Unhappy Croptober: Sungrown Prices Crash to Historic Lows

The mood was somber at this year’s Hall of Flowers, the annual early fall trade show in Santa Rosa, California that’s become a de-facto preview of the yearly sungrown cannabis harvest.

For years prior to legalization and the opening of California’s adult-use cannabis market in January 2018, even if indoor-grown buds glistening with trichomes commanded higher prices, outdoor farmers still enjoyed reliably healthy appetites for their lower-THC, distinctly aromatic cuts. A pound of trimmed outdoor could fetch thousands of dollars; trimmers could expect $100 and $150 for every pound they prepared for market.

Not anymore. Since the opening of legal markets, outdoor prices have fallen, but fluctuated just enough to keep people in business. But this year, with the early light-deprivation harvest competing with enormous auto-flowering hauls from the airliner-hangar-sized greenhouses in the Salinas Valley and Santa Barbara County, as well as the usual indoor supply, things were different.

As one outdoor entrepreneur grimly joked, someone could wear a t-shirt offering “$50 packs,” and instead of eliciting knowing, sad laughs, they would probably entertain serious offers.

For a pound of outdoor cannabis in 2021 in early October, before the annual “Croptober” harvest, a pound of outdoor is demanding around $500 on the market. But most are asking for even less.

“The average is probably $500, but the drop from $500 to $150 is super quick,” said Nicholas Smilgys, who owns a Mendocino County-based distribution company.

His estimates were confirmed with other outdoor growers and distributors contacted by Cannabis Now. If someone has the most gorgeous outdoor anyone has ever seen—truly flawless AAA-grade weed—that might fetch $800. But that would be for what most growers, just a few years ago, would have reserved for their private head stash. And that’s still a price so low as to make outdoor cannabis farming a losing value proposition, as Tina Gordon, the founder and CEO of southern Humboldt County-based Moonmade Farms said.

While the flooded market means wholesale buyers can be outrageously selective, for producers, production costs have increased. There’s state excise taxes to pay before a single gram has been sold to consumers as well as state and county licensing and permit fees. With all that, combined with prices this low, how does anyone using the sun to produce cannabis make money?

“You can’t,” Gordon said.

Though this is an economic disaster, none of this should come as a surprise. The slow-motion demise of California’s small craft cannabis growers has been documented in excruciating detail over the past few years.

In addition to market competition and regulatory burdens, a litany of natural disasters like wildfires and drought, added to farmers’ woes—though at least fires offered a mixed blessing: if one farmers’ crop was ruined by smoke damage, that meant less competition for the farmer on the next ridge over whose crop was untouched.

But with more and more large-scale greenhouses entering the market—a single 87-acre grow was approved in Santa Barbara County earlier this summer, and county authorities reported more than 1,575 total acres in unincorporated Santa Barbara devoted to cannabis production or cultivation—California may produce three times as much cannabis as it can consume, industry observers and experts have said.

Exactly how much legal cannabis California produces remains a literal state secret; state law allows industry regulators to keep those numbers known only to themselves and select others, including law enforcement.

That might not matter if small farmers could sell directly to consumers or market their crops across state lines—neither of which is legal under state and federal law.

Small farmers, then, have two options. They can return to the illicit market, chasing higher prices along with increased risk. After all, the high prices that some fondly remember from a decade ago were in a way artificial, inflated by the risk of prohibition. Or they can offer only a few drops into an onrushing river that’s threatening to carry away their mode of production, as well as their way of life.

“These big swings are tough for a smaller company,” Smilgys observed. “You have to scramble to make up that lost revenue somewhere else.” That might be cutting wages for workers (or releasing staffs entirely). That might be cutting corners on supplies like fertilizers. Or it might mean giving up entirely on trying to satisfy a market that, to date, simply hasn’t been efficient in the way a small, bootstrapped producer using the sun needs.

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The Return of The Hall of Flowers

The past two years have affected us all in the cannabis business in unusual ways, from being on lockdown, to being declared an “essential business.” And now we’re fighting for survival in a difficult market.

Those who have survived were out in full force for the Hall of Flowers cannabis B2B show at the Sonoma County Fairgrounds in Santa Rosa, Sept. 22-23. Perhaps the most overheard comment during both the days of the event was, “What a joy it is to be together again.” At last, after such a long break, dedicated cannabis business entrepreneurs were given a chance to gather, laugh, hug and share stories.

Of course, the players are the same. The last Hall of Flowers event took place in 2019, where many of the original companies, distributors, retailers and farms were clearly not present at this week’s gathering. Instead, there were several new interesting (and sometimes flashy) businesses. For the old-timers it was a bittersweet reunion, recognizing the loss of compatriots who have recently quit while also feeling thrilled to see dear old friends who have shared the pathway to legality all these years.

