It’s been said before that nothing is certain except for death and taxes. Well, in the case of the Oklahoma cannabis industry, here is what is certain…
- No cap on cultivation licenses means there will soon be a massive oversupply of cannabis
- Wholesale AND retail cannabis prices will crash
- With a dispensary on every corner, most will try to compete on price and face a race to the bottom
- Many cultivators will fail within the next 1-2 years
- Many dispensaries will fail within the next 1-2 years
- Commoditization of all but top-shelf flower and premium products will crush margins
How do we know this will happen? Because it already has… in Oregon.
Let’s dig in a little deeper.
Oregon voted to legalize recreational cannabis on Nov. 4, 2014, and it became available to consumers on July 1, 2015. The green rush boomed there like it does in every legalized market, and cultivators, processors, and dispensaries were flush with money. But the euphoria was short-lived. The retail price of a gram of legal cannabis plunged from $10 to $5 between October 2016 and December 2018. A pound of outdoor-grown, mid-grade cannabis was going for as low as $350 wholesale. By January 2019, state regulators reported that cultivators had stockpiled more than 1.3 million pounds of cannabis, which is shocking when you consider that Oregonians typically consume only 300,000-350,000 pounds per year.
It’s simple: Oregon placed no caps on cultivation licenses. Far too many cultivators were granted licenses than could be realistically supported by the legal market. Then the problems extended to dispensaries, who faced sinking margins and competitors on every corner.
Why does matter to growers in Oklahoma?
The same scenario that unraveled the market in Oregon is now beginning to play out In Oklahoma. But we believe it will happen even faster than it did in Oregon, and has the potential to be much worse. That’s because the bar to entry for cultivators is even lower in OK, and there are even less regulations.
There are now more licensed cultivators in Oklahoma than there are in Oregon, despite the fact that the legal market in Oklahoma is limited to 200,000 medical card holders, when Oregon is recreationally legal and has an adult population of 3.5 million
We weren’t kidding when we called it the OKannapocalypse!
So how do Oklahoma cultivators survive the OKannapocalypse? Three ways.
focus on high quality products
Prices for premium flower and other high-quality products isn’t quite as susceptible to market fluctuations.
Run a legitimate business
If you’ve never operated a full-fledged business before, now is not the time to start. If you don’t have business experience that doesn’t mean you can’t succeed, it just means you need to have advisors or team members that have substantial prior business experience.
Invest in building a valuable brand and on-going, expert marketing
If you’ve already ticked point 1 and 2 above, then this is the key to survival. We’ll say it again, in bold this time…
To survive the OKannapocalypse, YOU NEED TO COMMIT TO PROFESSIONAL MARKETING!
Yes, we are a marketing agency, so we may be biased, but you don’t have to take our word for it. Just take a look at the most successful cannabis cultivators in Oregon (all made the list from Portland Business Journal published in April 2019 that ranked the top cannabis companies by revenue and employee count.)
Chalice Farms, Oregrown, and East Fork Cultivars; these cultivators have all used solid branding to create a foundation and exceptional marketing to propel their business growth and stand out from the pack.
Oregrown aligned their brand with the adventurous, outdoor-dwelling nature of Oregonians. They have an excellent and diverse merch-line to support awareness and brand evangelism. To help provide consistent, on-brand content they sponsor a 9-person team of athletes from various adventure sports. To build community good-will, Oregrown established a charitable fund that helps senior pets in need, inspired by the founder’s own dog.
East Fork Cultivars differentiate themselves from other growers by focusing solely on high-CBD strain cultivation. Their brand story is all about sustainability, being good stewards of their land, and growing using 100% organic methods. East Fork’s simple but accessible brand elements and website focus attention where they want it: their plants and their products. Their robust Corporate Social Responsibility program includes 3 different charities that they promote and help fund.
Chalice Farms (Golden Leaf Holdings) - Chalice has zeroed in on high-quality content as their primary marketing vehicle. From their Instagram feed to their multiple branded Chalice TV series, they focus on telling the stories of the people behind and in front of their products, rather than simply talking about the products themselves. They’ve also built an excellent Education component to their company (https://chalicefarms.com/cannabis-education/) which encourages trust amongst consumers, eases the pathway to purchase for somebody who’s canna curious, and of course generates extremely valuable SEO juice.
None of these cultivators implemented good branding and marketing as a reaction to the poor market conditions in Oregon, they used marketing to get ahead of them.
Their well-executed marketing allowed them to thrive while many growers went out of business.
This post isn’t intended to be a scare-tactic, it’s intended to provoke thought on what we believe will protect your business from the coming OKannapocalypse and ensure your continued growth: marketing.