How the marijuana ‘green rush’ fell apart

https://www.washingtonpost.com/business/2022/12/30/marijuana-supply-sales-turmoil/

by pseudolus • 4 years ago

123 191 4 years ago

greazy• 4 years ago

This reminds me of the strawberry growers here in Australia, QLD. Many farmers switched to strawberries and the market was flooded for one season. They were literally selling them by the kilo when previously punnets (250g) were 3-5 dollars each.

Lots of farmers switched to other more stable crops. The big players stayed and the small farmers producing high quality fruit continued.

The market stabilizing. Interesting times.

atentaten• 4 years ago

Off topic. I've been appalled at how tasteless store-bought strawberries in the U.S. have become. I don't know happened, a change in cultivar? 12 years ago I could buy flavorful strawberries in the U.S., today I cannot. I hope they have more flavor in AU.

jspash• 4 years ago

If you have the money, take a trip to Japan and you can try the best strawberries in the world. Only $500 each!

https://strawberryplants.org/japanese-strawberry-growing-sec...

rootusrootus2• 4 years ago

Maybe coming from afar and picked when they're green? Local strawberries in the summer are great, just like local tomatoes. The rest of the year it's much harder to get either one in any variety I can stomach.

pixl972• 4 years ago

Because consumers in the US buy on size and appearance and not taste.

We'll buy a pint of massive, red, perfect looking berries that have zero flavor before we'll buy a smaller, dented berry that has the best flavor on the planet. Add to that the berries tend to be picked green and shipped long distances and you have the perfect maelstrom for the next 'red delicious' debacle.

mturmon• 4 years ago

Many varieties were replaced with the "Camarosa", which is now the default grocery-store berry. Here's an article from the change-over:

https://www.latimes.com/archives/la-xpm-1996-04-21-mn-61072-...

[edited to add: see also: https://homeguides.sfgate.com/interesting-chandler-strawberr... -- but there are a lot of astroturf pieces out there also]

Camarosa ships well (high firmness), but the taste really isn't there.

That replacement was more of a circa-2000 thing. Perhaps the further decline since then has been due to relocation of berry production even farther away from U.S. markets (e.g., in Mexico or Central America).

You can still get the other varieties from local producers, at least where I live in southern California. The taste difference is enormous, it's worth going to a farmer's market just for the berries.

Same kind of thing has happened with tomatoes.

metta2uall• 4 years ago

Sadly the vast majority do not..

MonkeyMalarky• 4 years ago

When do you buy them? Where I live in Canada there are two options, big tasteless imported (from down south) stuff that's available year round, or tasty local half-the-size stuff that is only available for a few weeks once a year.

int_19h• 4 years ago

BTW, if you haven't tried wild strawberries, I would highly recommend. They are not super sweet, but they have very strong, concentrated flavor, much more so than regular strawberries. Seems to be largely unknown in US, unfortunately?

https://en.wikipedia.org/wiki/Fragaria_vesca

AlbertCory• 4 years ago

Besides farmers' markets, which the others have mentioned, there are smaller produce markets in a lot of areas (they tend to be in strip malls, at least near me). Their whole shtick is having good produce, including berries.

skyberrys• 4 years ago

Try getting some Mara de Bois bare root strawberries. I plant them in old paper bags filled with soil and leave them outside.

chupchap• 4 years ago

And that happened with avocados this year

sethammons• 4 years ago

Avocados take 10 years to start producing. Strawberries are available that growing season. Any wild drop in avocado prices I'd imagine would have to be something changing in the economic playing field (unless it is just a ten year delay from a jump in tree planting).

The Mexican cartels have been squeezing avocado farmers, there is an episode on Rotten (Netflix, I think) about it. Any price swinging makes me wonder how the cartels may have been involved.

latchkey7• 4 years ago

I spent about 4 years actively growing weed before it was "legal." in San Francisco.

Because mine was indoor/soil/organic and didn't require driving up to Ukiah or waiting for the outdoor harvests, I got the same premium rates for it that are noted in the article.

As soon as I realized that weed was eventually going legal, I stopped entirely because I could see the writing on the wall. It was becoming commoditized to the point where it was impossible to compete. Too much money was being thrown at it.

Articles like this are zero surprise.

a2tech• 4 years ago

In Michigan now that its legal the prices have plummeted. I just saw a place advertising $100 for 2 full ounces for new recreation customers. Thats an insane deal. I'm sure its not the best stuff but its a shocking amount.

pixl972• 4 years ago

I mean $100 for 2 ounces of the marijuana plant in particular isn't cheap at all. There are some 'mild' complications in growing it, but in theory it should end up more like a bulk farming product where we talk about dollars per pound on the retail side, and dollars per ton on the wholesale side.

LBJsPNS• 4 years ago

I can buy ounces all day in Portland for $20. Is it Jesus incarnate? Nope. Is it perfectly good sinsemilla that gets ya high? Yup.