Outdoor Activations Go All Out

Three large halls were filled with various booths. Outdoors, there were sprinklings of large, elaborate installations – some were two levels high, offering fantastic views over the open chill spaces on the lawn below. Ispire, one of the world’s largest vape manufacturers, built a fantastic area with a second-floor lounge space, complete with fan and mister to keep you truly chilled while smoking through one of their outrageous new dabbing device designs.

Meanwhile, CannaCraft blasted non-stop music from their 2nd story outdoor area, punctuated every half hour or so by reminders to keep your mask on at all times while inside the main halls. In light of the coronavirus, many precautions were taken: All guests were required to present proof of vaccination or a negative COVID-19 diagnostic test within 48 hours of entry. Testing kits were available on site for anyone who did not meet these requirements. While some participants complained, the extra security did afford everyone there the comfort to share careful hugs, fist-bumps and even some joints.

Finding Success Together

The Hall of Flowers is a unique B2B cannabis event. Participating brands paid well for their booth spaces, and curious guests (who were allowed entry on the second day only) also had a hefty entrance fee. Retailers and distributors, who wandered about making new connections, did not have a cover charge.

At each booth, vouchers were passed to interested visitors who wanted samples. Vouchers could then then be turned in at the “Dispensary Hall” where several salespeople efficiently redeemed them for their chosen samples. The customers paid only $3 for each sample, plus taxes, which was actually a good deal. Samples included pre-rolls, hash, topicals, edibles, carts and more. Guests mostly left the show with large bags bursting with $3 goodies.

Almost everyone agreed this was a very successful gathering, as many deals were made, which is the main objective. Wendy Baker, owner and founder of Space Gems edibles since 2013, is one of the old-timers in the biz at this point. In her opinion, Hall of Flowers is one of the very best cannabis events, affording her the opportunity to close deals and meet buyers from all parts of the U.S.

Baker shared her large booth space with Craig Nejerdley of Talking Trees, a regular winner at The Emerald Cup. Nejerdley does it all: He grows beautiful flowers and owns a distribution company and retail shop in Humboldt County. He is a community-oriented man who wants the best for his fellow cannabis companies. As he explained, “We will all only survive if we do this together.”

And isn’t that the core of cannabis philosophy? During the past few months, while the glut of mediocre cannabis grown in giant greenhouses hits the market, prices for legacy growers and brands is dropping, and the message is clear: We must join forces.

Cannabis Enterprises, Big and Small

Hall of Flowers in person B2B cannabis event September 2021.

Collaborations are the way to go for many – Radiant Distribution has a co-op brand for legacy farmers under the name Cosmic. Several of their farmers choose to donate 10 percent of each sale to the Last Prisoner’s Project, which is also a wonderful trend to see in the world of cannabis. As Peter Pietrangeli, VP of Sales at Cosmic said, “everyone on our supply chain has contributed.”

A few visitors did say the influence of “Big Business” was annoyingly evident. “You can smell more corporate cologne than weed in there,” commented one attendee upon leaving one of the large exhibit halls. But there was plenty of smoking was going on outside: At the Puffco booth, decked out with cozy white chairs and fake palm trees, Jessica Hwang from Feeling Frosty filled pipes for passersby and clearly loved seeing their contented smiles.

But there actually was perfume inside one of the halls, at the Drew Martin x Heretic booth. Martin himself offered whiffs of what he calls, “the world’s first THC-infused fragrance.” It was divine! Innovative products like this make our industry extra exciting. Some companies clearly catered to the Y and Z generations, some to an urban-slick style, and some to sophisticated elegance.

A big surprise was the guy from Talking Terps, Hope Lord, who is creatively making bank from cannabis, while never getting near the plant. Lord designs cannabis toys and clothing, and his quirky and colorful style has taken off. “I sold 300 of these Terp Crawford toys at $200 each in one hour today,” he said. Whoa. That is a good businessman who knows his demographic.

All kinds of cannabis enterprises, both big and small, were represented. Not to be missed was the Italian booth with 3 separate companies filling the space with cannabis delights: biscotti hashish and pre-rolls, authentic Italian edibles from Mammamia, and affordable concentrates from Tutti.

Even after a long day in the hot sun and warm halls, people were still ready to party. Several events took place all over Sonoma County, catering to the many facets of cannabis fans. For a group of people who have been so separate over the past 24 months, this was the perfect chance to re-learn how to socialize in public again.

Thanks, as always, to cannabis for bringing us together.

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The Hall of Flowers Engage Event Curates Cannabis Connections

While the nation was shut down due to the COVID-19 pandemic, organizers of the Northern California trade show, Hall of Flowers, held onto the value of face-to-face connections through the creation of Engage. The virtual event fosters networking opportunities between licensed brands and retailers across the state.

