Marijuana Business Magazine - April 2018

CULT¬VAT¬ON BUS¬NESS STRATEG¬ES EXECUTIVE SUMMARY Colorado-based Strawberry Fields, which began with one medical marijuana grow and one dispensary, has been taking steps to boost its bottom line in the face of changing tax rules and growing competition. Here’s what you need to know: • The company is striving to vertically integrate all aspects of its business by opening dispensaries and producing its own products, including vape pens, edibles and lotions that are sold in its stores. • By selling the marijuana it grows to its own stores, Strawberry Fields was able to protect itself from falling wholesale prices. • A change in Colorado’s tax rules last year spurred Strawberry Fields to pivot. To lower its tax bill by about 35%, the company began buying cannabis from other growers to stock its dispensaries; conversely, Strawberry Fields began selling the MJ it grows to other retailers. • Looking ahead, Strawberry Fields plans to distill its own cannabis oil for use in the company’s infused products – rather than buy it from a supplier. S trawberry Fields is not your run- of-the-mill marijuana business. The vertically integrated Colo- rado company has been opening retail stores across the state over the last few years so it can sell its crop directly to consumers. By doing so, Strawberry Fields protected itself from tumbling wholesale prices. But a change last year in the way Colorado collects excise taxes required Strawberry Fields to pivot abruptly. To cut its tax exposure, the company opted to: • Buy marijuana from other growers to stock its dispensaries – rather than use its own crop. • Sell its marijuana to other dispensa- ries rather than supply its own stores. By Margaret Jackson Turning on a Dime To boost its bottom line, a Colorado MJ company shifts gears to lower its taxes, expand into new lines of business It’s just one way Strawberry Fields, based in Colorado Springs, has bobbed and weaved to boost its bottom line. In addition to growing and retailing cannabis, the company makes various products – including vape pens, edibles and lotions – that it sells in its stores. The math is simple. Sam Thoman, the company’s head of business development, said customers want cheaper products. By making its own products – versus buying from a sup- plier – Strawberry Fields can sell its items for 15%-20% cheaper than a competitor’s goods. Besides, consum- ers aren’t picky about where their can- nabis comes from, Thoman said. “When you look at an edible, if it’s 100 milligrams, consumers look at it as paying for 100 milligrams,” he noted. “They don’t care what the label is.” Looking ahead, Strawberry Fields plans to distill its own cannabis oil for use in the company’s infused prod- ucts – rather than buy it from a sup- plier. The company, in short, wants to be self-sufficient. Branching Out Launched in 2010, Strawberry Fields began with a 30,000-square-foot Strawberry Fields, based in southern Colorado, is a cultivator that also operates retail outlets and makes its own products, including vape pens, edibles and lotions. Photo courtesy of Strawberry Fields 88 • Marijuana Business Magazine • April 2018