HDThoreaun• 4 years ago

In Illinois the opposite has happened. Been legal for going on 3 years now and an mid quality ounce goes for $300-400 minimum. 1 gram carts retail for $60 plus taxes bringing it to an easy 80. I just drive to Michigan now since the prices there are 4x lower, but the black market is doing quite well here since the number of smokers has increased and prices are half for similar quality flower.

hotpotamus• 4 years ago

I remember reading something years back that applying modern large scale ag technology to cannabis was never a technical hurdle, merely a legal one, and how much cheaper it would be once the well-capitalized giants got ahold of it and came to pretty much the same conclusion. It did make for a neat trip through Colorado in 2017 when it was still pretty novel though.

asdff17• 4 years ago

It actually is a technical hurdle because not a lot of academic research is being done on it for commercial growers to use. You see some papers out there that cover things like yield per light spectrum or what soil ammendments do for terpene content, but they all come out of Canada and specifically McGill. It's like U.S. researchers are blackballed by their institutions or maybe their grant funding agencies. As such, techniques like plant tissue culture that are commonly done with other crops and expensive ornamentals in the U.S. are rarely done with cannabis because growers that do these techniques are often tight lipped about things such as the most ideal media composition or really anything else related to methodology.

Meanwhile with crops such as corn, you have entire land grant universities planting test crops as we speak and biology departments dedicated to maize genetics, and thats true for almost every other large commercial crop. Billions are spent on research by the federal and state governments. Agriculture takes advantage of all of this research and development when producing commercial crops, but none of this investment is being made for cannabis and when it is done by these private companies they are not proliferating their findings.

latchkey7• 4 years ago

Despite the name 'weed'... it is actually a very complex plant to grow well and with the highest output. I propagated the best cuttings, from the same strain and the plant morphed over the years. Far stronger at the end than when I started. But it also became oddly harder to grow, the same techniques that I was using, didn't work over time despite a relatively controlled growing environment.

It is a fascinating plant.

asdff17• 4 years ago

I'm not sure what your operation was but I think there is still a market for your crop. There's plenty of weed in the dispensary, yes, but its taxed sometimes 30%. You get what you think is a cheap oz of weed but its in a sealed bag, and when you open it up it does the job sure according to THC % but its all that shake and larf and ugly stuff that comes from the trim bag and rock hard cure style of prep commercial growers do. There's a reason why the grey market remains so huge.

standardUser4• 4 years ago

I've had the exact opposite experience with recreational stores. A wide selection of accurately labelled and high quality products, instead of just a bag of weed that's way too strong for me, like the black market primarily provides. It's a million times more convenient and not much more expensive overall (unless you buy some premium products maybe).

latchkey7• 4 years ago

I'm very long out of the business, it is several lifetimes ago for me, which is why I'm comfortable talking about it now.

Grey market at scale is a pain in the ass, and risky. You need people to buy pounds at a time, in cash. A big bag for a big bag.

You basically need to set up a supply chain that you can trust... this is why the DEA a lot of the time finds weapons with drugs.

So yea... growing for friends is easy... growing to make a living, is a real pain in the ass.

AtlasBarfed• 4 years ago

And the revolution will be corporatized.

Once the federal level stuff gets sorted out, you think ma and pop growers will be able to compete with big tobacco or some other outfit? This is a dependency-forming market opportunity. It's likely a 10s of billions market, maybe hundreds. Alcohol is 287 billion per year.

I guess the only good news is that cannabis is a lot easier to self-produce than tobacco.

And once they figure out how to get nicotine into cannabis...

flybrand• 4 years ago

Crops have a shelf life and a consumption window - they are perishable. There’s enormous investment going on in technologies to enhance the storage of downstream products. That will pay off, in the same way that the excess crops of the Ohio valley were profitable once they could be converted to alcohol. Today’s glut is an abundance of raw material that indicates demand for some method to store the product longer.

upon_drumhead• 4 years ago

Isn't the oils and extracts that solution for the long term storage? What's missing?

flutas3• 4 years ago

Isn't the oils and extracts that solution for the long term storage?

Yep, and you will see distillate used for things like edibles/drinks/vapes.

This has two problems (in my mind), but both the same cause...consumers are picky.

First issue is most states require the date of extraction to be listed on the product packaging. If they see a really old date, they get sketchy about it. (ex: I have recently got some R&D stuff from a grow, and the extraction date was listed as February 2022 and that set off alarm bells in my head, even though it's perfectly fine like you mentioned.)

The second is a group of issues in consumers minds and they are all closely related. Distillate doesn't have all the terpenes the other forms do (and therefore removes the 'strain specific' effects that some go after), so you lose out on the entourage effect[0]. Some grows will start re-adding the terpenes to distillate using cheaper plant based (tree in some cases) terpenes and again, people are picky and this turns them off of the product.

[0] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3165946/

nickthegreek3• 4 years ago

Shelf life is still around year according to the expiration dates on the medical concentrates in my state.

latchkey7• 4 years ago

I stored a pounds of weed in air tight 5 gallon homedepot buckets for many years (forgot about them actually when I shut down my operation). After pulling it out and sampling it, still smelled fresh and smoked well. I could have easily sold it.

As long as it is stored well, I don't think this is as major of a concern as you're making it out to be.

