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Thank the Heavy Lifters

"Natural Medicine Extractors"

Thank the Heavy Lifters

Cannabis Retailers - MedXtractor - CO2 cannabis extractors
 

“Aphria says the deal with Southern Glazer’s, one of North America’s largest wine and spirits distributors, will give it coverage of all cannabis retailers across Canada on the first day of legal adult-use sales.”

“Edmonton-based Aurora Cannabis Inc. announced in February it would buy a 20 per cent stake in retailer Liquor Stores N.A. Ltd., which changed its name last week to Alcanna Inc. to reflect it now has alcohol and cannabis divisions.”

“Canopy Growth Corp. reached a deal last fall with Constellation Brands that saw the alcohol supplier invest $245 million for a 10 per cent stake in Canopy, and the two partner on marketing and product development.”

Wow, it sure looks like the start of an oligarcy with a few big players controlling the cannabis market. First they build the mass grows and now they’re buying the distribution chain all the way down to retail.  At the same time, some say there will be a supply glut and others say there will be a severe shortage. This all looks like a corner trap for small growers, right?

Nope. Once the big guys lay down the distribution system, that system will have to flow product that the consumer wants. And the consumer wants choice. Not just choice of big-guy products, but craft products as well. Just walk into any liquor store to see what’s coming. Consider this:

“In most consumer goods markets in America today, two or three giants dominate – think toothpaste, eyeglasses and soft drinks. New entrants – be it Tom’s toothpaste or Vitamin Water – can find it very hard to keep their independence for long. In large part, this is because most distribution systems, and even most shelving decisions inside the retailers, are managed by the giants. In the beer market, by contrast, new entrants still find more than 3,000 small distributors that have both an interest in promoting new and better products and the means to do so. In this one instance at least, a market designed to yield a particular set of moral outcomes has also proved to be extremely effective at promoting innovation and variety.” source: Craft Beer Distributor Market Study

and this – Weed is the new craft beer.

 

About choice – do you think the cannabis market is more like the toothpaste market or the beer market? It seems obvious to me that the beer market is a better analogue.

No matter who controls the distribution, it is the consumer who determines what is ultimately on the shelf – and consumers want, no, they demand, choice.  That choice comes from craft growers.

About supply – if there is undersupply the door opens for craft growers due to raw demand – if there is oversupply the door is still open to craft growers due to “choice” demand from consumers – in either case there is a distribution avenue for craft product no matter who owns the supply chain.

About value-ad – where in the grower-to-consumer cannabis chain is the most money made? It’s in upgrading low-value trim to high-value oil. That requires extraction and extraction requires extractors.

At the end of the day I believe that craft growers that value-ad their crops will flourish.

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