Weed Dealings - Golden Nugs

In the beginning of the California Gold Rush, folks were finding gold left and right with little more than a simple set of tools, some serious dedication, and a bit of luck. That’s not too different from the first wave of California’s Green Rush. But once all the surface gold had been picked out, the gold industry was run by those with the heavy machinery to move land and extract buried gold. Last year, however, a man found an 8.2 pound gold nugget in his yard somewhere in California. Similarly, there are still under-qualified folks growing and selling inferior cannabis. Eventually the Gold Rush turned from something that anyone could easily get involved in to an industry with plenty of opportunities but no easy money, and finally to an industry with slim pickings. I don’t think the third phase will necessarily beset the Green Rush, but the second phase? That’s already here.

Gone are the days when anyone could come to California, grow weed, and get rich. You can still come out here, grow cannabis, and make some money, but just growing won’t make anyone rich. Neither will just owning a dispensary. Aside from the market being flooded with inferior products—which can’t be distinguished from superior products and thus driving down whole market prices—the regulatory atmosphere has changed drastically. It’s still the Wild West, but the sheriffs have moved in, the towns have been settled, and people are failing.

A few years ago you could move to California, grow mediocre cannabis, and sell it for around $4,500 per pound. Not today. There are so many people growing cannabis that a lot of it’s currently sitting around—most likely being stored improperly—while people hope for prices to come back up. But they won’t just pop back up: they can only be carried back up, and that’s an involved process. Right now people are moving out here, and they’re failing. People are opening businesses and closing them months later. I know growers who had to part with flowers for ridiculously low prices—half of what they were getting two years ago.

There was an extract business run by a young woman in her early 30s who had ample experience in a number of retail businesses. Despite being backed by two investors, her shop only lasted six months before closing up. When asked by the landlord why they were moving out—standard exit interview for the space—she said that the investors hadn’t seen the return they expected. In any other industry, you’d be crazy to expect a profit within six months. But in the cannabis industry, that was a reasonable expectation a few years ago. A lot of things have changed since then, and they’ve changed fast.

It’s all part of the second wave. Just as miners had to bring in specialized equipment and specialized methods for extracting more gold in the late 19th century, anyone looking to extract money from the cannabis industry now is going to need more than the standard tools. Nobody in California buys weed anymore. People have become consumers, and no consumer chooses their products blindly. More Californians every day are becoming choosy cannabis consumers. Now that cannabis is a consumer product, and not just a black market drug, there is no black market industry to jump into. There is no selling shit simply because you have it. Everyone has it, and some people just have better shit. Welcome to the future.

Last week's Weed Dealings, Doffing Birkenstocks