Cannabis Price Surprises and Volatility in 2015 and 2016

Jennifer Beck discusses cannabis prices

Jennifer Beck is the co-founder and CEO of CannaBase, a wholesale cannabis marketplace. Jennifer walks us through surprises in wholesale cannabis prices in 2015 and what to expect in 2016. Learn more at: http://www.cannabase.io

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

There have been surprises in the price of cannabis this year and in how wholesaler cannabis growers and retailers are engaging in the cannabis marketplace. To help us understand the market dynamics I’ve invited Jennifer Beck CEO of CannaBase on CannaInsider today. Welcome back to CannaInsider Jennifer.

Jennifer: Thank you for having me.

Matthew: Jennifer to give listeners a sense of geography can you tell us where you are in the world today?

Jennifer: Denver, Colorado.

Matthew: Okay and you were on the show last and a lot has changed since then, but before we dive into everything that is going on can you remind us what CannaBase does?

Jennifer: Absolutely. CannaBase is a private online wholesale marijuana marketplace that connects licensed business so commercial cultivators and marijuana infused product manufacturers with licensed dispensaries, so licensed retailers. It’s completely free to join and use. Our goal is to create a safe, compliant and transparent open market that allows owners and operators to take control of their cannabis business from seed to sale.

Matthew: Yes, I hear an emphasis on licensed there. How many license holders are currently on the CannaBase platform?

Jennifer: Over 300 entities which represent over 1500 licenses.

Matthew: Can remind us what vertical integration is and why it’s important for listeners to understand how it ended and what we should think about it?

Jennifer: Absolutely. Mandatory vertical integration was in place for both pneumatical and recreational markets until October 2014. At that time vertical integration was no longer mandatory for recreational businesses. It still is for medical product. Basically before this date like medical cultivations and dispensaries, recreational business were required to be vertically integrated. So they had to have both a cultivation and a retailer license and they had to supply 70% of their own product to their retail center or dispensary. This helped keep the market small and manageable in its early years and it decreased chances of product diverting to the black market which is a huge priority for the state and community.

Vertical integration, however, makes the burden of business ownership very high for cannabis business owners. Some would prefer to be specialists and focus on just a retail center or just a cultivation, but not be required to run both which are very different businesses. So this year, since October 2014, we’ve had our wave of first decoupled licenses so business owners that just own a recreational cultivation or just a recreation dispensary. And so far this evolution has seemed to be very healthy for the industry as a whole. Obviously with the end of vertical integration the main concern was that some standalone cultivations would begin over producing and could hurt the supply side of the market if they began undercutting prices at large.

Matthew: Right. Now a lot of people might be thinking why would you not want to have your own dispensary if you cultivate your own cannabis, but there’s a lot of reasons why that might be true. What do you often see or what type of personalities tend to gravitate to maybe just being a cultivator or maybe just having a dispensary or maybe just being a processor. I mean is there anything, any color you can give us around that in terms of why people don’t want to do it all?

Jennifer: Absolutely. These are really three very different businesses, and they’re all changing rapidly as more mainstream money begins to enter the industry. So everything is in a high state of flux, but running a cultivation it can be either indoor or outdoors and we have a lot of people who are very experienced cultivators who have been doing this for many years you know in their basement, and they’re passionate about growing the product. They’re passionate about types of strains. They’re passionate about the grow process. They’re passionate about cultivation and it really is an art. It’s a specialty and it’s an art.

On the flip side running a retail center is an entirely different deal. You’re dealing with how to reach consumer in a largely underground consumer base. You know most people that smoke pot are so pretty quiet about it, at least to their family and friends and wherever they work. So you’re working on how to identify a target market, what kind of strains you should be carrying, how to stay well stocked, predicting the tourist season, when you’re going to need more inventory, managing a retail center it’s a retail job. I mean it’s seven days a week and it has its own set of trials and tribulations. And then if you’re running a marijuana infused product company, you’re manufacturing edibles or you’re producing wax. You’re extracting the THC and the cannabinoids from the trim, the leftover trim of the whole plant and you’re using that to make a variety of consumable goods or product that can be vaporized or eaten.

