It’s the age-old principle of supply and demand. When the supply is high, the demand is low. And when the demand is low, prices plummet.
That’s currently what’s happening in Michigan’s marijuana industry. With over a 1,000 dispensaries in the state and new permits approved each week to open more, competition is fierce.
Prices are at an all time low – even in the midst of inflation. Sure, it’s great news for consumers. But these low cannabis prices hurt small businesses. And not just growers and dispensaries, but everyone along the cannabis food chain.
Supporting Mom and Pop Growers
One way that some independent dispensaries are fighting the fight is by continuing to support small growers. It’s a solidarity thing. Jerry Millen, owner of the Greenhouse in Walled Lake, is doing just that.
Millen doesn’t want to see any of the smaller dispensaries or growers go out of business. “I’m paying some of them more than I can get from other places,” he says of small growers. “The big guys are trying to crush the little guy. They have the money to do it. What happens when the little guys are pushed out? Do the prices go back up?”
It’s an important consideration.
Millen, who has been involved in the cannabis industry for over a decade, stays competitive by keeping his customers happy. The Greenhouse believes in being a positive and active member of their local community. They adopt families during the holidays, host community events, offer plenty of specials and giveaways, and have been leading the effort to restore a local landmark in Walled Lake.
“You have to find a niche and find a way to keep customers happy,” he says. “I want to be the Samuel Adams of cannabis. I don’t want to be the Budweiser.”
The Trouble With Corporate Weed
Part of the problem is the presence of corporate weed. In March of 2021, small growers were able to get $2,800 per pound from dispensaries. These days, it’s less than $1,000. This barely covers production costs.
Just like the big box producers, small growers have overhead. They have to pay for license fees, taxes, infrastructure and power. But with such high supply and low demand, the large growers are running down the price.
Large cultivators aim to simply push out as much product as they can. The focus isn’t on quality, but rather on quantity. Meanwhile, the small growers – such as those supported by Millen – go above and beyond to ensure the highest quality product.
Many smaller growers see cultivation as a labor of love. And that caring is imparted onto the plant. They rely on small dispensaries who appreciate that quality to keep them afloat. But right now, they’re getting hammered.
Low Cannabis Prices Hurt Small Businesses
It’s not just retailers and cultivators feeling the pain. Manufacturing and processing are taking a hit too. Just as with the dispensaries and growers, they’re incorporating ways to be unique in order to stand out.
Edibles are a hot commodity right now. With such a wealth of them to choose from, it’s difficult for consumers to sort through them all. That’s why a company called Ripple knew they needed to create a one-of-a-kind product.
They now produce edibles that are water-soluble – allowing THC to enter the bloodstream within 10 minutes rather than the usual 30 minutes to two hours it takes from fat-soluble products. When they opened their 8,000-square-foot manufacturing and processing facility near Lansing back in March, they were excited.
Because of their unique approach, they’re managing to stay competitive. But even they’ve had to drop their prices by a third since they opened. If prices go any lower, it’s going to be dicey.
So for now, they’ll continue to boost their cannabis marketing efforts and hope that consumers will make the effort to support small businesses whenever they can.
It makes such a huge difference.
Could Your Small Cannabis Business Use a Boost?
Seeing how low cannabis prices hurt small businesses is disheartening. But if you have a cannabis business that’s struggling, you don’t need to throw in the towel.
As cannabis marketing and public relations experts, we can help you stand out. So contact us today. And start getting the attention you deserve.