Getting the Oregon Cannabis Industry Back on Track

2018-05-03T21:18:03+00:00May 3rd, 2018|Announcements|

INTRODUCTION

Since the legalization of marijuana in Oregon, countless entrepreneurs–both growers and purveyors–have opened their doors and jumped at the chance to make their mark on this moment in history. The popularity of the emerging industry combined with an incredible season for cannabis crops last year has left Oregon with a massive oversupply issue. According to The Willamette Week, Oregon produced 1.1 million pounds of legal cannabis as of February 2018. That’s about three times the amount that Oregonians legally consumed last year. As a result, the cannabis industry is a buyer’s market and prices for cannabis are unbelievably low. In some cases, it has left the supply chain at a standstill and business owners are becoming desperate to move their product by any means necessary. Many in the industry are now struggling to survive, with even more wondering about the security of their future.

One of the many benefits of being a part of the industry’s supporting infrastructure is the unique perspective it gives GroTec as a business. From the vantage point of hard costs and long term strategy, it becomes possible to see standardization and consolidation as the next step towards a thriving industry.

STANDARDIZATION

With facility regulation slow to develop and data collection just beginning, we are still deep in the throws of significant financial unpredictability. A lack of standards not only gave individuals the opportunity to get into the industry who might not have, but also rendered business to business comparisons relatively meaningless. While the perceived drawbacks of standardization may seem obvious, the benefits lead the industry directly towards long term success. More predictable projections and level business to business comparisons enable determinable profitability and measured competition, with a stable market as the outcome.

CONSOLIDATION

The problem facing many business owners now is a lack of resources. When resources are scarce it is challenging to see the long term benefits of investment in infrastructure. If corporate growth has taught us anything it is that building an industry from the ground up takes money; frequently money that small businesses do not have. All emerging industries can depend on the investment of significant working capital, and the beginnings of facility and brand consolidation in the cannabis industry will be no different. Oregonians are champions of the small business, and the natural instinct might be to push back against the larger corporations entering into the cannabis industry. “We have worked hard through our legislation to make ample room for the cottage industry; the DIY craft pot grower who is looking to carve out a modest corner of the market and make their mark through quality and care,” said Anya Gordon, CEO of GroTec. “As a small business ourselves, we champion this ideal in almost every way. While it is common to villainize the corporate world, some of what they bring to the table is not only beneficial, but necessary.” Let corporate investment lay the foundation; let corporate dollars fund the arduous process of R&D so that the craft producers and purveyors may benefit from that solid starting point.

BEST PRACTICES

We are already seeing companies in the cannabis industry begin to consolidate. Those that have managed to succeed are beginning to offer an exit strategy to those who are looking to hang up their pruning shears. Operational facilities and dispensaries are being brought under a larger umbrella and belonging to fewer and fewer brands. These expanding brands are well-funded and have multiple facilities under their care, which allows the opportunity to implement consistent standardization in their facilities. As the industry continues to consolidate, systems will begin to be made uniform across the board. Brands will set a new bar for consistency, and finally a baseline will start to emerge. They will invest in streamlined processes and search for the most efficient methodologies on a scale that small businesses never could. The investment in both energy and production efficiency, and the adaptation of universal standards in climate controlled agriculture will enable these young corporations to find their way towards increasingly consistent product. This will lead to higher brand engagement, loyalty and an ever-expanding consumer base. Consistency is king in the corporate world and engaging consumers in an experience they can trust is imperative for a thriving business. Corporate as they may be, Starbucks expanded coffee’s consumer base by exponential proportions because of the standards they set. Imagine the doors this could open as we dawn this new day in the cannabis industry.

As companies in the cannabis industry continue to consolidate, GroTec can help them set the best standards for their facility when it comes to sustainability, employee and consumer safety, and profitability. This will set the industry up as a whole to adopt these consistencies and have long term sustainable success. Let’s welcome the platform that corporations will build and the investment they will bring. This is industry; this is cannabis 2.0, and while it may look like the ship is sinking, in reality we are heading full speed into the next phase of legitimacy and sustainability. As John F. Kennedy liked to often say, “A rising tide lifts all boats.”