Pulcinella• 4 years ago

Bad for small businesses, but potentially good for purchasers (i.e. low prices). Unfortunate for those looking to get rich, but legal weed is essentially farming, and no one thinks of farming as easy money. It’s like starting your own brewery or vineyard/winery. They are commodity products, not huge moneymakers.

lost_tourist3• 4 years ago

I have a friend making a killing at the 3 local breweries he runs, so making a tidy profit can be done.

sudosteph2• 4 years ago

I'd be interested to know if the new market for "full spectrum hemp" in non-decriminalized states is also affecting the legal growers. Here in NC, you can go into stores all over the state and buy thc edibles for a very reasonable price. And I'm not even talking about the delta-8 stuff that was popular for a while (though that's around too). Basically a farm bill loophole has made it so that processing low-thc hemp and selling products made from that is very profitable, and it doesn't have the same tax burden of legal weed. Even real flower is available through a different loophole, and you can go to dab bars in cities like Nashville and buy concentrate from that loophole bud. I could see people who would otherwise travel across state lines for reputable product preferring the loophole stuff due to convenience and price.

standardUser4• 4 years ago

I was in NC recently and totally baffled by the selection and availability of different cannabis products. I'm still not sure what I was buying/smoking half the time, but I mostly enjoyed it.

Here in NY, we have a different kind of "gray market" that has been filling the vacuum created by a lack of legally sanctioned stores. It started as weed vans all over the city (selling products of questionable quality) and then it was bodegas and smoke shops selling flowers and prerolls on every street corner. Now we have full-blown recreational shops with bright lights and branded packaging selling nothing but weed 24/7, and they are completely illegal.

The first legal stores finally opened up a few days ago.

feet• 4 years ago

That d9thc loophole is honestly hilarious. The gummies are comically large to get 0.3% thc

TylerE• 4 years ago

My friend had some of those… roughly the size of a Nilla wager for 25mg.

unethical_ban• 4 years ago

How is cannabis flower legal through a loophole? Someone here in TX said they have the real thing but I was skeptical, since some D8/CBD places are trying to sell smokable hemp.

That said, I must say Delta 8 and 11-Hydroxy-THC are two very different but enjoyable and legal substances in Texas. 6mg of D8 is just enough to take the edge off a day, and a full one will just totally chill you out for movies. Then THCjd, HHC or 11 Hydroxy THC will level you if that's what you want.

sudosteph2• 4 years ago

Lookup "high THCA hemp" for the loophole stuff (the subreddit "cultofthefranklin" is also dedicated to it). Basically THCA occurs naturally and converts directly to THC when heated (smoked or vaped), so if you test the bud before it converts, it passes because it's not technically THC per the federal farm bill. Some state bills are different though and do count THCA towards total THC.

alexose5• 4 years ago

I live on the Oregon/California border, where a lot of growers spilled over from Humboldt County and elsewhere. I've seen a few ups and downs in the market, but nothing like what happened over the last two years. There was a moment in 2020 when more acres of weed were being grown than alfalfa. Neighbors were signing multi-year contracts to rent out their water rights. And oh, all of the terrible behavior that the rush brought with it. So much plastic, everywhere.

And just like that, it's gone. All the big-money growers went to Oklahoma, and only a few remain. Which, I guess makes sense. The only reason they were here in the first place was because of the regulatory environment-- Not because land is particularly cheap or water particularly abundant.

I'm in the wine world, so I suppose I have some sour grapes, so to speak. In the boom times, a single cannabis plant could throw off $500 worth of product. Plus, the indoor grows were usually doing multiple harvests per year. Whereas my plant takes half a decade to establish, then produces $10 of fruit in a good year.

flutas3• 4 years ago

All the big-money growers went to Oklahoma

So accurate. Also a lot of foreign money in pot farms in OK... sometimes leading to essentially slavery on the farms resulting in the deaths of workers.

https://www.nbcnews.com/news/us-news/man-demanded-300k-killi...

alexose5• 4 years ago

Unfortunately, I can tell you exactly how it's going to go in Oklahoma as well. Not great.

asdff17• 4 years ago

You can get a lot more than $500 off a single plant. Outdoors grown right into the soil, you could get a pound or more off a single humongous plant, and in California with a medical card you can have 12 of these plants growing at once. Even a small indoor tent grown plant is good for like 5-6 oz or more 3-5 months from start to harvest. Genetics are great these days for seeds and clones. Imagine parting that out for $200 oz or better yet the $30 a gram metric the cops use when they weigh their busts.

dmurray• 4 years ago

You can get $5000 or a lot more for a single bottle (~1 plant) of wine, too. But if you're growing acres of either crop you aren't making those numbers reliably.

pests• 4 years ago

If you are still paying $200 (retail) for an OZ you are getting scammed.

loeg5• 4 years ago

You think bulk growers are making significantly more than $500 a lb? $30/g was fictional even before legalization.

elif2• 4 years ago

these are full time farmers, they aren't sitting around at home with 2 phones waiting for teenagers to pay retail price between fortnite matches. Instead they sold bulk on average for $660 / LB this last year, so ~ $250-330 per outdoor plant. MOST of that average is indoor high grade, so this can be seen as a ceiling on outdoor plant economics.

So your napkin math that "you can get a lot more than $500 off a single plant" appears to overly enthusiastic.

DonHopkins2• 4 years ago

I'm in the wine world, so I suppose I have some sour grapes, so to speak. [...] $10 of fruit in a good year.

