It’s hard to believe we’ve been at this for more than nine years. Time flies for sure.
During that time, we’ve had lots of amazing experiences, met a ton of cool folks, and seen countless grows and retail operations. Cannabis is a fascinating business and fast-growing industry.
I’m often asked where it’s going to go, if there will be federal legalization and what segments of the business are making money. To be honest, for all three questions, my answers are always guesses at best. When Washington and Colorado legalized adult-use marijuana, I did correctly predict that several other West Coast states would follow suit. Sure enough, Oregon and Alaska took the dive two years later, in 2014, and California followed suit in 2016. It always made sense to me because tax revenues drive a lot of our laws, and I was certain Oregon and Alaska wouldn’t want to lose taxes to Washington. Makes sense, right?
Nevada, Massachusetts and Maine passed legalization bills the same year as California, and after that, states began falling like dominos. Arizona, Illinois, Montana, Michigan and New Mexico came in the next waves. The East Coast wasn’t far behind, including Connecticut, Maryland, New Jersey and New York.
While much of the conversation lately has been about moving cannabis from Schedule I to Schedule III, I’m guessing federal delisting is inevitable. At least then in the kooky, far right states like Alabama, Idaho and Wyoming, the penalties for possession will be reduced and not federal felonies.
As far as making money is concerned, I’d go with the retail side over the grow side. Cannabis is an extremely easy plant to produce cheaply (despite what the High Times writer types might say), and the commoditization of the end product is inevitable. Or to put it another way, it’s another form of agriculture — and farmers are never the folks who make big bucks. The big bucks are made by distributors, packing houses and retailers. End of story. Think apples (Tree Top), grapes/raisins (Sun-Maid), cranberries (Ocean Spray), etc. Also think Safeway, Walmart, 7-Eleven and Kroger. You know all those names, but I bet you can’t name a single grower who grows apples for Tree Top Juice, which ends up being sold in Walmart. The point is that farming it a low margin business with lots of competition. It’s not a get-rich industry.
In the Northwest, and especially Washington and Oregon, the cannabis industry has seen many ups and downs over the past several years. It’s the same pattern often repeated in other forms of ag: Prices go up, more plants are planted and harvested, oversupply is the result and prices fall down. Then it’s repeated all over again. So in the end, my advice is the same as it’s been since day one: Forget about dreams of instant riches — it’s not going to happen. Be ready to work harder than the other guy and put in 10-hour days; expect plenty of your plans to go sideways; keep a sharp eye on the competition and pay attention to what your customers want; and never try to force a square peg in a round hole.
One final thought: Read about companies like Root Sciences and learn from them. They’re successful for a reason!