As the regulated California cannabis market continues to evolve, it’s become clear that size matters.
According to Headset, a cannabis data, analytics, and intelligence firm, two leaders have emerged in terms of packaged flower sales here in the Golden State – Lowell Farms and Glass House farms, each garnering just over a 3% market share. Lowell Farms boasts of nearly a quarter-million square feet of greenhouse production while Glass House sits at half a million, adding another 5.5 million square feet of greenhouse canopy this year. For perspective, with 436 acres in production, Humboldt has just under 19 million feet – probably far less by year-end.
As the bulk market has tanked the best way to make a living farming ganja has been to sell packaged products to dispensaries. With the passage of recreational cannabis sales several years back everyone knew that bulk pot prices would crater. They have, precipitously. What Humboldt didn’t know is that most of what we produce would be destined for bulk sales.
Our egos were perhaps a bit inflated as the country’s main producing region for decades. We simply didn’t have much competition and many growers felt their products were much better than they were. Our “premium” sun-grown flower hasn’t been much of a draw in the marketplace and instead, is often garnering bids as biomass for extraction.
The current market dynamics have been met with understandable frustration and fear. Folks who produced for decades are being priced out of the market and are looking for solutions. A growing area of focus is the formation of Cannabis Co-ops. Mendocino just announced one and I assume Humboldt will follow in short order.
A co-op is simply a cooperative and autonomous association of persons united to meet shared economic, social, or cultural needs. They are common in agricultural production and offer scale and the ability to penetrate markets and garner market share. A well-run co-op offers living wages to producers and can be a viable path forward that offers small farmers a way to compete with larger corporate players.
I applaud the concept in theory but think implementation, especially in the realm of cannabis, will be a challenge.
Many co-ops fail as they are complicated structures with many moving parts and stakeholders – employees, producers, manufacturers, distributors, and retail. Getting and keeping everyone on the same page is a monumental task that few have been able to master. Whoever is going to manage a Humboldt Cannabis Co-op will need to be an excellent communicator, a skilled negotiator, and an astute business person who can see opportunities, then create and drive processes to capitalize on them efficiently and effectively. This person should also have an intimate understanding of the California cannabis marketplace and be well apprised of developments across the nation and the world. This person is out there somewhere but attracting and retaining them may be a challenge. As many cannabis operators are struggling and strapped for cash, funding a co-op, its legal formation, its marketing efforts, and paying for staff may be out of reach.
Quality & Consistency
As I wrote about in the past, producing premium flower is about genetics, environmental exposure, process and inputs, and everyday execution. Genetic selection is critically important. Without the right genetics, no farming process can make your flower pop. Bunk cuts are out there and if you ever come across one it can collapse your season. The market currently favors exotic genetics and flavors, preferably purple in color. This can change quickly, but it’s what we have now.
Environmental exposure is also critical to product quality. When temperate and humidity parameters get out of whack, flower quality and appearance suffer. While sun-grown ganja is my favorite, open-air deps often darken and bronze near maturity. Growing under skins or greenhouse plastic that cuts a bit of UV creates shinier flower that sparkles and is in higher demand.
Process and inputs also matter. The way you shape and manipulate plants has a huge impact on flower size and density as does your amendment or fertilizer regimen.
The everyday effort, or how hard and how smart you and your team work also matters. Teams that grind it out daily will do better than teams who half-ass it or regularly take shortcuts by avoiding the meticulous and physically taxing processes that separate winners from losers.
As we look across a subset of say 100, or 500, or 5,000 farms there will be an enormous variety of environmental conditions and processes implemented. A strain produced in one region could be entirely different than the same strain produced in a different area of Humboldt. This will cause challenges concerning distribution and retail efforts where quality and consistency matter.
In the case of Lowell Farms and Glass House Farms - who are both winning in the marketplace and proclaim to produce artisan craft cannabis of high quality and unique genetic variety – they have centralized production hubs, one process that guides the cultivation efforts, and one consistent set of environmental parameters where flowers are grown. Slight modifications to processes are likely made for different cultivars, but generally speaking, they will produce products of similar quality time and time again.
Here in the hills if we have crappy spring or fall weather, or scorching hot dry summer days our product quality can suffer. It will be harder and harder to garner retail shelf space without the quality and consistency retailers and ever discerning consumers demand. As retail consolidates to fewer and fewer larger operators with multiple storefronts, they are going to source products from reliable producers who can provide the consistency and volume they need to successfully brand and differentiate.
For my dime, a successful cannabis co-op will need to homogenize processes, inputs, and processing techniques in order to be successful and gain lasting traction in the marketplace. If some areas of Humboldt lend themselves well to exotic strain production, that’s where they should be produced. If others grow fire OG’s or Sour’s, they should be grown by co-op members in those areas. One processor should trim all flowers to ensure consistency there. One processor trimming naked while another leaves more sugar leaf will similarly hurt distribution and sales efforts.
One thing I promise is that radically different expressions of the very same genetic will hamper sales and market penetration efforts and will be a losing proposition. On the other hand, offering 10,000 pounds of a consistent, high-quality flower of the same stain will turn heads and allow Humboldt to brand effectively and stay on the map.
In terms of building retail relationships, Humboldt has it dead wrong. Again and again, I see plastered all over Instagram how stupid dispensaries and budtenders are for focusing on high THC products and ignoring things like terpenes.
Firstly, calling or insinuating that others are stupid is childish and arrogant…it certainly won’t help us make friends or gain influence. It alienates others and makes us look bad. We should, instead, seek to understand current market realities and retail/distribution needs and work diligently to meet them. Trying to “educate” the masses can be a meaningful tactic, but it can also take you out of business if you continue to swim against the tide. While I respect having core principles and philosophies and serving as an educator and disruptor in business, the way we go about it needs to be more tactful.
We may care about terpenes and the entourage effect as seasoned consumers and sun-grown farmers, but not everyone else does. While in a medicinal context this focus makes more sense, I feel we are fighting a losing battle, especially in the context of adult-use markets. Like it or not, many people consume to get high. In my personal experience, I get higher when smoking an 89% live resin cartridge from my friends at BEAR than I do when smoking a joint. Moreover, I can take one puff off a cartridge and get lifted while I have to hit a joint many times before achieving the same effect. Financially, it’s far more efficient for me as well.
Am I wrong for this?
Am I stupid when I go into a dispensary looking for high THC products, which I do every single time?
Is someone telling me I’m wrong going to change my decisions or make me cozy up to that person?
I am a believer in markets. I believe markets, or the collective wisdom they represent, are “right.” Questioning them or arguing with them might make us feel righteous or like we have a cause, but it doesn’t seem to make much business sense to me.
As we embark on a countywide journey to secure our economic future and sustain the farming lifestyle many of us cherish, a cannabis co-op may indeed be part of the solution. A co-op that fully understands market needs and demands, is skillful in honoring others and creating winning business relationships, and one that places consumers at the forefront may indeed gain traction. With a focus on product quality, consistency, high volume, and unique genetic varietals, a Humboldt Cannabis Co-op can gain a foothold in California and beyond.
Failure to implement this correctly will cost precious time and energy our community can’t afford to lose. With fresh frozen prices at $35-50 a pound, I expect outdoor to garner $250-$350 a pound this season. With mixed light at $700-900 before the tsunami of greenhouse product hits the market in the coming months, it promises to be another challenging year. Without changing the equation quickly and finding a way to get our ganja to market, many farmers are facing their last ride.
I am rooting for us all and am sending you my very best!
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.