Even if the demand for grapes dries up and withers on the vine, at least you won't have a problem raisin money.

aaronbrethorst• 4 years ago

Did you hear about the viticulturalist whose crop was lost in a drought? He said his whole reason for being was to pay off his raisin debt. (I'm still workshopping this one.)

encryptluks22• 4 years ago

Wait, why in the world would they go to Oklahoma to grow? That is like asking for trouble from the law.

manicennui• 4 years ago

https://www.nytimes.com/2021/12/29/us/oklahoma-marijuana-boo...

Galaxity• 4 years ago

To sun it up from the NYTimes article posted below, Oklahoma does in fact have legal medical marijuana. In addition it apparently has pretty lax regulations compared to other states on growing. Basically little limit on how many farms are allowed, how much they can grow, etc. And apparently pretty low startup costs (I assume license fees and all that are low).

chasd00• 4 years ago

OK is as close to a free market as you can get, low license fees, taxes, etc. Recreational use is on the ballet for a special session in the spring and it’s already legal for medicinal use and a very liberal def. of “medicinal” at that. There are dispensaries everywhere.

/own 20 acres in SE Oklahoma (tangent, my property taxes last year was a whole $9)

sammalloy• 4 years ago

Plus, the indoor grows we’re usually doing multiple harvests a year.

Maximum of four, and if you have it staggered in multiple grow environments, then you’re doing 12, one every month.

bogomipz• 4 years ago

"Whereas my plant takes half a decade to establish, then produces $10 of fruit in a good year."

I would be interested in hearing more detail about the economics of the $10. Is this price you get from selling your grapes to someone else or is the net from selling the wine that you produce from your plants?

spydum• 4 years ago

also involved the winemaking and vineyard biz (east coast us). i think that estimate is on the lower end, but also per season (single harvest per year). while the vines do take 5 years to really start producing, they will continue to produce for decades after, with a cyclical nature of peaks and valleys approx every 5 years. $10/per plant seems very low, even if selling only as u-pick. also highly depends on your spacing and grape type. for us in the south east, muscadine grapes are enormous and a single plant with a 12' spread can produce quite a lot per plant at its peak, easily 80lbs of grapes in one season. wine is approx 15-20lbs grapes per gallon from that.

alexose5• 4 years ago

Well, I don't make my living off of growing grapes. I just do that part for fun. So my napkin math is basically $1.50 per pound, which is on the low end of what I pay when I buy them from a vineyard.

Real grape growers are looking to maximize dollar per acre. There's a lot that goes into it if you're trying to turn a profit. But at the end of the day it's about keeping the yield high and the input costs (especially labor) low.

mind-blight5• 4 years ago

I grew up in Ashland (visiting there right now, in fact) and have family who funded one of the first marijuana companies in the state.

Some problems were bad behavior from legal growers, but I'd argue the bigger problems were caused by regulatory and oversight failures from OLCC and enforcement of existing laws on illegal grow operations.

1) OLCC allowed for way too many grow license at first. For a state of 4.3 million, you have a serious upper bound to how much the legal market can support. There was some discussion about weed tourism, and a bit of work to allow legal interstate sales between Washington and California, but nothing really materialized.

2) A plant could produce $500+ in product, but it cost tens of thousands of dollars per acre just to get your plants in the ground. That's not including harvesting, drying, trimming, and storage. Given that there's no crop insurance, if anything goes wrong you're easily a couple hundred thousand in the hole.

3) OLCC often added regulations mid-grow, after it was impossible to effectively respond. This included things such as dropping the batch size for a test (which costs hundreds of dollars per run) down to 10lbs per batch. This sort of uncertainty, the oversupply of licenses, and the huge up getting operational costs made it financially impossible for a lot of farms to break even. I don't condone it, but I do understand why a lot of folks under reported yield and sold part of their harvest in other states.

4) A lot of the truly bad actors we're organized crime rings moving in (Russian mob and Yakuza from what I heard). They got a hemp license and grew marijuana illegally (usually having a few hemp plants in case a state tester came to the grow site). Local law enforcement knew about it, but they were literally out manned and out gunned. The feds eventually offered support, but it took a while. Folks understandably freaked out, but OLCC mainly used the mob as a pretense to try to wrestle hemp regulation away from the ODA (which they have been trying to do for years) rather than acknowledge that this was an enforcement problem, not a regulatory problem.

jefftk• 4 years ago

On (1) I'm don't see how limiting the number of growers was, or should have been, within OLCC's role. When governments try to match supply to demand this way it generally goes very poorly in the best case (ex: certificate of need requirements for opening hospitals, federal marketing orders limiting production) and runs into regulatory capture in the worst case (ex: increasing the entry requirements for professions to boost wages).

The people best included to make good decisions on how much to produce were the growers and their investors, with their own time and money on the line.

dsfyu404ed3• 4 years ago

you have a serious upper bound to how much the legal market can support.

Demand is very much elastic in response to price.

jMyles• 4 years ago

I love Ashland. The lithia water is some of my favorite water I've ever encountered. I have occasionally wondered: is it possible to buy land there with a well that produces that amazing water? I have looked around the area of emmigrant creek and the gun range, from which the water is apparently piped?