These are all very different businesses. We tend to see the marijuana infused product companies, the ones that create edibles have the most brand recognition across different retail centers. It’s harder as a cultivator to always get credit for your product when it bought wholesale because a lot of times the retailers want to maintain brand control over the product that they sell. So it depends what’s important to you. If you really want your brand to be recognized and you want to be in a variety of retail centers, I would recommend starting a MIP. If you’re really passionate about selling to consumers, providing patient care, the extension of that old caregiver model, then you need to probably be a retail. But if it’s so important to you exactly what goes into the product and you consider yourself a connoisseur, you’re going to want a different level of control over that cultivation process.

Matthew: Great, that’s very good color. Now diving into Colorado a little bit, what happened to the price of cannabis in 2015. And for people listening you know we are talking about Colorado, but Colorado in a sense is a micro chasm of what we’ll see in other states as they liberalize cannabis laws. So just keep that in perspective. I mean every state its own fiefdom, but Colorado is a good one to look at to see the future. So with that being said, Jenn, what happened to the price of cannabis in 2015 in Colorado?

Jennifer: It’s been wild. It’s been a wild ride. It has fluctuated greatly. So it’s ranged from an average price of just under about $1,600 to shortages, seasonal shortages that led to any product getting listed flying off the shelves upwards of $3,000 a pound. So you know doubling in price. At its lowest “Low Shelf Product” that once in a while you can find for the $1,000 to $1,200 range, although that’s largely medical product. But yeah at its highest the product was going for over $3,000, $3,300 a pound.

Matthew: Wow, you know I was dead wrong about what would happen in 2015. I felt like hey all these competitive forces are coming into the state of Colorado. There’s a lot of licenses here. I really thought the price would drop and stay below $1,000 a pound. I mean there was some kind of regulations around pesticides and testing and things like that. Do you think that really affected it upwards a lot?

Jennifer: You nailed it. I mean everyone was concerned about a, I mean, we heard it called a bloodbath price crash because of the influx of new cultivators and this decoupling of licenses, the fact that you were now allowed to grow more than you had to sell. Everyone thought that prices would crash. And what we saw was that prices were much more tied to seasonal trends in terms of tourism and then regulatory changes. The influence of microbial testing and pesticide testing was huge. At first because people were growing using mechanisms that were no longer allowed so old product had to be thrown away, but then also because there were only a certain number of labs that were certified to test for those problems or certified to test for those components of the product. So there was a lot of bottlenecking.

We saw in mid-Fall around August, September into October a shortage unlike anything we’ve ever seen. And we account for it first there being a shortage in Colorado Springs where a lot of Denver’s wholesale product was bought. Denver and Colorado Springs are the two largest markets so we think that had played a role. And then we had the pesticide testing, microbial testing. September we had a tax-free holiday. All of these components worked together and we had the least amount of product we’ve ever seen listed, and like I said, something would be listed for $3,000 a pound and there would be bidding wars within an hour.

Matthew: That is crazy. That is nuts. What kind of comments or anecdotal type of information did you receive from growers and dispensary owners as you talk to them, as you chat with them online, did you see any kind of trends or things that you were hearing over and over again where you’re thinking wow I did not expect this or this is interesting that the market is turning this way, any frustrations they aired.

Jennifer: Absolutely. Well you know in addition to CannaBase I’m also the Vice Chair of the Colorado Cannabis Chamber of Commerce. So we’re really always watching the regulatory issues and the macro and the micro issues that are facing the cultivators and the dispensaries on a day-to-day basis. And the truth of the matter is it’s very hard to survive in this industry that is so tightly regulated, is taxed so heavily, our margins are very very tight and it’s very unpredictable. When you are waiting for something to happen the way that pesticide testing and microbial testing could happen with such a vengeance and it could take so many businesses by surprise and so many were sitting on huge amounts of inventory. It makes it really really difficult to survive, very difficult to predict long term, very difficult to even predict the larger seasonal changes. So we’re lacking some of that data, the structure and the predictability that help make margins and prices manageable in the long term. So business owners are often just flying by the seat of their pants trying to keep up, do what’s right, predict the best, you know, list their product for the best price possible and stay afloat. I mean it’s a really difficult industry still to survive in and thrive in.

