In Washington State and many other states, dispensaries have been operating in a buyer’s market. A plentiful supply of cannabis products has allowed dispensary managers to keep prices down and the shelves stocked. This term is typically used in the housing market, and as in the housing market, we see transitions between buyer’s and seller’s markets in cannabis.
Purchasing Managers are now facing the challenge of purchasing in a pandemic. Most states have seen an increase in sales over last year and a shift in product type preferences. The cannabis market has transitioned to a seller’s market; there is not enough product to supply dispensaries and fulfill consumer demand. What you don’t know about sourcing products for the dispensary shelf is that purchasing in a pandemic is extremely challenging.
The New Seller’s Cannabis Market
In the current cannabis market, we are experiencing a product drought, not enough cannabis to supply consumer demand. We have already transitioned into a seller’s market. You may notice that the once full shelves of your dispensary are sparse, or that new brands are being offered.
Since Washington State has separated production from retail, behind those shelves is a dispensary Purchasing Manager responsible for keeping products in the shop. Before the pandemic, growers and processors had to invest a great deal of time, energy, and money into securing shelf space for their product. Now, the pandemic has caused a drought, and the power has shifted from the hands of the purchasers to those of the producers.
Eli Leder, Director of Sales at Cascadia Gardens notes that “While I used to send out menus of strains and allow Purchasing Managers to build an order that they choose, I now ask them what size of order they would like me to create for them. I have had to refocus my energy on existing partners rather than expanding the reach of the brand. Initially, my main job was new retailer acquisition. Now I am juggling keeping existing partners happy while at the same time keeping my product available at the companies that helped me establish my brand.”
Some gardens are overwhelmed by recent high demands and been forced to cut partnerships. As a result, many dispensary Purchasing Manager picked up brands to fill empty shelf space. Prior to the drought, a brand would be reviewed by budtenders and purchasers 2 or 3 times before placing an initial order. Now, new brands can appear in stores without thorough vetting.
Time will tell if this market shift will persist after the pandemic, or swing back in favor of the buyer. “I think the demand will plateau, but I don’t think it will decrease significantly after the pandemic. I want to keep my product on the shelves from my current partners. As well as expand to new retailers while other growers are cutting shelves. Then, after this pandemic, I will be in the best possible place without having to increase my prices. This means that my customers keep their access to my product, although maybe slightly less, throughout this market shift” says Leder.
This is not the only viewpoint held by sales directors, however, and many producers have already increased their prices in response to the increased demand.
Consumer Purchasing Trend Shifts
In addition to the shift in power, there has been a noticeable shift in consumer behavior, increasing the challenge of dispensaries to accurately purchase during the pandemic. There is no doubt that the stay at home orders have increased cannabis consumption across the U.S. The pandemic has also created a shift in product type purchasing. Earlier this year, 56.11 percent of surveyed users said that vaporizing was their preferred method of consuming cannabis. Since the quarantine, that figure has jumped to 73.06 percent. Couple this with increased spending overall and most dispensaries are struggling to keep cartridges in stock.
In the store I manage, Dancing Gypsies, we’ve picked up two new cartridge brands to match the demand. One of which, had higher failure rates than tolerable, and will not be purchasing from them again. The other cartridges come from a brand we’ve bought trusted flower from for a long time, Skord.
Despite the premium price point, I will continue to purchase these cartridges because the consumers love them. I struggle to keep them in stock. Prior to the pandemic, I would not have purchased cartridges without trying them myself and collecting budtender feedback. Now, due to the high demand, decreased availability, and long turn around times, I’m struggling to keep up with consumer demand.
The Next Cannabis Market, What’s Coming?
If what we are seeing now is in fact, just a trend, then what is the next trend? Vincent Packard, CEO of Goodiez Inc. oversees wholesale deals between producers and sales between producers and retailers daily. These connections and a long history in the industry, allows him to see shifts in market trends and forecast them. Packard believes that “at the end of the day the consumer is still concerned with whether or not the dispensary has the best product for the best price point.
The successful brands are acquiring failing brands, and I think we are going to see an overall improvement in quality. Outdoor last year suffered an early frost. This year, brands like Leaves of Grass and Flight 9 are preparing for great outdoor harvests. Additionally, more emphasis is being placed on brands like these that are pesticide-free. Ultimately, the consumer is winning.”
What This Means For You
Dispensary Purchasing Managers all have different ideas about how to select the products they offer in their shop. From potency, to harvest date, to product consistency, to “Literally price, that’s about it”. Now, due to the pandemic, the challenges for dispensaries to purchase during a pandemic, and especially purchasing the right, and enough product to fill the shelves, have increased.
Decreased vetting may result in overall decreased product quality. Increased demand may eliminate poorly run companies that result in overall increased product quality. Decreased inventory may result in less selection for you to purchase from. Increased demand may result in price increases for the products you regularly consume. Behind these things, is a Purchasing Manager doing their best to navigate purchasing during a pandemic, and following it. If your dispensary manager is hitting, show them some love. If they’re not, now might be the best time to find a new dispensary.
