Interlude- “The Compleat Herbalist-3” Herbie and his Friends Visit Cuyahoga National Park

Blunt Business Cannabis Education Herbie National Parks

OK, let’s get started,” says Monk.  “I got the report from our consultant.  I won’t bore you with the details, but I will give it to you at a high level.

First, he covered ‘Entry Barriers’.  The main entry barrier we discussed was licensing, but there are others that we don’t even know about.

Briefly, grower licenses are limited, which is good for potential profitability.  Lab licenses are limited.  Dispensary licenses are virtually unlimited, which is bad for potential profitability.  Basic supply and demand- lots of supply pushes the price you can charge down, because all of the dispensaries will be competing against each other.  This all favors the grower and lab sectors from an ‘attractiveness’ viewpoint.

Then, still under ‘Entry barriers’, he reviewed fees and deposits required to get in the business.  They are exorbitant across the board, so all three of us are screwed here.

Finally, he discussed the size and power of the illegal market, specifically as it relates to organized crime and/ or gang activity.  He said Growers will face more organized crime, some dispensaries will need to protect themselves from street level gang activity, and labs are at the least risk here.”

Summarizing:

Entry Barriers-

 

Growers

Labs (processors)

Dispensaries

Licenses

Limited (good)

Limited (good)

Unlimited (bad)

Fees and deposits

High (bad)

High (bad)

High (bad)

Illegal market, crime

Organized crime (bad)

Very little (good)

Street gangs (bad)

 

“So far, Herbie my friend, dispensaries aren’t looking too good,” says Astro.  Assuming all categories are weighted equally, that’s three ‘bads’, buddy.

“Blunt, please bite this fool,” says Herbie. (Note: Blunt does not bite Astro).

“OK, let’s continue”, says Monk.  “Exit barriers”.

Generally, what the consultant looked at is “if things get bad, or if you just want to get out, can you?”.  He looked specifically at whether you can sell your inventory or licenses if you want to.  Basically, the answer is ‘No’ in our market.”

Exit Barriers

 

Growers

Labs (processors)

Dispensaries

Can you sell licenses?

No (bad)

No (bad)

No (bad)

Can you sell inventory?

No (bad)

No (bad)

No (bad)

 

“OK, so what’s left”? asks Herbie.

“Actually, quite a bit.  But for today, just 1 more item- alternatives to our product” says Monk.  This one was more complicated.”

“For Growers, the primary alternative might eventually have something to do with Delta-8 thc, which is an issue that is just emerging and evolving.”

“For processors and labs, the main issue is whether customers can use out-of-state labs.”

“And for dispensaries, there are several issues- one is the drinking age.  Another is on-site consumption lounges.  And within the retail category, you have concentrates vs. leaf and all of that.

 

Product Alternatives

 

Growers

Labs (processors)

Dispensaries

Key issue

Delta-8 thc ??

(evolving- impact unclear)

Use of out of state labs (not allowed- good)

State drinking age and enforcement (age 21, tough enforcement, regular DUI checkpoints- good)

 

 

Consumption lounges- May broaden range of exotic product offerings for labs to process (good).

Consumption lounges. (not good).

 

“So this is all high level and summarized.  I have 7 more categories to review with you, and we are only reviewing the summaries.  This consultant has done a lot of work,” says Monk.

“Some things you can, in fact, look up, like the policy on licenses.  But other things, like the level of concentration of your suppliers, this is where our consultant has done original, expensive research.  And remember, there may be entry and exit barriers that we have not yet identified.  A survey of dispensary owners and applicants, particularly those that were unsuccessful, might be helpful in identifying additional entry barriers.”

Look guys, I’m a little tired of all of this business talk.  Let’s look around.  Isn’t there supposed to be a nice waterfall around here”? says Herbie.

“Brandywine Falls”.  Let’s go.


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