Matthew: And you mentioned the now microbial and pesticide testing regulations are tightening, and from a consumer perspective that’s great. We don’t want any e-coli in our cannabis or any Eagle 20 although some people debate that there are still safe ways to use that. But I’m wondering what…do you see different cultivators responding to these tighter regulations around microbial and pesticide testing in different ways because my sense is that there’re some that kind of him and haw about it and they complain and they do the minimum and others just like this is what we have to do. We’re going to make sure we as a team understand the requirements and execute in a five star way to make sure we do. They kind of turn this pain in the butt into an asset for themselves by executing and understanding it so well. Is there anything you can comment around that?

Jennifer: Absolutely. I mean I truly believe, and we spend a lot of time with the licensed business community and with the cultivators and with the retailers that by in large this is an enormously ethical passionate user base of business owners who want nothing but the best, if not only for the health of their businesses, but for the long-term health of the industry. We want safety and regulation as much if not more than everyone else and there’s… I don’t think anyone wants anything harmful in the product.

The biggest problem is around clarity. You know when we change the rules or when we start to tighten up on the rules there are financial realities. If a company’s been using something that was alright for them to use yesterday and now they’re sitting one or two or three hundred pounds of product that they’re not allowed to sell, whether or not they’ll be able to stay in business. And so I would like to believe and evidence has shown that when a company has the resources to change their ways and make better decisions as the evidence and as the regulations steer us in those directions, everyone seems to rise to the challenge and want what’s best. It’s just a matter of economic feasibility and being able to do it quickly and then hoping that their license isn’t at risk. You know hoping that maybe they sourced some trim, and what’s happening with a lot of these edibles companies is that they’re going through these recalls from trim that was sourced long before these mandates went into effect or these regulations were tightened up on, and now they’re facing huge recalls and public scrutiny over their brand. Which not that it’s unwarranted but can be incredibly destructive for a very well meaning business.

So I don’t think that anyone, yeah, so I don’t think anybody doesn’t want to rise to the challenge. It’s about having the resources and the time to rise to the challenge and clarity you know from the local government in terms of what exactly is allowed. What is the list of what is allowed, you know, at what date is that allowed. A lot of times there’s a lot of murkiness and things get lost in translation, and when you have a cultivation that’s running 24/7 you need a little bit of time. These are plants. You need time to implement these changes and rise to the challenge.

Matthew: Now focusing in on CannaBase specifically let’s say that I need to purchase some trim or some cannabis flower and I get on CannaBase for the first time, walk us through what’s that like. How do I evaluate someone I would want to do business with whether I would want to sell to them or buy from them as a licensed cultivator? Is it like a Yelp-like platform? How do I know that they’re a trustworthy or so on and so forth?

Jennifer: Absolutely. So everything on CannaBase is done on an entity level. So you’re able to tell really quickly whether a listing or a request has been put up by which business. So you’re not looking at individual user names and trying to manage between employees. You’re really seeing the credibility of that business. On every listing we have the number of connections, their number of friends. We have how many people have viewed that listing. We integrate lab data. So we try and give the buyer as many tools as possible to ascertain whether or not this product is right for them.

I think the real power of CannaBase is in its breadth. It’s in the fact that we have worked enormously hard as a team and as a company to keep the marketplace free and open for people to use because to us that’s the only way that we’re going to begin to eliminate some of this price volatility and that we can have a truly authentic market if everyone can be there and everybody has access to the listings and requests. We’re not just blocking it as brokers. So that’s been incredibly important to us. You can see how one buyer/seller stacks up in terms of the greater market in terms of their pricing. They’re allowed to promote their product however they deem fit. And then you’re allowed to just establish connections either over a listing or a request saying I’m interested in this, it opens up in-app instant messaging. You can add employees. You can add group chat. And then we even have negotiation dashboards that allow you to go back and forth on price and set up delivery logistics.

Matthew: Jenn, in terms of what the participants in CannaBase are looking for is it primarily an immediate type of marketplace where people say I want to buy or sell right now or do you see some interest in more of the commodities type market that allows for future transactions to occur and locking in price and quantity and things like this?