While we’re all glad to see the past months of isolation and illness wrapping up, we must admit that even the pandemic had some silver linings: cannabis was declared an essential business in several states; we all learned to value of our health and freedom to roam; and the virtual world of communication blossomed in unexpected ways. For both fledgling and established cannabis businesses, it meant that traditional trade shows and personal visits to dispensaries to sell your wares were no longer possible. Sales reps could continue to make cold calls and send menus by e-mail, but that’s never the same as face-to-face interactions.

Even as the nation gradually opens up, Engage remains a valuable platforms for cannabis businesses of all sizes. The most recent Engage event took place June 8-9, and was decidedly a win-win for all participants.

Cannabis Matchmaking

According to Hall of Flowers team member Aengus Cawley, they realized that through “virtual matchmaking” they could help connect like-minded brands and retailers so that everyone could continue to grow while the nation was shut down. “It’s not a trade show or a Zoom meeting either,” he explained. People were skeptical at first, but once they saw the value of the time, money and energy it saved, they got it. Plus, at trade shows there is no guarantee of meetings, while via Engage you know you will get one-on-one time with buyers and brands.”

The main question posed was, “Would the virtual connections lack the cultural and discovery components that a physical show offers?” To counter those losses, the Engage crew supplemented the new format with weekly mailers about new brands and events on Clubhouse. While Cawley admits that “there is lots to be said for smelling the flowers and looking someone in the eye,” he also has seen Engage flourish over time.

There have been four Engage events, beginning in July 2020, and the one that just wrapped up on June 9 was a win-win for all. Approximately 136 buyers and 74 brands participated in the two-day event which ran from 10 a.m. to noon, with a “Power Hour” from 1-2:00 p.m. to make up for anyone who may have missed a meeting. Each session lasts only 15 minutes, but as Biko’s founder and CEO Timeka Drew discovered, you can fit a whole lot into a short amount of time if you are prepared. Her company launched in February 2021, and this was her first time pitching the brand and sharing information in a formalized manner. 

Drew admits that just as she was feeling nervous before it started, a text came through from the Engage tech support team saying they were there to help. “Everyone was so nice and helpful and supportive,” she said. “I was skeptical about how much we could get done in 15-minute meetings, but we put together a deck and still had time for questions at the end. It’s like speed dating for cannabis.”

Biko, which offers premium whole flower pre-rolls, was chosen to be one of three companies that received equity grants allowing them to join The Hall of Flowers Engage event at no charge. For other brand participants, the rate is $2,000. This guarantees 10 meetings with retailers, plus the assistance of the sales team. Uber lunch vouchers were provided for all participants through sponsorships – a nice touch for the busy brands and buyers. 

For retailers, there is no fee to enter. “We reach out to buyers who participated in the Hall of Flowers event in the past, although not all understand the digital method the same way,” Cawley said. “We curate the chosen retailers based on their interests and how they mesh with the brands on board.”

Brands of All Sizes See Value

Harborside, one of California’s oldest and largest cannabis dispensary chains, participated in Engage for their third time. The company’s marketing and events coordinator Jessie Corpus explained just how beneficial the event has been during the pandemic. 

“We usually do quarterly reviews at Harborside to bring on new brands, so with COVID it was a great outlet,” she said. “Once a brand knew they’d be talking with us, they could send samples ahead of time.” 

While Engage has borrowed ideas from standard trade shows, the event expands upon the profiling to create algorithms to make perfect matches. 

“Engage matches us with what we’re looking for based upon our criteria and what the brands offer,” Corpus explained. “For example, ‘Is the retailer looking for high end or bargain pricing; ‘What are the target markets?’ Then they give us options, and we get to pick which brands to interview.” 

For many brands, this is a rare opportunity, especially for smaller companies with a limited budget. Not only do they get the chance to speak with buyers directly, but they can save money and time otherwise spent at in-person tradeshows on hotels and transportation, and the expenses of setting up a booth to impress. 

Engage has given emerging brands the opportunity to get in front of top-notch retailers across California. Both Drew at Biko and Corpus at Harborside see the benefit of Engage continuing after the coronavirus pandemic, perhaps as a fill-in between the regular live Hall of Flowers events, and as a way for entry level brands with lower budgets to be seen. 

“Engage has given us a chance to build community with other aligned brands. It gives me a renewed faith in our industry,” Drew said. 

Although Engage has been a successful cannabis B2B trade show, everyone is certainly looking forward to being together in person again soon. The Hall of Flowers events have been epic in the past – always a great way for the cannabis community to come together and do business while having some fun. We all look forward to the event at the Santa Rosa Fairgrounds on September 22 and 23, and then on December 8 and 9 in Palm Springs. According to Cawley, registrations are filling up fast already. The Santa Rosa event should be as large as it was prior to the coronavirus, and a great place to connect with both old and new friends in the biz. We hope to see you there!

