web developers and Internet sales specialists.
4. We Think “Outside the Industry”
Aside from hiring experts with experience in “traditional” businesses, cannabis companies are increasingly realizing that consumers are evolving.
The cannabis industry tends to be highly insular, but not everybody who steps into a retail store is looking for the most potent product available. Not everybody wants to be asked, “indica or sativa?” And not everybody buys into the silly culture of strain names that are mostly perpetuated by cannabis growers and breeders. Many companies are shifting away from the cultural components that have been a standard for the industry look to reach a broader spectrum of consumers.
5. We Understand that Consumers Shop by Price
Yes, there’s room for high-priced, artisan cannabis — just as there are markets for high-end beer, wine and cigars. However, just as 90% of wines are sold in the $10 to $15 price point, and most cigars are priced at $10 to $20, about 90% of cannabis consumers just want the best bud for $5 to $10 a gram. Washington has proven unambiguously that you can get great, 25% THC bud for $5 at retail. Most sales now reflect this. The problem with most people in the cannabis business is that 90% of growers want to compete for the 10% of the market that represents the high end. Simple math prevails here.
6. Retail is Evolving
All avenues of the cannabis industry are evolving at a breakneck pace. Growers are getting more efficient. Processors are adopting new technology. Regulations are changing every day. Fierce competition is forcing business owners to realize that marketing, branding, store design, product selection and inventory management are all crucial components to distinguish themselves from other shops. Traceability requirements and the need for business intelligence are driving the demand for better, more advanced point-of-sale systems and software.
The explosive growth of CBD products is forcing retailers to rethink their strategy to stay ahead of a booming curve. Dozens of household brands are taking a deeper look into the cannabis space to see how they might work with retailers and/or processors. Onerous tax obligations are leading savvy operators to explore ways to improve their margins, which often means selling less cannabis and more add-ons and merchandise, including hats and clothing, non-infused food and drink products, paraphernalia, books, magazines, home-grow equipment and accessories. It’s hard to say exactly what cannabis retail will look like in the next year or two as shops evolve and specialize and focus on solidifying their niche in the market. The cottage industry that began with just a handful of states legalizing medical marijuana in the 1990s has all but disappeared. Even the early days of the rec sector are a distant memory as this third wave of marijuana retail sweeps the country. If you’re involved in running a retail shop or dispensary, you can’t afford to maintain the status quo.
The cannabis industry is growing at an incredible pace. These examples are but the tip of the iceberg when it comes to industry innovation. To learn more about upgrading your business join NCIA and at the 5th Annual this July 25-27 in San Jose, CA. .
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