Jennifer: Currently it’s very short term. Eventually we think that it’s inevitable that we’ll reach a point where cannabis can be traded more like a commodity. And this will have the potential to drastically change the dynamics of the industry, but I think we’re a ways from reaching that point. The industry is still experimenting with a variety of cultivation techniques. The homogeneity of strains and product quality still very significantly. What we’re really passionate about in order to create a more long term marketplace where businesses can buy product in greater quantities that they’ll feel confident about later on is the establishment of standards.

Matthew: Yes it’s the standardization. So what I’m calling certain cultivation or my flower is not the same as the next guy even though we’re calling them the same things. I guess it probably is going to need to be at a certain scale. You know we look at things like corn and soybeans and pork bellies and there is a very dialed in standard even though the way that those animals are raised and so forth can be very different and those plants I raise can be very different. There is still some sort of agreement at a high level of what the minimal standard is and I guess until we get to a certain threshold I don’t know if that will be maybe tens of billions or something where that is a necessity where this is where we’re at. And people are kind of doing more of a one on one thing instead of a secondary market of futures and options on commodities. So that makes sense. I think it will be… that would be great though if that did exist because you know we see a cultivator who might be a little gun shy about you know planting a certain number of plants, but if he could lock in a price now and know he would make a certain amount of profit that would relieve him and he could bring that flower to market in a way that benefits everybody hopefully and hedges risk.

Jennifer: Absolutely. And that will also just rely on the price being less volatile. You know right now prices are changing so drastically that it’s tempting for cultivators to hold on to product until it can sell for quite a bit more, and I don’t know if that level, that risk is able to be mitigated right now as much as the benefit of holding the product and selling when there’s a sudden shortage. I think that draw is probably a little bit stronger still.

Matthew: So let’s say you’re looking over the shoulder of two people that are currently on CannaBase and they’re coming to some agreement, what does that look like? Walk us through after they decide on what they want to transact, what happens next?

Jennifer: Absolutely. Once they decide on what the sale will look like, how much they’re looking to buy, which strains, etc, there’s a lot of paperwork that needs to be handled. So for product to be transferred there needs to be a manifest and that manifest states a lot of the license information of each party as well as information required by law of the courier who will be delivering the product. Everything from their badge number to their car license plate number to the exact route that they’ll be taking when they deliver the product from point A to point B. So the logistics is still quite a bit of hassle. And then of course we have the cash element. So most of these transactions are still done via check or cash, and so that adds another element to the planning of both the drive and the route and how everything will be delivered in a timely manner.

Matthew: Jenn if there are any aspiring entrepreneurs listening, looking to get their edibles or infused products into a dispensary or if they’re already in a couple of dispensaries but want to grow their footprint is there any suggestions you would offer them?

Jennifer: Well I don’t want to just toot our own horn here, but this is what CannaBase was made for. We have phenomenal tools for edibles companies to promote their inventory to retailers statewide. We represent over 70% of the retailers in the state on our platform, and they’re able to not only list their products but create deals for just the businesses to see. They’re able to create surveys. They’re able to gather reviews and they’re able to really create that credibility that will help other retailers carry their product. Additionally for cultivators that are entering the market and looking to meet retailers I’d say the same thing.

We have two different features; listings and requests. And so it’s easy for them to create a listing that will be published in the marketplace for all of the different retailers to see and connect over. But potentially even more powerfully we have requests. And requests are a tool so that when a business is short on a type of product, either bud, trim, extract, edibles, seeds or clones, they can post a request to the market with their price range, their location, desired strains, etc. And it’s a really easy way for new market entrants to find hungry buyers, message them directly and get the process started. Additionally I think for anyone entering the market I don’t know how they do it without a place like CannaBase because it’s really important to stay on top of what the prices are at that moment. And there’s really no other way without making a lot of phone calls to know that you’re pricing your product appropriately or that you’re getting the best price for your product because it’s changing so rapidly. Price trends in the marketplace change literally week to week.

And so businesses that do stay locked up in long term contracts with trusted partners, potentially that works for their margins and that’s awesome, but if they get excess inventory they should absolutely hop on to the marketplace and be tracking when there are times that they can get a premium for that same product because it happens sporadically and it happens often.

Matthew: You mentioned seeds and clones there and that’s something I want to address. What is the marketplace at CannaBase currently look like now? I mean in terms of what people are most interested in. I’m guessing but I could be totally wrong. Is it flower, then trim, I mean how does it stack rank what people are most interesting and transacting.

