A survey conducted by the Cannabis Council of Canada reveals that more than 80% of LPs have yet to attain positive cash flow. Additionally, it is estimated there has been a 32% reduction in indoor/greenhouse cultivation space from 2020 to March 2023. In this challenging market landscape, some participants will exit, leaving behind resilient, agile, and efficient companies. These surviving entities have managed to navigate the tough market conditions through a variety of strategic approaches.
Enhancing Market Access and Strategic Collaborations: When LPs expand their access to wholesale products, they position themselves to respond more swiftly to changes in consumer buying habits.
Meeting consumers’ evolving demands may necessitate sourcing cannabis from beyond their cultivation facilities. While vertically integrated companies benefit from full control of their supply chain, it limits their ability to pivot.
Specializing in core activities and working with other businesses can offer a sustainable competitive edge and save on capital.
Access to a wholesale platform like CCX empowers LPs to procure from diverse product categories bringing a variety of SKUs to the market expeditiously and allowing growers to easily diversify their markets and buyers.
Leveraging CCX’s extensive network, our seasoned live brokers can also facilitate connections with other businesses, broadening your strategic partnerships.
Leveraging Industry Insights for Product Innovation: Staying ahead in the ever-evolving cannabis market demands staying on pace with or driving industry trends.
Recent data from Headset highlights the surge in pre-roll sales, with an impressive 33.3% of total sales in August. This surge positions pre-rolls as the second most popular product category in Canada, boasting a remarkable 60.5% increase in market share since January 2022. There is speculation that pre-rolls could surpass dried flower as the number one category.
This data isn’t just numbers, for LPs this is an opportunity for strategic product development. Take, for example, the multi-pack of pre-rolls, capturing a substantial 82.9% of sales, significantly outperforming single pre-roll options. The rise of “mixed strain” pre-rolls, often in variety multi-packs, signifies a growing trend.
LPs specializing in premium craft flower can capitalize by bundling flagship strains in multi-packs rather than individual pre-roll SKUs. This move not only prevents self-competition but also reduces packaging costs, taps into a burgeoning market segment, and sets your products apart on retail shelves.
Chart 1: Category Share of Total Retail Sales in Canada
Product Education & Community Building as a Sales Tactic: Once LPs receive a purchase order, sales tactics are limited due to the government bodies withholding ordering information, and stringent marketing regulations. Sales tactics that have been successful in the past include building relationships with independent retailers, providing educational materials for SKUs, such as one-pagers and strain cards, and giving samples to budtenders. LPs should strive to make selling their products as easy as possible. When educational material and product coaching are provided to budtenders, it will give them the chance to sell your product confidently.
In conclusion, as the cannabis industry celebrates its fifth year of legalization, it’s crucial to acknowledge the obstacles faced by licensed producers. This milestone also offers an opportunity to educate those outside the industry, fostering more advocates for change. The above strategies can help LPs navigate these challenges effectively. This entails staying attuned to industry trends, leveraging services to broaden market access, prioritizing product innovation and emphasizing product education.