Fighting back against price gouging
High prices have been a bit of the expected norm over the past few weeks since the state’s first pot shops opened.
It’s a basic supply and demand issue, with growers that have any product able to sell it almost instantly.
That’s somewhat OK if the product is worth the price. If it’s high quality, hard to find and customers enjoy it.
Trying to sell bad product at high prices though? That’s another story. And a few growers have been trying to do just that – price gouge.
Vancouver’s stores say they won’t do business with those folks anymore. They want to make sure their customers are getting the quality they’re paying for, owners of Main Street Marijuana and New Vansterdam said.
Here’s my story from today’s paper with some more details about what they’re doing:
By Sue Vorenberg
Columbian features reporter
Ramsey Hamide says he has had enough of cannabis price gouging.
When the Main Street Marijuana manager saw what came in a shipment of material from a new grower this week, he decided to close until he can secure more variety, lower prices and better quality stock, he said.
“I’m not going to let these guys hold us hostage anymore,” Hamide said of a handful of growers that he says have been selling bad product for high prices. “It’s hurting the entire system, and it needs to stop. By continuing to play ball with these guys, it’s just making things worse.”
The store will likely remain closed through the weekend and could stay that way well into next week, Hamide said.
There’s a significant shortage of legal marijuana across Washington. Fewer than 100 of the 2,500 or so growers who applied for licenses from the state have so far been approved, and growers that have licenses haven’t had enough time to harvest much stock, because it takes at least 10 weeks to grow even the fastest-growing plants.
The lack of product has led to store closures around the state — including Seattle’s lone retailer, Cannabis City, which ran out of product on July 10 and has yet to reopen — as well as long lines, customer complaints and high prices, customers and store owners in Vancouver have said.
Jared Herling, owner of Farmer J’s, a Tier 3 grower in Spokane, said his prices have been high, but it’s because his farm sells a premium product. He said some growers in the state have misrepresented their products as premium and are trying to grab as much money as possible while stores are desperate.
“Unfortunately, when someone is advertising as a premium product and then it’s virtually unsellable, it makes us all look bad,” Herling said. “Quality comes at a price. For us, our motto is the green standard. We’re a top-shelf company, but we were able to hit the market early.”
The grower that tried to gouge Main Street Marijuana, who Hamide declined to name, wanted an extremely high price for the low-potency product, along with a $200 surprise “delivery fee” that he demanded out of pocket when he arrived, Hamide said.
“And for all that, what we got was really poorly trimmed,” Hamide said. “The buds were really small and leafy. There was a high ratio of stem to bud. It was crap.”
The store had already pre-purchased a limited amount of the stock and had to sell it to recoup costs, but Hamide said he won’t get fooled like that again.
“It was embarrassing to sell that stuff,” Hamide said. “Our customers deserve much better. It’s been frustrating for them. It’s frustrating for us. I don’t want to reopen until I have multiple processors and multiple strains so people have better choices.”
It’s a problem that’s also plagued Vancouver’s other pot shop, New Vansterdam.
That store hasn’t been able to stay open as much as it would like because it has refused to do business with growers selling overpriced, poor-quality product, said Brian Budz, one of the owners.
“We have definitely turned down opportunities with growers that were clearly price gouging,” Budz said. “We’ve had to shut down some times when we wanted to be open. But we’ve had a price ceiling with this that we decided early on we wouldn’t violate. And we’ve stuck to that.”
Demand from consumers is high enough that even stores with high-priced product have consistently sold out, creating periodic shutdowns.
Some growers are capitalizing on high demand by harvesting what they have too early and selling parts of the plant that would usually be tossed out or processed into other products, store owners said.
“The market needs to reset a bit,” Hamide said. “Growers aren’t selling premium product. We need to have these guys basically be told ‘No.’ ”
Herling, who said he’s aware of the gouging by the grower that tried to sell to Main Street Marijuana, added that he’s not surprised to hear about it. He also thinks it’s likely to happen again until the market matures.
“It’s certainly damaged their business,” Herling said of the grower. “It’s unfortunate it happened in the market this early. But at the same time, it was bound to happen. Does a business that does that last? Who knows? But everybody’s building their reputations right now.”
That said, the market for premium marijuana products — high quality strains of the plant that offer different flavors and experiences for the user — seems to be robust. People are getting to pick from several varieties of marijuana at stores for the first time and have been generally happy with the experience, Herling said.
“We feel that our premium price is justified,” Herling said. “I don’t see our prices changing that much when lower-quality, lower-priced product comes out to compete with us as more growers start to harvest.”
By mid-August, several new growers should reach full production, and by late September the outdoor growers will have an even more robust supply for the state’s stores, Hamide said.
But for now, shop owners say they are at the mercy of what they can get.
And Hamide said he agrees that the demand for premium brands and variety seems to be what’s drawing most customers into the store — customers don’t seem to be just trying to purchase any marijuana they can get.
“We’ve forged some relationships with some real quality growers,” Hamide said. “And we want to continue to provide quality products to our customers.”
Growers and processors that don’t respect stores or consumers right now, though, might find themselves blacklisted in the future, he said.
“Price gouging, that’s just not ethical,” Hamide said. “People who try to rip us off now? We won’t be doing business with them again in the future when the market evolves.”
Customers have generally been paying somewhere between $20 to $30 a gram since the first stores opened in the state on July 8. Those numbers should be cut in half once production picks up this fall, Hamide and Budz said.
In the meantime, both stores were closed Wednesday and were planning to be shut down on Thursday because of the supply issues.
At 11 a.m. Friday, New Vansterdam anticipates reopening for the weekend with several strains from about five growers, Budz said.
If New Vansterdam has enough stock to stay open all weekend, Hamide said he may keep Main Street Marijuana closed until New Vansterdam runs out of product early next week in order to build up enough high-quality supply and variety to satisfy his customers.
“We want to work together to make sure customers in Vancouver always have a store open,” Hamide said, adding that he’s discussed the problems with Budz. “Obviously we’re not there yet, but I think by mid-August things will have improved enough that these supply issues will be mostly behind us.”