When you walk into a major liquor retailer like Total Wine and Spirits, you encounter tremendous product variety, that follows well established rules for retail distribution. Take for example the vodka section, where you’ll see no-name brands from places you’ve never heard of in cheap plastic bottles on the bottom shelf. Skol Vodka in the plastic bottle retails for $5.99 for 750ml is the cheapest standard sized vodka sold by Total Wine. Adorning the top shelf, you’ll find The Monte Carlo Vodka Swarovski Special Edition, as Total Wine’s most expensive standard sized vodka, which retails for $169.99 for 750ml. The difference between these two products is over 2,700%. They are both vodka. They both sell in 750ml bottles.
The cannabis industry is no different. There is a huge spectrum of quality, and a multi-thousand percent difference on the perceived value. Some imported low-quality Mexican ‘brick’ weed may retail for pennies a gram (3 – 5 cents), while high-quality hand tended visually perfect hydroponic grown buds may retail for $15 to $20/gram. This is a greater price difference between the low-end and the high-end of cannabis than distilled spirits or wine. Price differentials of this size represent tremendous profit-making opportunities.
Lower quality cannabis, farmed outdoors by faceless corporations and processed on an industrial scale, represents the low-end of the spectrum. Tenth generation curated hybrids, lovingly grown indoors by persnickety cultivators with high-tech equipment, represents the high-end of the spectrum.
Growing cannabis, like growing grapes, is not a pure science. It is also part art. Selecting grapes for wines, and for wine blends is definitely more art than science, which is also true in selecting cannabis varieties for cultivation. There are over 10,000 different varieties of wine grapes in the world, and the same is true for cannabis, with more cannabis varieties being purposefully created every year. Deciding what to grow, how to grow it, and how to cure it are all creative activities which draw upon the cultivator’s knowledge, experience, and ‘green thumb’. There is no question that some people grow better grapes than others, even using the same soil and environment, and so it is also true with cannabis. Some do it better than others, through art, skill, and spirit.
Very high-quality cannabis is similar to the situation in Bordeaux, France, where seasonal grape yields determine how many cases of wine can be produced each year. Even throwing barrels full of cash at the wineries wouldn’t enable them to produce any more wine than they already do, so it is also true with boutique cannabis growers, who already manage as many plants as they can and still provide the personal care that is required for the best product.
The Cannabis Industry is just now coming out of its bootleg phase. Almost everyone growing today, that was growing a decade ago, was or is still currently an outlaw. Most outlaws do not take kindly to people who took no risk yesterday stepping in to take profits today. This makes the cannabis industry insular to outsiders.
In the history of new industry creation, a general rule of thumb has developed: The preceding industries almost never control the newly created industries. Broadway theater companies did not invent or profit off of the silent movie motion picture industry, just as the companies who founded the rail industry were not involved in the creation of the airline industry. Microsoft ate IBM’s lunch in the case of the newer Personal Computer Industry overtaking the Mainframe Industry, and Google in-turn ate Microsoft’s lunch with the ubiquity of the Internet.
Only rarely does a preceding industry get to steer the direction of the new industry. Two shining examples are General Motors in the Automotive Industry and CBS/NBC/ABC making the transition from Radio to Television. The founders of GM were in the horse drawn carriage business and they saw the writing on the wall with the advent of the automobile. CBS/NBC/ABC, who invented the Golden Age of Radio, created the Golden Age of Television using the same tried and true strategies, but updated for the times and medium. These are generational opportunities; some of the best opportunities to generate wealth that appear in a generation.