Much like the history of the American cowboy and his era of the open range and the great cattle drives, prices are driving entrepreneurs to venture into dangerous territory searching for new routes with better grass. The market landscape looks familiar, and roles look similar too. In today’s index, the hot commodity is marijuana, where a pound of Emerald Triangle-grown cannabis is worth $1,200-1,500 at home in California, and $5,000-$6,000 a pound in New York City.
Welcome to the new West of cannabis
In 1866-1886, the incentive was the high price of beef up North, where Union armies had exhausted the supply, and a steer worth four dollars in Texas were worth forty dollars in the Massachusetts.
When soldiers came home from the Civil War, they were no longer content to stay home and inherit the family business. They looked to the West and the opportunities and were not risk adverse considering the dangerous war they had just been through.
The difference between the Old West Cowboy and the “cannabis cowboy” is that beef was never illegal. Cannabis still is, and that’s a big part of the premium prices.
Cultivators push their plant limits for maximum profit, tend to the crops for many difficult months, deal with all the risks of transportation and deal with retail operations that beat them up them on prices. – Susan Soares, Executive Director of the 501(C) (3) organization C.A.R.E.
In this scenario, retailers mark up the product many times over and turn it over in a relatively short period of time. “To gain maximum profitability, the Emerald Triangle growers are still willing to take the risk of traveling across state lines to get a fair markup,” Soares continued.
The new regulations and taxes, much like the barbed wire, a web of railroads throughout the Great Plains, and enforcement of federal laws unmounted the American cowboy, may very well put a majority of the green cowboys out of business.
Today’s cannabis grower slow to accept the industry’s evolution can be likened to the 19th-century cowboy who hated to work unmounted. Good or bad, it’s the evolution of a trade.
Welcome to the new West of cannabis.
The aptly-named New West Summit is helping forge the way for these types of people. Recently concluding its second year in San Francisco, the conference brings together cannapreneurs and companies to commiserate on cannabis industry and its changes.
And what’s changing around the industry is efficiency,
At this year’s New West Summit, an air of professionalism filled the air. – Jim McAlpine, executive director of New West Summit
Practically every facet of cannabis production, packaging, and delivery, is based on innovation leading to efficiency. From leveraging data to optimize marijuana product retail sales, to leveraging different sets of data to automate and optimize growing, the industry is growing smarter, and building upon itself.
David Barakett, CEO of ShowGrow, the largest premier dispensary chain in the southwest, was excited to see how the auxiliary services within the industry are progressing,
Quality technology has long been a hurdle in achieving the things we are looking to do to push the industry forward. Now we’re really seeing it take form.
Increasingly, instead of relying on the vertically integrated models, cannabis entrepreneurs are specializing in smaller pieces of the supply chain. Strainz Inc., for example is 100% focused on producing and distributing extracted products.
We are leveraging technologies from the consumer package goods industry to make our bottling, filling and labeling dramatically less expensive which allows us to pass cost savings on the consumers. – Hugh Hempel, CEO and Co-founder of Strainz
Hempel believes that focusing on a particular segment of the industry allows for innovation to come more quickly.
— Strainz (@StrainzInc) October 21, 2016
Eli Duffy, CEO of Grownetics uses advanced technology like machine learning and 3D crop sensing, enabling growers to grow smarter with remote visibility and control over their cultivation facilities, analogous to a self-driving car for indoor cultivation.
The margins that exist within traditional agricultural commodity markets are much smaller than those within cannabis. This incentives for cannabis cultivators to produce consistent, high-quality yield are much more compelling.
There’s never been a better time to be a retailer or consumer in the cannabis space, as well. New data-driven programs are enabling suppliers and retailers to anticipate what consumers want, and make sure it’s on the shelves.
Cultivators margins are dropping across markets because they do not know what strains to grow and are not meeting consumer demand. -Giadha DeCarcer, revealed New Frontier CEO and Founder
New Frontier Data’s Equio platform finally gives those operators and cultivators the power to analyze historic and real-time sales visualizations down to the product, category, and strain levels, so they can determine what their customers need.
California’s Prop 64
While all this is happening in the posh, downtown Hyatt, growers and consumers in the State of California are still unaligned on Proposition 64, the state’s initiative to “legalize cannabis.” That definition is parenthetical, depending whom you ask.
Proponents of the California legislation cite positive aspects of it. Things like relatively low excise tax rates, predicted to help steer black market control and the promise of high state revenue.
Additionally, the punishment for cannabis violations will be reduced, judges will be allowed to reassess sentences for those that are already in jail for selling and/or growing cannabis illegally, and licenses will be allowed for on-site consumption premises, or “cannabis cafes”
On the other side of the debate are revered industry influencers and critics. I sat with Dennis Peron, author of the pioneering, 20-year-old initiative, Proposition 215, that introduced medical marijuana to the California masses.
Some industry vets like Dennis will tell you marijuana is already legal. Well, it is and it isn’t. The plant is legal if you have a one of a broad range of medical conditions making you eligible for it. But the stigma around the marijuana plant has not been liberated.
At the same time, these opponents can cite a fairly effective medical marijuana program in the nation’s largest state that’s by most accounts worked fine for serving its constituents.
There’s no right or wrong, and no clear answer when it comes to the legislation around cannabis. Although, you’d be hard-pressed to find someone who entirely disdains the thought of a fully-realized and evolved market. On the other hand, I haven’t met anyone who’s categorically thrilled about the current proposed legislation.
Regardless, the landscape has evolved. “New West Summit showed that the cannabis industry is here to stay,” McAlpine concluded.
Mythologized in thousands of novels, television programs, and motion pictures, the legend of the early, pioneering American cowboy is a fundamental part of the fabric of the United States. Will today’s pioneering ‘cannabis cowboy’ one day be regarded in the same way?
To do so, he or she must certainly do some wrangling.SHARE