Thought I’d talk about a couple things in today’s post – CannaCon and (unrelated to that) the price spikes at pot shops.

CannaCon

I spent Friday at CannaCon, the biggest cannabis business conference in the Pacific Northwest. I ran into a lot of Clark County folks at the event, which is in its first year.

Viridian Sciences was the only local booth at the event, but I saw folks from CannaMan Farms, New Vansterdam and Main Street Marijuana all wandering around checking it out.

I was surprised by all the supplemental jobs associated with the industry. Beyond budtenders, growers and store owners there are booming business opportunities for accountants, lawyers, insurance companies, plant nutrient makers and even fence manufacturers, thanks to I502 fencing requirements.

Some folks are trying to set up a Cannabis Commodities Exchange in the state. Another group is building out a cannabis related job and social networking site called Leafhead that looks interesting.

I also had a good chat with Dave Rheins, CEO of the Marijuana Business Association (MJBA), which you can read more about in Sunday’s Business section in The Columbian, along with details on some of the other businesses and business opportunities popping up out there. The group is trying to help everybody in the marijuana business sector get organized and network. And it’s opening an office in Vancouver in September.

Price Spikes

After I got home and checked in on Cannabis Chronicles social media sites this weekend, I was surprised to see yet another price spike in marijuana prices at local stores.

Both New Vansterdam and Main Street Marijuana had prices between $32 and $38 a gram for their most recent products.

If we haven’t hit it already, I think this may be the market breaking point.

People seem to be willing to pay up to $20 a gram for good quality legal cannabis – especially considering the lab testing and other assurances that the product is safe.

But with a street value of about $5 a gram compared with $32 to $38 a gram, a lot of people who would like to be legal customers are just plain heading back to their old dealers. And I’m not sure I blame them.

What’s causing the spike? Part of it is the tax problem. State taxes, which add 25 percent to the cost at each stage between grower, processor and retail, is one part. Federal taxes that also tax those state taxes are another – although whether those taxes are real or not is somewhat in question.

And not all, but some growers have been gouging, changing their prices when they get to the stores and leaving the owners with the option of staying closed all week or buying product for an extra $2 per gram.

“That really puts retailers in a bad spot,” said Brian Budz, co-owner of New Vansterdam. “We’re finding that our purchase agreements are more fluid than we thought, and there’s not much we can do about it. We’ve said no to some, but if we do that we have to close the store. It’s a catch-22. That will eventually end up with stores not being able to stay open and growers not having anyone to sell to.”

The problems are compounded for processors that aren’t also growers. Processors buy lower quality cuttings called “shake” from growers that they use for extraction so they can infuse their products.

But some growers are charging up to $1,800 for a pound of shake that’s only worth perhaps $500 if that.

“We find processors are spending an exorbitant amount on material,” Budz said. “For a processor to be charged that much for trim? That’s not a sustainable business model. We can’t charge $150 for a chocolate bar.”

Still, not all growers are gouging. Budz said the two he’s enjoyed working with the most are Vancouver’s CannaMan Farms and Wenatchee’s Monkey Grass Farms.

“Brian Stroh at CannaMan has been a spectacular person to be in business with,” Stroh said. “He’s been very open. We’ve been to his farm. What he produces is top notch, and we have customers that come back and repeatedly ask for his products.”

Monkey Grass has also done a good job of being open about explaining prices and how things work on their side of the business, he said.

“They’ve been amenable to talking with us and explaining why their prices are the way they are,” Stroh said. “They’ve done a very good job of doing things the right way.”

He wouldn’t name any of the growers he’s not happy with on the record, other than saying that some were in Eastern Washington.

Asked about Blewett Pass Farms, which has sold tins of joints with filters on them that some customers have complained about on Cannabis Chronicles social media sites, Budz said this:

“I do not wish to comment about Blewetts in any way at any time, and that’s on the record,” Budz said. “Thank you.”

I’ll have more on the pricing issues soon. If you have comments about it, I’d love to hear from you.

Cheers,
-SueVo (sue.vorenberg@columbian.com)