I'd love to know more about this. I think about this water often.

alexose5• 4 years ago

Hey Ashlander! I'm out in the Applegate (as you probably could have guessed).

Thank you for adding some more nuance to my post. I agree with everything you've written here. It matches my understanding of what happened despite my earlier oversimplifications.

There were compounding problems, but I think the story to be told is one of ineffective regulation and underenforcement. The regulators just didn't have a complete understanding of the industry, which introduced loopholes large enough to drive a Mexican cartel-sized truck through. Better representation from industry might have helped, but it's hard to say.

In their defense, the market changed underneath everyone. Keep in mind that there was virtually no public awareness of CBD until after it became legal to farm (https://trends.google.com/trends/explore?date=all&geo=US&q=c...). The wink-wink nudge-nudge "hemp" growers knew this, and moved with incredible speed to farm as many acres as possible before the regulators caught up. Somewhat like flooding a small town with Bird scooters in the middle of the night.

I'm not saying the industry was perfect beforehand, but it was mostly fine until it became clear that there would be a 1-3 year window for growers to extract maximum profits. At this point the whole valley got ground up in the mighty garbage disposal of capitalism.

dsfyu404ed3• 4 years ago

As long as regulation and taxes are a dominant cost in the weed industry it will remain volatile. Some state is gonna come along and tax it slightly less than Oklahoma and everyone will go there. Wash, rinse repeat among the 30-something states that are sufficiently arable for weed until the taxation is a low enough fraction of the overall cost that other factors (water cost, growing season, etc) dominate.

dmix2• 4 years ago

Is there any other markets that the same hydroponic equipment could be used for that's profitable?

Or maybe just the greenhouses and gardening equipment, since hydroponic has a limited set of vegetables/plants that it can grow.

rootusrootus2• 4 years ago

Well, it's been a joke (at least around me) for a long time that weed was just like tomatoes to grow. If someone can figure out how to pull off a good quality heirloom tomato variety that works even in the dead of winter, that sure would be nice.

patmcc• 4 years ago

The hard part is finding someone to pay $500/pound for tomatoes.

loeg5• 4 years ago

Tomatoes and peppers grow great in hydroponic setups but good luck in profitability.

DoreenMichele• 4 years ago

Potentially: Growing veggies in Alaska and other far north places where people have trouble getting veggies at all and typically pay crazy high prices compared to what people pay elsewhere.

lathyrus_long• 4 years ago

Tomatoes, peppers, lettuce, culinary herbs, and many other plant species are grown profitably under hydroponic conditions. This is especially common in colder climates, to maximize the yield per square foot in expensive greenhouses. It's sometimes economic even outdoors though, like in regions with poor soil or scarce water, or to mitigate some (but not all) pests and pathogens. Here's a paper studying the economics of hydroponic greenhouse tomatoes in Florida:

https://svaec.ifas.ufl.edu/media/svaecifasufledu/docs/pdf/ag...

The theory is the same regardless of the plant species, but irrigation equipment and consumables targeting the cannabis industry tend to be quite expensive, sometimes because the higher-value crop justified that, sometimes for no good reason. The lighting requirements for cannabis are also unusual (very high PPFD, controlled photoperiod for non-autoflowering strains), so the greenhouses would need some reconfiguration. So the capital investment doesn't go to zero, but it's a big markdown.

A lot of graduates of top agronomy and horticulture programs (Cornell, etc.) also seem to have ended up in cannabis, I assume because the money was good. It will probably be better for society overall if this crash redirects their efforts to the food supply, though sad for them personally--vegetable growers are paid quite badly, even by the already dismal standards of the life sciences.

dmix2• 4 years ago

Thank you for this comment, it's very insightful.

mseri• 4 years ago

Without paywall at https://archive.ph/8aj7W

rippercushions2• 4 years ago

The cannabis boom seems to have been predicated largely on the assumption that it would resemble the high-end wine market, with expensive vintages, "budtenders", etc that can support lots of boutique farms and retailers.

But it looks more like the future will resemble the tobacco industry, with slim profit margins and a handful of conglomerates controlling production. And in reality, for wine as well, LVMH owns many of the most famous upmarket brands and and most wine drinkers stick to the bottom-shelf industrially produced bulk stuff that wholesales for $1/litre.

yieldcrv• 4 years ago

The cannabis boom seems to have been predicated largely on the assumption that it would resemble the high-end wine market, with expensive vintages, "budtenders", etc that can support lots of boutique farms and retailers.

I don't feel like founders, employers, consumers or anybody standing nearby ever believed that.

But founders had to convince investors.

Karrot_Kream2• 4 years ago

There are high-end weed products out there. High quality wax, concentrates, and edibles for discerning customers exists. Certain dispensaries also specialize in higher quality product. I enjoy many of these myself as legal weed in my area is still much cheaper than alcohol and I prefer the product.