Jennifer: Great question. It’s always bud. We have a lot of bud and we get a lot of bud posted the most frequently. So I’d say bud is the cornerstone of our inventory. Trim is the most desired. We’re always looking for more trim. A lot of businesses have their trim tied up in long term contracts. So for instance some business do trim for trade where they will work with an extractor, a designated extractor and they’ll give them all their trim for free and let them keep a portion if they’ll do the work of converting it into extract for that company. So it’s really hard to get trim back on to the open market, but everyone’s hungry for it. There is a huge market for wax and for extracts, especially with the rise of vaporizers and you know other distribution methods of the product besides smoking. And then for all of the edibles manufacturers. Some edibles manufacturers grow their own trim, but some purchase it exclusively through wholesale. The price of trim can be very volatile, go everywhere from a couple hundred dollars a pound to $700, $600-$700 a pound and it can be very hard to find.

Besides that we tend to have static inventory of edibles that seems to be the most traditional product that we carry. And then seeds and clones are up and own. CannaBase has some really interesting tools with seeds where you can put in the key metrics about its yield and its timing and it will create a yield projection calculator and calendar on the listing itself and so that’s really interesting when businesses play with that. And then we see clones haphazardly. Currently we actually have a lot of clones listed but I haven’t seen that for a while. So those tend to just more come and go depending on the active users at the time.

Matthew: Now I’ve talked to some people that grow cannabis and they grow it with the intention of trading their flower or buds for trim. And the first time you hear that you’re thinking wow that doesn’t seem to make any sense. Can you explain why someone might do that?

Jennifer: Why they would grow the bud for the trim?

Matthew: No they grow the bud with the intention of trading it for trim. You know they want more trim than they do the flower.

Jennifer: I actually haven’t heard about that. I mean I would imagine that if you were an edibles manufacturer you don’t need the bud itself. So you could theoretically trim the product and use the trim for your edibles and then that bud would be very valuable in exchange for trim. So if trim is going for $500 and the bud is $2,000 a pound, you could get for, you could trade it with a dispensary that’s perhaps running short and that has extra trim on hand. That could be a more effective channel to supply your trim inventory. Like I said trim is really really hard to get in bulk and to get enough of to supply the market’s needs. So I would imagine that if you were a MIP with your own grow you would be using all the bud at your disposal to try and lock down more trim.

Matthew: And that is the instance I’m… It’s MIPs that have their own grows that I’m referring to. And it’s something that just doesn’t, you know, you hear that and you’re thinking wow why would you ever want to get rid of flower for trim, but that is the reason why. It makes sense and it’s crazy that trim is such a hot commodity but I guess you know you can use it for so many things. There’s so many applications for it that that’s why it’s becoming so valuable.

Jennifer: Exactly. There are so many applications for it, and a lot of times businesses will just hold on to their trim. Like I said they’ll get it extracted and they’ll carry their own wax or they’ll carry their own extract. So if you need a way to secure a line of additional trim from another grow, you know, offering them perhaps a discount on the bud that you’re producing that you’re not going to use is a phenomenal win/win to just secure that distribution channel because it is really hard to keep a consistent source of trim coming in. So that makes a lot of sense.

Matthew: Turning to 2016, we’re recording here on the last couple of days in December 2015, but turning our view to 2016 what do you think will happen with the price of cannabis in the largest markets, I mean Colorado, but then do you have any thoughts about anywhere else in the country that anecdotally that you think what’s going to happen?

Jennifer: Absolutely. In Colorado like I mentioned before we’re seeing larger financing tackling the larger scale cultivations. So if these are able to get up and running successfully, the general concern is that they’ll be able to flood the market with cheap product and undercut the existing cultivators. There’s a host of potential regulatory issues with the execution of the strategy. So it’s all a matter of if they’re able to get up and running and into the market successfully, but this again goes back to my point that most importantly we need a set of qualifiers that allow us to commoditize the product better so that if this cheaper product is coming to the market then perhaps boutique cultivators can stay competitive and can prove why their product warrants a higher price.

