I recently joined a Washington State 502 email group that circulates around some of the latest news in Washington State. Being in this group, I’ve received tons of email threads about who is in the industry, the big state capital updates, legal revisions, overcoming problems, new advocacy related news and also the sale of licenses. Through just a mere two weeks, I’ve learned more about how Washington State’s cannabis industry works, but more than that how a community forms behind a product.
The email group is a good representation of the diversity of individuals who participate in this industry. You can read about some of the cultivators with years of experience giving advice to newer less experienced growers, and you can also read about how cultivators are trying to make the industry better by trying to understand how new legislation is crafted and what it means in practice. The breadth of engagement is immense as well, the community actively engages in these threads and discussions everyday. There will be new thoughts, opinions, advice given and solutions proposed all for the sake of the industry. I think that this is the first thing I realized happened in the industry.
Being a newcomer, breaking into the industry has been the hardest part of Cannabis (or Marijuana depending on your area). Finding the right people to talk to is challenging, especially when you don’t know who is in the industry and who is legitimate or not. Even when you talk to many different people, sometimes you can come back empty handed because people don’t have the time to talk to someone who is “interested” in Marijuana. This sentiment is further perpetuated with the rise of the “Green Rush”, where people who casually enjoy the concept and indulging of the product seek to join so they can “cash in” before the money goes away. This feeling is reciprocated by those who have been in the industry because they simply don’t have time for people who want to make a quick exit. As a result, it creates this hyper pseudo-secretive tight-knit community. The purpose is to simply extricate those who are interested for superficial monetary gain and support those who actually believe in the product. The result of this is a super tight-knit community that frequently meets together, chats together and stays together.
This is definitely the first thing I learned about the industry, it is a strong, but small, community. Everyone is so plugged into each other, and almost every player seems to know what the landscape is, and what people are doing. In a way, it is almost counter to what is taught in basic economics. Rather than maximizing profits and individualistic, this community is surprisingly collaborative. People seem to care about each other’s well-being and strive to become the best they can be in producing their product. Although this is quickly starting to change with the introduction of large players and huge capital investments, the majority of this industry in Washington still seems to be very focused on maintaining a pre-capitalistic phase of the industry. People are willing to help each other out by giving advice, but they are also not afraid of calling each other out on things that seem suspicious, or things that are incorrect. This is more of a reflection of how open and close people are in this industry: they are not afraid to call each other out.
This reminds me of the growth of the Willamette Valley Wines in Oregon that occurred in the 80s/90s. There, a very similar approach occurred with wines, where many of the smaller farms in the Valley helped each other out in the infancy of the industry and eventually helped create policy that ensured quality of product for everyone who purchased product from this specific geography. The result is a diverse product of wines coming from Oregon, some being the best of the world. Many of these vineyards claim that without the help of their fellow winemakers, they would not have gotten to where they are today. The biggest caveat to this, however, is the market availability. Wine is readily consumed all over the world, but Marijuana consumption is currently being contained into individual pockets. Despite the market pressures, these cultivators still seem to be able to carry themselves and work collaboratively together rather than hostile.
Another thing I’ve realized, more prominently, was how much cultivators in the industry are struggling. Within the 2 week period of being in the group, I witnessed around 4 individuals putting up their license for sale. To be clear, I am unsure if this is atypical or if it is common this time of year, but from what I saw I was surprised by the clear drop out rate people are experiencing in this industry. Almost everyone I talk to brings up the topics of oversupply and how there is way too much product that is being created and not enough demand for it. One speaker at a conference I attended even said that the entire demand for Washington state could be satisfied with seventeen tier 3 cultivation licenses (90k sq/ft) because of how productive production is. Similar stories are being heard outside of Washington as well, one article saying that Oregon has produced enough product in this one year to satisfy 7 years of consumption consistent with what we seen this year. These articles seem to address a gross oversupply of marijuana products that we see in the industry. But these were just facts until you connect people’s lives with these licenses and struggles.
This is the second thing that surprised me, how much people are struggling. In Washington state alone, there are a little more than 1,400 producers (cultivators like growers) and processors (manufacturers like edible artisan and concentrate craftsman), whereas there are only 400 retailers to host these producers and processors products. Furthermore, the spread of dispensaries concentrate around the large cities such as Seattle and Spokane. Basic statistics suggest that there are .000005 or dispensaries per capita this year, whereas liquor has a different has roughly 1/1200 according to the capitolist in 2014. This is data to note because there were roughly 1400 liquor retailers in Washington state in 2014 (presumably more given population growth), which is almost 4 times more than the number of cannabis retailers available today. In other words, there is roughly 1 cannabis retailer for every 17,500 people and 1 liquor retailer for every 1,200 people (2014). The restriction to access to demand has a direct affect on the consumption behavior of consumers. As a result, consumption of marijuana is definitely below optimal consumption levels.
Data aside, this oversupply is completely driven because of retailer license restrictions, which is understandable precaution taken by the government. However, this gross oversupply has had devastating effects in Washington state’s cultivators. We hear about how much producers and processors are struggling, but when I saw the numbers of the number of people dropping out in two weeks (roughly 4 licenses), it would roughly equal 740 producers/processors dropping out per week, or half of the producers/processors drop out by the end of the year. The rate of dropout should be alarming to people who are in the industry. Producers and processors in Washington understand and are actively addressing this problem, but it is very obvious that people outside the industry or work outside of the producer/processor scope do not grasp the gravity of the seriousness of this problem.