- Sea Of Green
- Posts
- Is There a Cannabis Middle Class?
Is There a Cannabis Middle Class?
Who will be left standing when the music stops?
Duncan Cameron
August 18, 2023
Photo: Eric Tirrell
Well, I made it back from NECANN Maine, not that I wanted to leave. Maine in the summer is pretty good. Lobstah rolls, the smell of the ocean, dark night skies - you get it. And while I enjoyed my time there the conference definitely had an under current of exhaustion. Vendor stories of businesses not paying, operators’ stories of price compression and the never ending 280E saga.
This particular market is made up of smaller growers and the sentiment was very anti-MSO. This really got me thinking about what the next few years have in store for the industry.
I saw a lot of good weed in Maine and a lot of pride in the craft of growing. Most of these operations are under 20,000sf. More and more that seems like the line of demarcation between craft and commodity. Operations bigger than this are going to have to specialize in joints and biomass for edibles and extracts.
The quality gap is just too big for an MSO to be a craft cultivator.
But more importantly, no one accepts it.
You may have SOP’s and standardized facilities (which I have yet to see), but that’s not enough to make up for the amount of variation between regulations, staff and genetics from state to state.
I see a day when operators caught in the middle will have to make a choice - acquiesce that what they produce is a raw commodity used for finished products or down size and focus, really focus, on quality. Much like the US in general, the middle is shrinking fast.
POUND SAND
This week I had the pleasure of speaking with Ronald Morton, COO of LOCKGREEN Consulting. I asked Ron what he thought about the current state of the market and what challenges new operators face. Here’s what he said -
In order to obtain capital, make sure that you have a tangible asset, a robust balance sheet, proof of owning land or a building - something with guarantor value. I’ve seen so many different decks and business plans. This is great but do you own anything? If someone is going to give you $5 to $10 million, what are you bringing to the table? This dwindles the market quickly.
Make sure you have assets and a tight operation. Is your team credible? What is their history and expertise? Do you have SOP’s? Make sure its all in place so when you approach an investor they think it’s a good project.
Have a pivot strategy if those are not in place. Maybe start with a retail license and build proof of concept. Now you’ve shown that you can operate in the space and make the investor feel comfortable.
OTHER NEWS
Self stability testing is coming to Colorado. Yet another reason to right size your cultivation.