The Secret of the Traditional Market
I’m just going to come right out and say it: the traditional market isn’t going anywhere. Ever. And the recreational market isn’t harmed by it, in fact, its whole existence, at least since rec, and in the future when full legalization drops, is in spite of it.
There’s a multitude of reasons why the traditional market is here forever, like over regulation and taxes, but the long and short of it boils down to this: the rec market simply doesn’t cater to its consumer the way the traditional market does. Until the quality of the product, or concern for the end user, matches that of the ‘lifers’, we’re simply talking about two different ball games, despite the fact that they’re playing with the same equipment.
Stoking the Fear
Now sure, there are going to be a bunch of newjack corporate types who pop out of the ether to warn us about all the pesticides and ‘poisons’ that are seemingly rampant on the traditional market, but here’s the truth: I’ve been smoking that weed since the early 2000’s, and it’s still better than what you’ve got in your shop 90% of the time, despite your best efforts. Now, that’s coming from someone who used to buy ‘exos’ off a guy we later found out was spraying the nugs with Raid, so trust me when I tell you there are consumers who have no problem risking life and limb to get high. It’s true that one of my friends went blind briefly, but we all survived. And we kept smoking.
The anti-traditional cannabis mall cops have been trying hard to get that danger fear to stick for years. We had reefer madness, we had vapegate, we even have people believing that stoners were actively and in-your-town giving out drugs to kids intentionally on Halloween year after year. (I say intentionally bc I’m absolutely positive it’s happened accidentally before, but it’s not some conspiracy. Consumers want to consume, not force others to.) And the sheep eat it up, and even believe that this plant is not only a danger to them, but their kids. Since laws started passing in our favor the institutions that be now warn kids everywhere about the dangers of the ‘traditional market’, and encourage that you buy your cannabis in a legal store, like a good little capitalist. Well let me tell you something folks, sure some of the stuff you’ll find in the traditional market is molded, or didn’t pass testing, but it’s also where you’ll find the best of the best. I don’t know anyone who got into this game because people were telling us it was a great idea… we came out of love for the plant.
So why, in all of the propagandists’ expertise, would I ever want to buy from someone WITHOUT that type of love for the plant? That type of sacrifice? I get that not everyone is at my level of obsession, but doesn’t it seem to make sense that those would be the type of people you’d want to buy from? Those who dedicated their life to it, not just jumped on the new money train? My policy has always been to try and buy drugs from the guy who looks like he thinks he’s an actual wizard. He’s got that good. If it’s not clear why yet, keep reading – it will be.
Vulture Capitalism (or Why You’re Not Getting High On Your Supply)
A normal person is probably asking themselves: if the legal players don’t care about the game they’re playing, why are they in it? The answer, my friends, is simple. Greed.
Over the past few years we’ve seen countless articles highlighting the ‘opportunity’ of the cannabis market. You know, the one they used to lock our OG’s up for. Well NOW it’s a multi-billion dollar opportunity – and people are celebrating the ‘new’ industry as if there wasn’t decades of effort that got us to this point. I digress, but the point is now that the Wall Street Journal is touting how many B’s there are to be made, all the suits ears perked up, and they started playing the game they know.
Now, here’s the big difference between the game we love and the one they’re playing: playing for margin is almost never about maximizing value for the end user. So for all those caregivers who cared about providing you with the best quality medicine for your ailments, there’s now a gang of mostly washed-out corporate types who think you’re the new prey for their cheap CPG bullshit. So they’ve built the size and scale facilities the operators who have been around can’t possibly compete with, hoping they could wash them out in favor of cheaper, flashier branded low end.
The catch is, cannabis isn’t some easily repeatable plastic good. It’s produce. So while all the new players are racing to automate and produce a gazillion pounds for less than you’d pay for an ounce on the street, it’s surprising no one has looked toward other fruit based industries for guidance. I know machine trimming sounds cost effective, but ask yourself, why does Tropicana still have fruit pickers?
The Lungs of Experience, and the Rise of Expertise
Lifers know the plant is much more than a set it and forget it type business. That’s part of the reason, in my opinion, why so few celebrity plays have been effective thus far. It takes a LOT of effort to produce world class products, and while you may be able to do it once, it’s even harder to maintain the quality your base has come to expect. Sure from the outside it’s easy to think we’re all flocking to flashy mylars and influencers, but the kingmaker in this game is and has always been the flower.
Automation, though cost effective, can remove the human element required to produce truly great cannabis. Even worse, the lack of experience from the new jacks are forcing production for bud size and total weight over the cultivar expressions true heads look for. Sure some of it looks great on Instagram, but we’re talking about something people have to smoke. They’re going to handle it, and if it’s mids it’s not that hard to tell. Sure you can probably make the sale once off of good marketing, but retaining a consumer – especially in a market with this many options – is very difficult.
Comparatively, you’re now competing against people who actually consume the products they’re pushing. And I don’t mean that in a passive when-I’m-in-the-mood sense, I mean religiously. They wake up with it, they eat their meals with it. Without that kind of dedication you simply haven’t tried & tested your products in the way your consumer will.
And not only that, they’re smoking everything else to see how they stack up. While most legal players probably think they produce the best weed in the world, it’s USUALLY because that’s all they’re smoking. Just because it’s coming to you easily, and for free, doesn’t mean that’s all that’s out there. Far from it.
All that said, the most important part of any sales process is the consumer, right? Well these legacy guys actually know theirs. Well, too. Not through a budtender, or through an Instagram page, but through having boots on the ground. By being where they live. By living their life. You look at an operator like Doja Pak – the guy is everywhere. With that comes real, meaningful interaction with your clients. You can truly learn what they like, and what they don’t. You can’t get that from a boardroom. The reason someone like Doja is winning is because he himself can tell what the market will like, rather than wishing on a prayer. He doesn’t even need to grow it.
And trust me, when they don’t, the traditional dealers hear that too. Directly from the consumer. They have to hear all the colorful language that comes from someone who feels like they were ripped off. The ones who want to keep their base adjust accordingly. Imagine that, catering to your consumer.
The Cheat Code of the Future
The one question I always have for the scale guys is, while I totally understand better margins look great to investors, how do you reckon with the fact that the smallest batch stuff always sells for the highest? Nevermind what price you’re hoping to go for, but if it’s clear the market responds to premium products, and exclusivity, how can having a market depleting supply seem like a victory in the eyes of your consumers?
Consumers don’t just want anything, and they certainly don’t want trash. Sure they might fall for it right now, because they’re still excited about the access, and they don’t know any better yet – but it doesn’t take long to learn that mids make you feel lousy, and primo elevates your existence. All of those investors you’re pitching are great, but some of them are potential consumers, too. And even if they’re not, you’re going to need someone to buy this stuff if you want to make any money. The value conversation is coming before long, and it’s not going to go the way the vast majority of the MSO and mega-grow types are hoping. I liken this again to oranges – if Tropicana’s got sour, or just weren’t sweet anymore, do you think people would still buy them?
Fighting for our right is getting old, and we’re at a moment in time when consumers are FINALLY getting access to the thing they’ve loved for decades. Don’t spoil the fun with some bullshit. If you want to get into the game, empower someone who actually knows what they’re doing. I promise it’s a better move for your business anyway. After all, the price for tops is better than ever, despite becoming harder to find in the sea of nonsense. Once this race to the bottom truly bottoms out there’s going to be a rude awakening for most of the legal operators, but you know what? The trap will still be thriving.