The cannabis supply chain has been disrupted, flower prices are on the rise, and still the industry remains agile
It truly is an “essential” industry
Everyone knew when COVID came to town, that it was going to dramatically change the cannabis industry. But few could have predicted by how much, and how fast that change would happen.
Since March, rules have been changing like the wind for cannabis businesses, they’ve had to remain agile and determined in order to stay open, adhering to new CDC guidelines while also making sure they aren’t in violation of any of the changing MED, state and local regulations. And, at the same time, dealing with shifting consumer patterns.
All of that has sent a ripple back up the supply chain both in Colorado and in California. It’s affecting availability and the prices of flower everywhere, and is making it exceptionally difficult for new brands to launch into the market. Yet still, the cannabis industry is hanging on strong despite the challenges they face.
“It has been challenging, but exciting at the same time,” says Camille Roistacher, the co-founder and CEO of Voyage Distribution out of Los Angeles.
Voyage Distribution is a logistics company that offers “supply chain solutions to cultivators, manufacturers, distributors and retailers” according to their website. They source cannabis, provide secure transportation, storage, lab testing facilitation, packaging, labeling, sales and marketing.
Basically, they function as a connector and a middle man between marketers, storefronts, producers and cultivators. So, naturally, they’ve seen firsthand how the changing landscape of our times has affected the supply chain of California’s cannabis.
“We saw an uptick in sales right at the beginning of the pandemic,” Roistacher explains. “Where stores were trying to meet the demand for the consumers.”
Big demand on the consumer side, meant that stores needed to buy more wholesale from distributors like Voyage. That increased the price per pound of cannabis in California dramatically, a price spike which still hasn’t quite leveled out just yet.
Roistacher also points out that this pandemic has made it exceptionally challenging for new brands to step onto the scene. They can’t take the same kinds of marketing approaches that they used to, and have had to think on their toes. They’ve had to figure out how to still get people together virtually, and get them excited about a product they’re unfamiliar with. It hasn’t been easy for a lot of those budding brands, says Roistancher.
“So, hats off to all those brands that are launching during this time,” She says. “I just keep trying to remind them: ‘Hey, look, if you can launch during this time, if you can survive this, you can survive anything.”
Sadly, many of the dispensaries that were looted and destroyed during the Black Lives Matter protests-turned-riots at the end of July, have thrown a monkey wrench into the issue as well. Many cannabis brands and companies already had product orders in place for those businesses — which were ready for delivery.
“Those orders now are all in limbo because [those dispensaries] have closed down,” says Roistacher. Which leaves a lot of product with nowhere to go and vulnerable to spoiling.
“Of course, California is also going through a drought right now,” Roistacher continues. “So all of the outdoor flower is drying up.”
That has forced everyone in California’s cannabis industry to lean more heavily on indoor-grown flower, which is markedly more expensive — and the cost is on the rise. Two months ago, a pound of indoor flower was going for less than $2000 in LA, according to Roistacher — today it’s selling for between $2500-2700.
And people are still lining up to buying it in bulk.
“I've never had so many cold calls as I have in the past week or two, of people trying to source more and more flower,” she says.
It’s something that Lisa Gee, from Lightshade Marijuana Dispensaries in Denver has seen as well. Lightshade produces 60% of the cannabis they sell, themselves, so they have been largely insulated from that kind of market volatility. Though, not all in the industry have been so fortunate.
“Just in the last week, we have had a number of other dispensaries contact us to try and buy wholesale flower,” Gee says. “We really try to be mindful of our own needs, first. But when we do have a little bit extra [flower], we do put that on the wholesale market.”
However, dispensaries aren’t the only ones trying to stock up on bulk cannabis. Consumers have started to up the quantities they buy at once as well. Gee says that at Lightshade, they’ve seen customer cart sizes increase by almost 50%.
“That purchasing behavior has definitely changed,” she says. And not necessarily for the worse. Bigger sales are never a bad thing.
That’s not the only silver lining Gee points to, either. She explains that one of Lightshade’s partners, Leaf-411, a call center for the canna-curious, has seen a dramatic spike in calls from people who are interested in starting to use pot. With all the stress and madness in the world right now, having a non-pharmaceutical drug that helps with sleep, anxiety and boredom is really appealing to people. Even those who haven’t ever tried cannabis before.
“They don't smoke, but they're looking for tinctures or edibles so they can take something that helps them sleep or manage their anxiety. And we've seen a lot of that just across the board.”
So, the magic of marijuana is spreading! And the stigma affixed to it might be dissolving as that does so. This pandemic has really illustrated what an important part of life in Colorado cannabis has become since its legalization six years ago. It is truly an essential industry.
So, while prices fluctuate and the availability of flower changes both here and in California, while the cannabis industry might be on unstable and tumultuous ground, and while new brands think of creative new ways to get their names out there, cannabis is only cementing its place in society.
And this whole pandemic crisis has really illustrated that.
“To be indicated as an essential industry — in the state of Colorado and in other states as well — that is a huge step for the cannabis industry,” says Gee. “That the governor has recognized our industry as a key component and driver of our economy, among other things, I think that is going to have a very broad impact on the perception of cannabis.”