The OG Collective
Cathedral City, CA
As I write this, we are 37 days into the adult-use era of California cannabis. It has certainly been an eye-opening and exciting experience over the last five weeks. There were many expectations and predictions that came to fruition and there was certainly a fair share of surprises in our initial foray in the world’s largest market for legal cannabis.
Perhaps the most surprising thing that happened on Jan. 1 was the fact that local municipalities had not prepared themselves. Despite knowing for more than a year that adult-use sales were on the way, almost every municipality failed to have an ordinance in place for licensed cannabis businesses.
Luckily, at The OG Collective, we were one of a very few retail locations ready for recreational sales on the first day of the new year. To say that business has been excellent would be the understatement of the century.
But I have to admit that I’m a little surprised by how many people that consume cannabis do so without a medical recommendation. Considering how easy it has been to obtain a medical marijuana recommendation in the state of California, I always assumed to a certain degree that people simply obtained a “rec” and went to their local dispensary. But I was completely wrong. Our client base has exploded since the passage of adult-use legalization. Consumers clearly feel far more comfortable with “total” legality, as opposed to operating under the medical program.
There are a few things I envision happening over the next few months. Major investments from public companies in Canada and from private equity in the United States will start to “roll up” licenses throughout the state and the industry in general. People that own one or two licenses will be approached by larger conglomerates with very aggressive, unsolicited purchase offers. I also believe the industry is going to go through price adjustments on both the wholesale and retail levels. With the implementation of the distribution model, cultivators and manufacturers will be forced to raise prices to cover that cost.
On the retail level, prices have risen because of the cannabis tax implemented on the state level. The question is, how much will the consumer accept before going back to the black market? With that in mind, aggressive law enforcement against black market operators is going to be imperative to the success of legal cannabis in California.
More to report next month …