So our only defense against these large scale cultivations is going to be a better understanding of different cultivations across the state and what they can bring to the table in a way that’s objective and standard and scalable. Around the country Washington, unlike Colorado, has a cap on the total amount of product that can be produced statewide. So that should prevent this potential problem or any unforeseen price crashes. The Oregon market has historically had the lowest prices in the nation largely because they have a lot of caregivers involved in their wholesale economy. So there’s just a larger amount of product at any given time. But with the number of licensed dispensaries and cultivators continuing to climb prices are expected to remain below those for Colorado and Washington. And then our biggest wildcard that the state we’re all watching is going to be California.

The legal adult use market is poised for a lot of growth after the 2016 elections, but the effect this will have on wholesale pricing is unclear and especially because we don’t know the time it will take to get these regulatory changes into effect and into the market, but I think that’s going to of course be a really interesting state to watch. Currently I think it’s incredibly interesting. California has been able to maintain wholesale prices similar to those we see in Colorado, and when you look at the fact that Colorado’s prices are so heavily impacted by taxes, regulations, packaging restrictions, you wonder why a market that has so many fewer regulations is able to maintain prices so high. And the reasons we’ve heard from that are because since the market is so loosely regulated that extra product is more easily able to be diverted into the black market. So you know that you’re going to get a return on that investment. It’s easier to maintain the high price of the product. With a more tightly regulated market the question is if the prices will just stay status quo that well be a tightening up of the distribution channels but an increase on regulations or if they’ll change one way or another. So I think that’s going to be really interesting and will become like Colorado a major indicator for the rest of the country.

Matthew: I have been so wrong about estimating pricing that I’m going to stop doing it and throw out all of my assumptions because right now I hear about huge grow operations getting started in Pueblo, Colorado which is about an hour and a half south of Denver, very sunny place so you can do some maybe greenhouse grows and things like that and when I hear about the size of these grows I’m just, I’m in awe (A) and (B) I think wow this is obviously going to really dampen the price of cannabis, and then at the same time there’s all these people, tourists and other people that are growing the market. People that are cannibalizing perhaps the alcohol market turning to cannabis because they’re curious or they like the effect. So that market is not just the cannabis enthusiasts, it’s these new cannabis enthusiasts coming online. So what’s the balance between all this new cannabis coming online and all these new consumers coming online, it’s really hard to project, but are you hearing some of the same things about these massive grows maybe in Pueblo or other parts of the state and curious about how that might affect wholesale prices at all.

Jennifer: Absolutely. I mean I think if these major grows in Pueblo that are look like, I mean they can be, that they’re going to be absolutely massive. If they’re able to produce low price product and we’re not able to objectively demonstrate that that quality is lower than what perhaps more specialized boutiques are carrying in other parts of the state, then just by the very nature of supply and demand it has to have a major effect on prices. It has to really pull down the wholesale market with it. One piece that I always, that I keep coming back to though is that what is currently driven the price volatility has been less correlated with the number of licenses or the number of active cultivations in the market and for more correlated with these regulatory seasonal changes with all of sudden pesticides are in effect or we’re clamping down on pesticides.

The idea that one of these larger grows would not be… they’ll be as susceptible to these changes as everyone else. So the question is if they’ll also be able to couple these lower prices and these increased distribution with perhaps better foresight of some of these vulnerabilities. And then additionally something that isn’t talked about much but that I think is a really interesting angle of the industry is couriers and transport. So when this product is sold on a wholesale level it then has to be transported across the state to the retailers who are going to carry it. And that’s an interesting, almost underground part of the market that isn’t too tightly regulated in terms of who’s managing those companies and they range in price from I mean $40 a trip for some of the cheaper couriers that will take a product to the mountains for $40 and then others that will you know will charge a more potentially reasonable $400 a piece because they’re better insured or they’re more secure.

So one thing that I’m really curious about is how the courier landscape will develop because if greater mandates and restrictions are put on who’s allowed to transport the product and how well insured they have to be, how much they’re allowed to carry at any one time is being more closely watched. You know we see that some of these lower price companies are stacking the roots a bit more than maybe manifest should be allowing them to do, then if the cost of the couriers comes up then it’s going to change the types of sales that these cultivators down in Pueblo are making on a regular basis. So if retailers are forced to pay more of a premium for perhaps safer and more compliant courier services, then are they going to be as likely to source a smaller purchase, like five or six pounds, from these cultivators down in Pueblo, or are they going to stay with their local network. So there’s a lot of pieces of the greater infrastructure that still need to be worked out, and they really all work in tandem. It’s an ecosystem.