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Who’s Still Standing in the Cannabis Industry?

When I look back to the beginning of the 2010s, to where the emerging world of cannabis stood ten years ago, it’s clear that we lived and worked in a whole other scene back then. In 2010, California’s Proposition 19 (also known as the Regulate, Control & Tax Cannabis Act) was an initiative on the November ballot, but it was narrowly defeated. Even though Proposition 215 — permitting the use of medical cannabis — was passed years earlier in November 1996, the citizens of the state were still not yet ready to go all the way. It took several more years to further break down the stigmas around cannabis, and we still have a long way to go.

Here in Mendocino County, I began growing cannabis for medical uses in full sun as soon as I could, with my partner Swami Chaitanya. In those days, we’d gather several scripts from various patients and grow a few pounds for each of them. I must admit that often the patient was not the only one to consume our flower, but they always got their fair share in return for the script. We were very much in the grey area of legality. But considering we’d all been complete outlaws before, this was a huge step.

It was in 2014 when the first cannabis political organizations began to form in various California counties. Slowly, farmers were willing to come off their remote mountain ranches and began to speak up, knowing that if we did not help shape the future of legal cannabis in our state, there would be no future for us in it.

It was a bold step when we formed the Mendocino Cannabis Policy Council that year. Meetings were held at least once a month, often at the local grange or at AREA 101 in Laytonville (home of The Emerald Cup). None of us were very good at setting up official organizations, so plenty of time was spent figuring out simply how to write a mission statement and create by-laws. We spoke about marketing our county’s fine cannabis, talked about influencing our conservative Board of Supervisors and shared growing and sales techniques. Plus, there was always news and gossip about who got busted recently and the price of weed on the illicit market.

In retrospect, I realize that very few of those farms that were involved back then are still in the business. As the harsh reality of coming into compliance became more evident and people saw the full costs it would entail, many began to back off, either retreating to the “traditional market” as we call it now, or quitting altogether. Growing cannabis has always been a transitional business, but this was different. Many of the original growers, the real “OGs”, were packing up and leaving, while upstarts were entering the scene with glorious dreams of easy fortune.

We welcomed one and all, although at times we felt a twinge of jealousy over the farms that had enough financial backing to make a big impact. Once brands came into being, many of the big guys who drove the giant pick-ups and lived high on the hog pushed their way in, as if to prove they had it all wrapped up. Others showed up from all corners of the globe, ready to take on huge investments and be winners in the cannabis game. Enormous numbers were tossed around with ease, and many thought they’d strike it rich in the Green Rush.

Taking the long view at the close of this tumultuous decade, the picture is coming into focus. Several of those big players, who took in massive investments based on convertible notes, are facing insurmountable debts they cannot repay. They may have built recognized brands, but without enough licensed stores to sell their products and exorbitant taxes that keep many consumers going to their dealer down the street, they are at a loss. Suddenly the pipe dreams of fame and fortune are literally going up in smoke.

So who remains in the game at this point? It is at the big cannabis events where the shift becomes most evident. Sadly, we see very few actual farmers anymore at industry events like the Hall of Flowers or cannabis festivals like the Emerald Cup, and forget about finding a farmer at MJBiz. Mostly the companies present are large corporations who can afford to spend $100,000 for a slick booth and the staff to work it. No longer does a customer get to meet the farmer in person, smoke a joint and hear stories about growing weed. Now it is all about the sales pitch and the glitzy packaging, not much different than if they were selling cosmetics or packaged foods. The personal touch is gone and has been replaced by classic consumerism.

I am happy to report that there remain a few small cannabis brands, such as Om Edibles and our Swami Select, who have survived because we have stuck to old-fashioned farming and production methods and, just as we grow our crop with organic methods, we do the same with our businesses. We continue to live simple lives, truly caring about the quality of our product and getting it into the hands of those who will truly appreciate and benefit from it. We may not be able to afford a fancy booth at an event, but we are there in person to share our authentic stories of the past and our dreams for the future.

We will continue to advocate to change unworkable policies, so that the day of full legalization will come and its benefits will be widely shared. The 2010s was a decade of making a new mold, and for some, breaking the old one. For the brands that carry on with integrity and faith, there remains hope. Not to say that only the small companies are good — there certainly are some large brands which are doing it right. But time is bound to sort out the greedy ones who only saw the money from those of us who truly have a passion for the plant and its magical products.

As we head into this new decade, we pray for peace and understanding to blossom, so that our planet may survive. We have learned a huge lesson over the past 10 years and feel ready to enter 2020 with great hope for advancement on many levels. It won’t be easy, but it’s bound to be interesting and a challenge well worth the effort if it brings pure cannabis to those who need it. That is our mission after all.

TELL US, do you feel pushed out of the cannabis industry?

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