Marijuana Business Factbook 2019

196 Marijuana Business Factbook 2019 Chapter 3 | Financial & Operational Data: Wholesale Cultivators © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Large cultivators are able to withstand price fluctuations and declines more efficiently than small companies. Access to capital provides greater opportunity for technology adoption as well, which, in the long run, may lower production costs and generate higher-quality product, improved yields and differentiated products that appeal to consumers. It is not all bad news for small growers. Those looking to position themselves for acquisition may benefit from the growth of larger cultivators. Small growers who do not seek acquisition and are able to withstand market fluctuations in the short termmay benefit from a shift in policies and consumer demand. Some analysts and industry insiders predict that the market for cannabis will behave similarly to markets for craft food and alcohol, where small-batch production can achieve high retail prices among consumers who place value on craft production, including differentiated production methods (sustainable, water-efficient, local, etc.). Regulators in Washington state have indicated interest in developing policies that would allow small-scale growers to sell directly to consumers. CHART 3.13: Wholesale Cultivators: What Is The Key Differentiator Of The Cannabis You Grow? Source: 2019 Marijuana Business Factbook © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Wholesale Cultivators: What Is The Key Differentiator Of The Cannabis You Grow? High Quality Grown Organically/Without Pesticides Low Cost Grown Sustainably Terpene Content/Profile Value For Money Other 46% 23% 12% 8% 4% 4% 4% Many growers have been or are currently competing on quality at a time when market forces are favoring growers who can reliably supply the extraction market with low-cost cannabis that meets a minimum standard of quality. With flower sales on the decline, the market will likely not be able to sustain such a large portion of growers attempting to compete on quality. While the extract market currently favors low-cost flower, demand for high-quality concentrates may take up more market share in the future, meaning quality will become a factor as consumer demand shifts in this direction rather than simply price. However, it’s unlikely to supplant low-cost concentrates.