In terms of the consumer to me that is the greatest thing that’s changing with 2016. It’s that people are really coming out of the woodworks, and it’s not just about having greater consumer demand, having more people experimenting and perhaps even more people becoming regular consumers, but what I think is most exciting is the idea that consumers will become more transparent about who they are and what they’re buying so that we can continue to develop more targeted products and strains towards those consumers. When we talk about wholesale pricing everything is a feedback loop. If we can establish that a product grown a certain way with a certain type of ingredients is “Organic” and then we can have consumers recognize “organic” certification or badge and we can demonstrate that consumers will pay more for it. Now we’re developing tiers in terms of product quality and tiers of pricing, and this is where businesses will really begin to differentiate themselves. Right now that’s done through branding. Someone says we’re a top notch brand, but with standardization, with transparency with consumers and with a more mature market in terms of the infrastructure surrounding the entire wholesale ecosystem we’re going to have a lot of changes ahead of us, a lot of consolidation, a lot of small businesses going out of business, and the prices will as I always hope, begin to stabilize because that shows that we know what’s coming and we’re comfortable making longer term purchases.

Matthew: Now a question about being an entrepreneur. Oftentimes you know we hear someone that’s an entrepreneur and we think they’re a fearless person and they came out of the womb and they were operating a business with no doubts and now setbacks. What’s it like running CannaBase day to day? What are some of the challenges and opportunities that maybe get glossed over in all the excitement about this new huge industry?

Jennifer: Oh there, I mean, I think we’re definitely an adventurous group. You have to be to hop into this industry and to tackle it, but it is all challenges. Everything is changing so rapidly that to stay relevant, to continue to build a product that people want to use, to stay in tuned with the community and to keep growing is a constant challenge and it’s a full time job. I mean we work absolutely around the clock, but it’s enormously exciting and it’s enormously fulfilling. I really couldn’t say much about it besides the fact that it’s very difficult. I mean you really have to figure out every day where is the best place to put my time and in this industry especially you’re building in the moment, but the future is happening rapidly. I mean the future is unfolding constantly. And I think the real movement in this industry with so many new market entrants and how quickly it’s going to transform over the next couple of years will be our ability as entrepreneurs to work together to create really seamless solutions.

I mean a lot of the things we talked about today are about how can we create that feedback loop? How are these different components of the industry working together because it’s way too much for one company to handle. So we’re always meeting new partners, seeing who’s getting into the market, learning about their philosophies and trying to find people with the same goals and the same passions we do, standards partners, courier partners, data partners, anyone that we can work together with to create better solutions that will help insure that the industry thrives for a long time to come.

Matthew: Jenn in closing how can listeners learn more about CannaBase?

Jennifer: Absolutely. So you can visit CannaBase online at www.cannabase.io and there are links to our blog to learn all about our different services and then if you’re a licensed business, there are links to sign up for a free account.

Matthew: Jenn thanks so much for coming on CannaInsider and educating us. I wish you a very happy New Year.

Jennifer: Thank you so much. You too Matt.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Key Takeaways:
[1:44] – What is CannaBase
[2:34] – Jennifer talks about vertical integration
[4:37] – Why do people not like the idea of vertical integration
[7:41] – Jennifer talks about the prices of cannabis in Colorado in 2015
[10:44] – Trends and frustrations expressed by growers and dispensary owners
[13:14] – Reactions to the stricter microbial and pesticide regulations
[16:26] – How do you rate users on CannaBase
[21:21] – What do transactions look like on CannaBase
[22:31] – How to get your product into dispensaries
[24:58] – Most popular products on CannaBase
[29:36] – Jennifer talks about her predictions for 2016
[33:58] – Jennifer talks about massive grows affecting prices
[39:15] – Jennifer talks about running CannaBase day to day
[41:17] – CannaBase contact details

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at:  http://www.cannainsider.com/trends

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The Five Disruptive Trends Shaping The Cannabis Industry Now