Wine has had a stable market for centuries with products aimed at many customer segments, high and low quality segments included. Weed is just beginning, and the biggest customer segment by aggregate demand will be the undiscerning customer. Thinking otherwise is silly IMO.

asdff17• 4 years ago

discerning

I have serious gripes with the high end market in the dispensary. For example, Stiizy will sell you a gram of distillate in a cartridge for $60. It's the exact same product as the one being sold in that same dispensary for $20 from a brand with less instagram presence. Distillate is pretty much commoditized. Also the entire $60 1/8th market is absurd to me, it seemingly exists for people who assume price means quality because at the end of the day, its not significantly different than the stuff being sold for less than half as much, but it might come in a nice glass jar with a sexy lid instead of an opaque plastic bag.

Then if you start growing yourself its like seeing the man behind the curtain in the Wizard of Oz, with how much excellent weed you can produce in a few months with little investment or effort beyond what you'd do for a tomato plant. It will honestly look better too being hand trimmed and cured versus trimmed by a trim bag facing whatever the commercial growers do to cure it into a tiny, dry rock hard nug (probably good for scaling the process but its ugly to me).

I guess you can say this is true for just about any luxury product though. There are people that say wild turky or knob creek is a lot better than much more expensive whisky some people chase after.

rippercushions2• 4 years ago

High-end tobacco exists as well, and you can also pay hundreds for a Cohiba cigar or a carton of Chunghwa cigarettes, but for the vast majority of smokers out there Marlboro is about as fancy as it gets.

asdff17• 4 years ago

The difference between pretty good weed and the best weed is irrelevent when you throw the bud into your grinder, unless you are buying moonrocks (kind of like battering fried chicken, the bud is dipped in high thc% oil then kief). It's not like a whisky where you get this whole tasting experience and can taste the wood of the barrel it sat in; to my tongue at least smoke is smoke unless its the terrible brick weed that I have not seen in 15 years. Even then with so much excess product being produced by growers, moonrocks would not be expensive to produce.

malermeister2• 4 years ago

Smoke is smoke, but vapor is not vapor.

You can taste a lot more when you stop burning the plant and I think that's where the industry needs to go if it wants to develop that way

extr3• 4 years ago

Great observation. I think people without a ton of experience with weed fail to appreciate just how different it is compared to alcohol. Back when weed was illegal I used to have a joke I would make with dealers. I would ask them what the strain of the weed I was buying, and usually they would tell me it was some Sour Diesel Purple Hurple Haze Hybrid or whatever (they were making it up on the spot most of the time, I'm sure). And I would then ask "Will it get me high?" and everyone would laugh.

The joke being that these days it's all the same stuff. It's either complete shit weed (which is rare) or high potency modern bud that is all basically interchangeable. I personally have never even been able to detect a real difference between sativa and indica, let alone individual strains. Does some of it taste kind of different...sure? But smoking something or even vaping it is just fundamentally a different experience. It's not food, it's clearly a drug. It's in your mouth for like a second max. Tolerance works differently too, unless you are a daily, habitual user you're not sitting there puffing on a 90% THC weed pen for hours. One puff and you're fucked up. But you can have a glass or two of wine and feel mostly normal, even for someone who doesn't drink often. You can sip on it.

So IMO all of this had led me to the same conclusion as you. The market is headed for complete commoditization in no time. I have a friend who works for Altria and she was saying even 10 years ago they were planning for complete legalization and to dominate the market once it happened. The growing fields were already purchased back then.

shlant3• 4 years ago

I personally have never even been able to detect a real difference between sativa and indica, let alone individual strains

This is interesting to hear because I have the opposite experience. I used to have really bad anxiety and weed was (and still can be) a trigger for it. I took a few years off weed and only starting trying it again since legalization in Canada (and now Thailand). I have definitely noticed that I feel best on something that is under 20% THC, with at least 1% CBD. I also am doing more experimenting with different terpenes and am pretty sure that also has an effect on how it makes me feel - limonene for example seems to be the best for getting the "euphoric" high. This makes sense as there is some research to indicate that terpenes from other plants (such as lavender) can have a positive impact on anxiety.

In terms of indica vs sativa however, I do think the distinction is largely overblown (from what I have read) and those are usually just proxies for the cannabinoid ratios (with sativa usually being higher THC etc and indica higher CBD etc.)

So from my experience and from what we have seen with coffee and beer I can agree that we will see commercialization first (like the Starbucks and Molson/Coors era) but I think that as weed becomes more normalized and more people get a feel for the differences in strains, preparations etc. we will see a shift back towards more "craft"/small farm interests like we have seen with beer and coffee in the last few years.

inDigiNeous3• 4 years ago

Maybe it takes some time to get to know the different strains and how they feel. I mean, I cannot tell the difference between different wines because I am not experienced in that, I can mostly say that this is shit wine and this is good wine.

But with this plant, the different strains definitely have different effects, and if you compare a strong indica vs sativa, the effects are very clearly different.

I mean, it is a plant that affects your mind and body, if you spend a lot of time with that you get to recognize the definite differences. The way the grower also handles the plants seem to have a difference, so it can be very sensitive if you have sensitivy for that kind of things.

