small business marijuana industry
Marijuana Business News

Marijuana Industry’s Future Success Depends On The Support Of Small Businesses

small business marijuana industry
(image via Wikipedia)

There are new projections for the economic future of the marijuana industry being released all of the time, and those projections are HUGE, and seem to grow with each new projection. This has led to investors flooding the industry, similar to the flood that occurred during the dot com boom. New businesses are being created daily, and there is no end in sight. Everyone wants in, and most businesses are claiming that they are absolutely crushing it with no end in sight.

But a question that I often ask is ‘how much of it is real’ when it comes to the biggest businesses in the industry? I have been doing this for almost six years now, and have had a front row seat to watch the industry grow, and get sent behind the scenes information all of the time. If there’s one thing that my observations have shown me, it’s that so many of the largest players in the industry are built on smoke and mirrors. They will brag about their massive profits, but will never release any proof to back those claims up.

These people and their companies are not hard to spot. They spend more time bragging about how much money they have (again, with no proof, which they guard with their lives) than they do actually working on making their company’s products and/or services better. Just ask them for a donation for a campaign or reform effort and you will see how fast they go from bragging about being a baller to explaining how strapped they are for funds currently. Trust me, I see it happen all the time.

The fact of the matter is that most of these ‘big marijuana’ companies are just hype. Sure, they are great at issuing press releases, their pitch decks are polished, they have funders and investors, they wear expensive suites and have coiffed hair. But at the end of the day they are just polished turds. They spend more time polishing that turd than they do trying to figure out how to replace their turd with something that people actually want to buy and/or use. It’s not coincidence that they fizzle fast. The money that you see is investor money, and once the company burns through that money (burn rate for any Silicon Valley show fans out there), they are forced to close down. And you better believe that there is no press release when the company fails, just a very quiet exit.

My problem with these companies is not that they are just hype machines. Hype machines are nothing new to the marijuana world. People have been over-hyping stuff in the marijuana world since probably the beginning. What I do have a problem with is that these coiffed hair types are coming into the industry, pushing all the little companies out who actually care about marijuana and actually have good products and services. But since they can’t compete with a well funded turd polishing machine’s bullying tactics, they are forced out of the industry. That is just to be followed by the big company flopping because no one actually likes what they are selling.

If all the industry becomes is big companies that spend huge amounts of investor money on hype, push out quality smaller companies, then fizzle themselves, the industry is not going to be as bright as people think. What makes an industry succeed in the long haul is consumers supporting businesses that have products and services that can stand the test of time. That was a big problem with the dot com industry – too much over-hyped crap entering the sector that people invested in, that crap was never embarrassed by consumers, and the bubble popped.

I don’t think that the ‘marijuana bubble’ would be as large as the dot com bubble because after all, people LOVE marijuana. But at the very least good, hardworking people will get pushed out of the industry, and consumers won’t be able to buy their quality products. I’m seeing this happen in Oregon right now as investors flood the state. I’m seeing people that have been living off of their niche business being forced out by larger companies with inferior products.

I’m not a business wizard (did I mention I work in a cubicle to make ends meet?) but I do have to eyes and a brain, and with the amount of money that these larger companies are spending in Oregon to hype their stuff versus how many people are actually buying that stuff, a lot of those companies won’t be around in a year or two. So the end result is that no one makes money, not even the larger company, and no one wins. That is unacceptable to me.

Why don’t we avoid all of this? Why don’t we make the marijuana industry different than other industries? With the industry being so new, we have a golden opportunity to go a different route. Support small businesses in this industry. Small business owners are not greedy like large companies who only care about the bottom line so that they can appease investors. It’s been my experience that small business owners are much nicer than corporate types in this industry. I have never had a small business owner try to stab me in the back in this industry, but I have plenty of scars on my back from interactions with ’successful industry leaders.’ It’s been my experience too that small businesses are more likely to support the cause, rather than just claim to do so like big companies.

I don’t want to see the ‘Wal-Mart of Weed’ or any other corporate giant takeover of the industry. Big business has ruined many other industries. Let’s make sure that doesn’t happen with marijuana, because unlike the other industries, the future of the marijuana industry is largely tied to the future of marijuana reform. This isn’t a matter of where can we get the cheapest TV – people’s freedoms are on the line, and that should be taken very seriously.

  • claygooding

    Eventually the days of making a living from an extra bedroom or small backyard will end as big producers compete for market dollars however the days of the exotic growers will never end because their circle of fans will keep their enterprise sustainable and instead of cash for his work he may be bartering his goods,,,,but being the top grower in his region may be enough to keep a lot of people that are addicted to growing in the game.

  • skoallio

    I think a few giant marijuana companies is better than many smaller ones. Heres why.

    Theres less of an incentive to be irresponsible and sell to kids. With less competition you could make money and keep your ethics. When its a highly competitive cut throat market, every marijuana business will have to do whatever it takes to make money which wont be so pretty.

    Another reason is that with a handful of giants, its easier to organize and lobby the government which protects them. That will help protect your rights to buy marijuana in a store and their rights to keep their business. With thousands of small marijuana business, its a lot less likely that all will band together cause theres so many of them.

  • saynotohypocrisy

    I can think of a few ways, which can be combined, that small growers can find a legal niche, if the government allows them to. There’s catering to the people who prefer to buy local, creating your own hybrid strain or other connoisseur quality weed, clever branding + packaging, and for the people who really, really want to grow weed for a living, there’s being willing to work for less financial reward than the competition is willing.

  • The dot com boom left us with the Internet as we know it. Not bad. The housing bubble left us with a LOT of empty houses and then destroyed houses.

    I think the cannabis boom will be more like the former than the latter.

    As to no one currently in the market winning? That is the way the natural cycle goes for any new industry. Rail roads, electricity, radio, you name it. Investors know how it works. They hope to be the “Apple” of the business and not the Cromemco. Most of them will be wrong. All of them could be wrong.

  • David Yoseph Schreiber

    It is important for any new legalization initiative to allow current growers including small ones to continue to operate.

    The person who has been growing and selling cannabis for years is not going to be enthusiastic about a legalization scheme that will put him out of business. Quite possibly his customers will see it that way, too. It is possible to produce marijuana efficiently with a small investment. One only needs a small amount of space plus garden supplies and made a grow light with a fan. Distribution can be done locally. It can also be produced on a large scale.

    In addition excessive regulation and high license fees can be a problem. We should be going in the direction of as legal as lettuce.

    It may also be better to look to bring the large producers in Mexico and South America into the legal system rather than vilifying them. I don’t know if anything can be done with the DEA. It seems to be an irretrievable criminal organization. Outright abolishment and lustration may be the only approach.

  • AntiIgnorant

    Definitely shop small. This is a good idea for anything. Small and local.