It’s
harvest season here in Humboldt.
First-run
deps for folks at modest elevations and those with sound
infrastructure are coming to market and buyers are snapping up
high-quality flower. Purple gassy strains continue to be the rave and
with bag appeal and a solid nose, prices are modest.
Photos: Jesse Duncan.
After
conversations with many people in distribution, including some of the
largest buyers in the state, one thing is clear … good weed is
selling. If you are sitting on product, it means only one thing: It’s
not cutting it in today’s market. Not the market of days past, or
the marketplace we wish we had, but the one we actually have.
Buyers
are increasingly discerning and want sorted pounds, with uniformity,
consistency, strong COA’s and spot-on processing. If you meet
these criteria, your stuff moves – fast. If you don’t, it won’t.
It’s that simple.
Across
the West Coast cannabis growing regions, a major shift is underway.
Cannabis production, and the economic benefits traditionally
associated with such, are going from the hands of many to the hands
of few. Small mom-and-pop operators are struggling to compete with
well-capitalized corporations and more skilled producers, and this
trend will only intensify.
While
the Craft industry (small-batch, high-end production) offers a
glimmer of hope for select family farms, the challenge is that many
folks operating in the space don’t possess the knowledge,
husbandry, resources or even basic farming skills required to
compete successfully in today’s “high-quality” flower markets.
In
other words, it’s not just that small operations lack the capital,
business prowess or proximity to major metropolitan markets as many
argue. It’s that many simply aren’t producing a product desirable
enough for increasingly discerning and judicious buyers and
consumers.
I
hate to say this, but flower that tastes awesome and looks like shit
is not gonna cut here in Cali. Flower structure, outer trichome
layer, color, nose and cannabinoid content dominate the sales
conversation here in the Golden State, and I don’t see that
changing over the immediate to the intermediate horizon. While I love
terpene-rich sun-grown flower and understand that not all strains
rock up and pod out, the market doesn’t seem to agree and wants
what it wants.
I’m
not a rocket scientist, but don’t find it useful to question or
ignore current realities. Instead, I work diligently to meet market
needs as sales velocity feeds the kids and keeps farms running.
To
be perfectly honest, most operators in Humboldt County I’ve worked
with are really bad at pot farming. Small, loose buds, poor trichome
production, terpene sloughing, powdery mildew, mold, bugs and
terrible drying and curing processes plague the many dozens of
farmers I’ve met over the past decade. And to be very clear, every
one of these operators told me they grow killer stuff and didn’t
get why they were struggling.
The
remote locations, the somewhat isolated lifestyles of many farmers,
and the lack of exposure to true top-shelf flower have led to
outsized and unwarranted confidence around production and skillset in
many cases.
Sadly,
I’ve lost friends (and perhaps gained a few adversaries) as I’ve
shed light on the subject for consulting clients. Cannabis farming
has been a very ego-driven business and we know that folks derive
personal satisfaction and a sense of self-worth and accomplishment
from their work, so I completely understand the angst. Many find it
hard to accept that they have learned little about producing high-end
product over the past decades and struggle with how ill-equipped they
are to compete in the current marketplace. Coming to understand that
one’s livelihood was based not on skill but on the fact that
there was relatively little weed around is a tough pill to swallow.
Many
are now exiting the industry while others are barely holding on.
In
defense of the less skilled, we must not forget that until several
years ago old, brown shit weed still fetched a fair ticket in the
illicit marketplace…now those units are being purchased by folks
from Arizona and elsewhere at $100-150 a pound, if at all. Given that
long-time operators are suddenly competing directly for shelf space
with corporate money and those who actually exhibit admirable
cannabis farming skills, overconfidence has been largely replaced
with fear, anxiety and depression.
Economically
speaking, small communities across the West Coast are beginning to
feel the pinch as excess rents (profits) go away. Fewer lifted trucks
and less spending on fancy attire, boats, firearms, ATV’s,
vacations, and dining out are hitting small businesses hard. With
less disposable income and with the corporatization of cannabis
markets, money is changing hands quickly. Corporate producers spend
less on local consumption and this trend has only just begun. Over
the coming years it’s estimated that 80 percent of California cannabis
companies will fail and the pain felt by industry participants, local
merchants and ancillary service providers will be significant.
It’s
time we small farmers begin executing at a higher level. The reason
many permit holders are struggling with distribution isn’t that the
market sucks, it’s because their product does. The quicker growers
can step up, hone their craft and begin producing something of value,
the more they will realize that opportunity is ripe. Margins are
slim, yes, but with efficient and effective production processes, a
nice living can still be made farming ganja.
It’s
the first inning of the regulated cannabis marketplace and to assume
things are over is ridiculous. Skilled farmers are inking deals with
celebrities, building brands of their own, and capitalizing on the
rapidly growing industry and the fervor for high-quality products.
And while prices continue to be very modest, the right stuff is
flying off the shelves and will continue to do so.
The
cannabis industry is now among our nation’s fastest-growing and
there’s a place in it for skilled participants across the operating
spectrum. The ability to meet consumer needs, adapt to their changing
preferences and stand out among increasing competition will separate
the winners from the losers.
Unfortunately,
out West, many long-term producers are losing and will be wiped out
in short order. Pockets of economic strength will remain and wealth
creation will be significant for some, but not many. Local economies
reliant on cannabis production will struggle and must be nimble and
adaptive in order to succeed in this new paradigm. Will you do the
same?
Much
love,
Jesse
###
Jesse Duncan is a lifelong Humboldt County resident, a father of six, a retired financial advisor, and a full-time commercial cannabis grower. He is also the creator of NorCal Financial and Cannabis Consulting, a no-cost platform that helps small farmers improve their cultivation, business, and financial skills. Please check out his blog at, his Instagram at jesse_duncann, and connect with him on Linkedin.