Personally I agree on that the race to increase THC levels in the plants is not the best way, I mean I would be more happy if there was a race to create balanced strains, instead of trying to maximize the "blast you in the face" high THC buds. Like you said, sipping on good balanced strains is a much better experience at least for me, than just getting blasted to the moon with these modern strains coming near 20-30% THC content and almost no CBD.

hypertele-Xii• 4 years ago

You can "sip" on a vape regardless of produce potency. Set the temperature to 185°C and suck gently, turning it off as soon as you taste it. Then vibe for a moment and get a feel. Increase temp by +2 degrees and repeat. This precisely avoids getting fucked up from one puff, and allows you to enjoy the gradual intoxication.

CBD, the calming, antipsychotic compound vaporizes at a lower temperature than THC, the compound that gets you high. At 185°C you're getting mostly a bodily soothe, while 230°C has you hitting the deck and spaceing out.

goolz• 4 years ago

I don’t want to come off as pedantic disagreeing here but as a degenerate pot smoker for the last 15 years I definitely can tell the difference. I actually never understood wine tasting and it’s subtleties until I started picking up on the same notes in my herbs.

Sure, back in the day lots of stuff was made up. But now I genuinely do get a different taste and high depending on the strain and I can usually tell the difference between certain kinds. Also, for very popular buds like Sour D I can ID by the smell alone. In the end it is just different terps, I know. And while I prefer Indica (“in-da-couch”) I do recognize some of the different effects could simply be psychological and not physical. Alas, I am big fan of medical grade sensi and the sincere peace it brings to my life (it is a boon for treating seizures). Anywho, just my two cents, have a good one!

ehnto• 4 years ago

That's what the venture capital involved seemed to expect anyway. There was a VC bubble for the industry, and some really crazy brands were showing up. Brands where you could buy your weed along side an order for a $15,000 dollar leather horse saddle, golden glassware, crystal ash trays or other expensive trinkets. Farm tours and taste testings emulated the wine industry to a tee. They were 100% banking on a premium clientelle. Does such a clientelle actually exist in enough quantity to support that industry though I wonder? Surely there was market research showing it might?

automatic61312• 4 years ago

Surely there was market research showing it might?

Yeah of course, it was done along side the crypto due-diligence

wonderwonder• 4 years ago

I would argue that medical marijuana is really where the money went. In states where there is only medical and not rec, you have to pay hundreds a year to get and keep your prescription. Anyone can get one they just have to say literally anything to a weed doctor and you get the prescription. It took me 15 minutes. Couple hundred bucks a couple times a year though to keep it. The people making money are the few politically well connected companies that have growers licenses and the doctors prescribing it. The grow licenses are worth tens / hundreds? of millions. Its honestly insane, everyone knows anyone can get a license if they have the $, but at the same time we continue to arrest and imprison people that don't have the money or the where withal to get a license.

flutas3• 4 years ago

The people making money are the few politically well connected companies that have growers licenses and the doctors prescribing it. The grow licenses are worth tens / hundreds? of millions.

Honestly knowing some of the backend of a grow in a medical only state, the grows aren't where the money is.

The article glances over this very quickly, but real money is in the dispensaries.

(this is from a dispensary angle)

Carl Giannone, the co-founder of cannabis company Trade Roots in Massachusetts, said an eighth of an ounce used to reliably sell for $55. Now he has to price it near $40.
“And the scary part is that product that’s selling for $40, I can buy from a large wholesaler for $7.50,” he said.
“The green rush has never happened,” Luchini said.

Nothing like a 533% markup.

edmundsauto• 4 years ago

533% markup isn’t all that different than retail, where they use the $1-$2-$4 rule of thumb. $1 to make, wholesale price $2, charge customers $4.

Or alcohol, where a $10 wholesale bottle of whiskey will sell for > $100 (20+ shots at $5/shot).

Retail is mostly overhead, not product. Something like cannabis, which is cash only and requires extra security, is actually fairly within norms.

Animats• 4 years ago

So even in a supply glut, demand doesn't go up much. The supply of potential druggies is limited. That's good news.

ch4s3• 4 years ago

Is that surprising? A lot of people really don’t like the experience and smoking generally has a pretty negative image culturally at the moment.

asdff17• 4 years ago

I think if people were more open to it culturally it would be used a lot more. I know plenty of my elderly relatives who would benefit switching from opioids to this for their chronic pain, but they grew up being fed lies about the drug that precludes them ever experimenting.

Socially its also not up to the level of alcohol is even in California. Every work event I have for instance has a selection of beers and wines and hard kombucha for us, but never any weed even if its legal for all of us, a few of us do use it, and our company does not care that we do it or not. One can argue "well a whole joint is a lot for most people" but I counter with the fact that you do not need to necessarily imbibe to the point of total impairment just like how you would not polish an entire bottle of scotch at the work event. They even sell seltzers with just a touch of thc in them these days, that would certainly be healthier than a white claw.

telotortium• 4 years ago

Got to normalize edibles (and federal legalization wouldn't hurt). No one in the US is going to provide product to smoke or vape.

standardUser4• 4 years ago

I'm still shocked we don't have a weed emoji. There's at least 7 for booze.

automatic61312• 4 years ago

has a selection of beers and wines and hard kombucha for us, but never any weed even if its legal for all of us, a few of us do use it

Do you expect them to have a selection of cigars and cigarettes too?

loeg5• 4 years ago

Weed is incredibly easy to grow and consumers simply cannot consume all that much of it. Half of all weed users like the idea of investing in weed industries. Too much investor money chasing a small TAM.

latchkey7• 4 years ago

It really isn't easy to grow at scale. There is a huge amount of work involved.

loeg5• 4 years ago

I buy that it's ~500x harder to grow 500 plants than 1 plant. But on a per plant basis, it is very very easy. And at scale you would do even less work per-plant than people trying to maximize a single plant.

calibas• 4 years ago

Fact #1: It's so easy to produce large quantities of good quality cannabis if you know what you're doing. Just need sunshine, water, soil, and fertilizer, no need to spend much money at all.

