“Phase I of the legal cannabis sector is coming to a close. Massive greenhouses and thousands of kg’s of funded capacity are getting less relevant by the day in a saturated market. Phase II will be about product development, distribution and technological advances.”
Last week a top shelf cannabis CEO sat in our office, after the carefully crafted sales pitch he loosened his tie and we began to shoot the breeze. He told me last summer his company ordered cannabis from another LP, more than half the flower was dead on arrival. They were able to clone the remaining half and had a successful harvest, but time and money were wasted.
B2B sales is a huge segment of the cannabis industry for a couple reasons.
- Big companies promised X of amount of product in their sales decks before realizing they couldn’t grow it all themselves in the timeframe they initially promised
- Small startups want to cut costs and avoid the growing process, acting as a middle man in the supply chain.
For a large LP who falls short of a target, instead of making a PR blunder , why not just buy product from somewhere else and sell it? Supreme (FIRE.C) cannabis has made this transaction their entire business plan until this point. Supply is not the problem, there is an abundant amount of cannabis in Canada.
It’s Not All About Massive Grows Anymore
Phase I of the legal cannabis sector is coming to a close. Massive greenhouses and thousands of kg’s of funded capacity are getting less relevant by the day in a saturated market. Phase II will be about product development, distribution and technological advances.
Auxly (XLY.C) (formerly Cannabis Wheaton) is a streaming company who offers cannabis startups capital in exchange for a % of their product for a fixed period of time.
If all of Auxly’s (XLY.C) deals go as planned they will have 620,000 kg’s in the next couple years. That would equal 17 grams of cannabis per Canadian a year from one company. With over 100 current LP’s in Canada, hundreds more lined up, and the soon to be legal black market, all of this cannabis has to move around.