GROWERS GROVE
The Green Rush Bubble Most people without previous experience don’t dive into a new business in a new industry just because they heard the industry was doing well. If graphic design or welding suddenly became the rage, people who had never used a computer or an arc welder probably wouldn’t think of starting a business in those trades even if the price of the commodity was rising (which it’s not in this industry). But for some reason, the medical Cannabis industry is viewed differently. I don’t know why, but right now everyone is riding high on the idea that even if they have no previous experience or background in Cannabis whatsoever, it’s a perfect time to open up a Cannabis business. Don’t worry if you have no knowledge of the skilled trade itself, if you’ve never grown a plant or if you’ve never even worked as a budtender in a dispensary, “The Green Rush” is on and everyone in the Cannabis industry is wealthy, so go for it and assume it’ll all work out. Yeah, here’s a history lesson for the business majors. Most people who flocked to California for the Gold Rush didn’t actually make any money. In fact, most of them sank everything they had into land that never produced any gold. Far more people found bankruptcy than wealth. The only people that had financial security were the ones selling shovels. So, for all the Cannabis industry professionals that are encouraging people with no experience to invest whatever they have into an industry based on a skilled trade that they have no previous knowledge of, you should really think about the ramifications of inexperienced individuals getting in over their head in an industry that still has many risks associated with it. As someone who spends a great deal of time educating struggling growers and cleaning up the potential disasters created by people getting in over their heads, I can tell you that selling the idea of starting a Cannabusiness is a very dangerous thing to do. I’ve seen several examples of dispensaries that opened after taking a weekend class on the Cannabis industry. Completely naïve but very eager, these businesses crumbled shortly after opening simply from lack of experience in the industry. In one very sad case, a poorly secured dispensary (that literally opened because they took a weekend class hyping the Green Rush) was robbed and the overnight security guard was beaten severely. Not only did the owner lose everything and all the employees were suddenly out of work 50
(one in the hospital), but all the product in the store was on consignment and now the growers operating on less and less of a margin all found themselves out of much needed income. In another case, a couple invested their retirement money in a dispensary only to lose everything in less than a year. Sometimes I think the only people making money in the Green Rush are the people selling the idea of the Green Rush to people who are just seeking financial security in a bad economy. There are occasionally finances in the Cannabis industry, but there is very little security in them even when you do find them. The idea of the Green Rush is by far the single biggest factor influencing the market now. It’s responsible for the massive outbreak of both ignorant consumers and inexperienced growers. The amount of superlative Cannabis is roughly the same now as it was 10 years ago, but it’s been diluted in an ocean of ho-hum buds. To find real chronic, discerning consumers have to wade through lots of “pretendicas” - pot that passes inspection at a glance but is terrible once smoked. In the exceedingly flooded market, some Cannabis Stores that are unable to compete by turning over lots of high quality Cannabis, try to survive by focusing on increasing their margin. Many consumers assume that Cannabis Stores always carry the best, but in the current market many of them just stock whatever they paid the least for. There are so many new patients every day who have no memory of better Cannabis days that the shift in market quality is overlooked by many patients. Cannabis Stores that focus on quality and turnover and who pay their growers top dollar for premium Cannabis, always have better medicine than stores that do not. Many dispensaries are so focused on asking the question of “How little can I pay for this product?” that they forget to ask the more important question of “Will my competition pay the grower’s asking price to have this product?” If it is an outstanding product, consumers will travel to stores outside their usual shopping area in order to get it, so dispensaries that hold a hard line on a high quality standard will draw in more customers even if they have to pay a little more for the product. Instead of advertising how cheap their eighths are, they should advertise that they pay their growers top dollar. I bet the quality of herb in their store goes through the roof as growers with outstanding products start showing up again (along with the customers that follow outstanding products). (continued on page 52)