Fact #2: The thing that made cannabis expensive was it's illegality. The difficulty in growing cannabis was that it had to be done in secret, and you could go to jail if you got caught.

Now if you put these facts together, you realize that legalization means there's no more justification for ridiculous prices on a plant that's easy to grow. The only winners in the "green rush" are the established dispensaries, and the prices will continue to drop as more states legalize marijuana.

The major black market producers are against legalization because they know it destroys their profits. An odd case where cops, criminals and pharmaceutical companies all share a common goal.

jwie• 4 years ago

It’s not that odd of a case. The incentives line up. LEOs get to seize drug money, property, and other assets related to drugs without due process.

For pharma and criminals it’s the exact same reason; the laws create an economic moat.

latchkey7• 4 years ago

"so easy" is proportional to "if you know what you're doing"

multifasciatus• 4 years ago

This is a fascinating change to the arc of the cannabis industry that I did not expect to see. We make the distinction between legal and illegal sales but the market does not care. With decriminalization happening all over I wonder if the existing culture of illegal trade will continue to thrive and always exist to undercut legal sales.

hoseja• 4 years ago

You can't overtax something people can grow themselves.

ndsipa_pomu• 4 years ago

Why do people keep using the term 'marijuana' when 'cannabis' is far more accurate and certainly less racist. It seems to be mainly a U.S. thing.

https://www.leafly.com/news/cannabis-101/where-did-the-word-...

technotarek• 4 years ago

Can someone please explain the CBD market? I’m in Paris right now and it seems like every block has a high end (looking) CBD shop. How are these rents being covered? Who is buying? I have to believe that most people still want THC.

chanc3e• 4 years ago

I believe THC is still illegal in France. So it's mostly convenience - a certain base of weed users don't want to buy from dealers, or want the security of a well produced product - an illicitly produced THC vape can be dangerous [1][2].

CBD (particularly the terpene infused ones) fill that gap.

[1] https://www.independent.co.uk/news/health/vaping-cannabis-oi... [2] https://www.vice.com/en/article/xweejk/cannabis-vapes-pens-b...

Edit: Should also mention there's a market for the effects of weed, without the 'high'.

gwbas1c3• 4 years ago

CBD has pretty awesome properties. For me, it kills or controls migraines very quickly.

I also use it when I get dental procedures, because it's not intoxicating like Ativan or similar.

lost_tourist3• 4 years ago

CBD does seem to have some minor medical benefits like some inflammation and pain reduction. It's not the miracle cure that the CBD pitch men claim though. Most of the affects are apparently placebo based though.

bluedino• 4 years ago

It seemed like over the last year or two, dispensaries shot up. Lots of new construction, fancy buildings, expensive weed.

Now it seems like at least half of them closed down, a lot of the chains opened too many locations. This was supposed to bring in all this tax money that was going to fix the roads and the schools and who knows what else.

I just don't know why it was going to be such a big deal to have legal places to buy when everyone that smokes already 'knows a guy' or three.

subpixel• 4 years ago

A friend owns a vertically integrated marijuana business. His research says his company alone exceeds the state’s demand. Meanwhile he has half a dozen competitors of equal size and dozens of small operators who retail only.

gwbas1c3• 4 years ago

One of the things I've noticed living in both CA and MA is that a lot of retail marijuana shops appear to be run by first-time business owners. In many cases, these businesses just don't appear to have the kind of discipline to be sustainable. They have weird marketing, oddball names, and unprofessional customer service.

I once went to a cannibas "church" in San Jose, CA, where they told me I could smoke up in their parking lot, directly in view of a residential neighborhood. Another time I called a dispensary to verify that they were open, and a super-stoned person answered the phone and immediately went into a monologue about how to get to the store.

I've never been to a liquor store where the help is visibly drunk or encourages drinking on their property.

elif2• 4 years ago

that analogy is no more applicable than saying my barista enjoys coffee.

alcohol and weed are not directly comparable.

(i would also posit that many servers and bartenders do in fact enjoy the devil's juice on the clock)

gwbas1c3• 4 years ago

I've never been to a liquor store where the help is visibly drunk or encourages drinking on their property.

Note the emphasis. A lot of people can moderate their drinking to not appear drunk at first glance, or slur their speech when they answer the phone. The same can be said for pot, too.

There's a pretty clear line between too drunk to run a store / bar / whatever, versus sneaking a shot or two on the clock.

har_ry5• 4 years ago

At the peak the BM market in norcal was as high as 3500-4000 a pound. Today outdoor is going for 1-300 on the bm.

How the marijuana ‘green rush’ fell apart

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