The cannabis industry has been booming over the past several years. However, there is still much to be concerned about as new industry trends arise. As a pioneer in the industry, other states can learn a lot from Colorado. As time passes, marijuana business consolidation is increasing at an alarming rate. This is bad news for smaller independent marijuana entrepreneurs. Competition is fierce. Product prices and average sales price per visit are also trending downward. Here are the top 5 marijuana industry trends to fear in 2016.
- Industry Consolidation- Colorado is several years ahead of other states in the great marijuana social experiment. Mom and pop dispensaries are now being swallowed up by larger companies such as Strainwise and Native Roots. These marijuana dispensary chains have as many as 10-15 stores and counting. Smaller independent marijuana businesses will not stand a chance if they do not invest in digital marketing and online branding. There is still tremendous opportunity for cannabis businesses of all sizes to tap into the huge search volume on Google. While physical competition is a reality, digital marketing is still something smaller cannabis businesses can do to increase their visibility and brand awareness on Google.
- Increased Competition- Downtown Denver, Colorado has almost 100 dispensaries alone. As of January 4, 2016 there are 516 medical dispensaries statewide. There are 424 recreational dispensaries, 1265 growers (medical and rec combined), and 370 edible manufacturers! With more choices, consumers are beginning to look around, and see who has the best prices, selection, and customer service. Cannabis businesses need to focus on business branding, offering unique stains and products, and making sure they get found on Internet searches.
- Lower Prices- In Washington State, there is a two month supply of extra cannabis. Some of this may be due to the outdoor harvests that occur every fall. However, there seems to be more cannabis than buyers. This is driving prices lower. Lower prices mean less profits for cannabis businesses. In Colorado, many dispensaries are trying to grow as much of their own product as possible. This increases brand awareness and profits. The Cannabis Superstores, located in Denver, grow over 50 of their own strains. They also feature products from other growers and dispensaries. Because of their huge sales volume they are able to buy products for less money.
- Complacency- The marijuana industry has been slow to understand the importance of the Internet when it comes to attracting more business. There is an insane amount of searches for cannabis nationwide. In Google, there are 2,500 to 5,000 searches each month for many cannabis product searches in Colorado. However, most cannabis businesses have pretty poor quality websites. Even more disturbing is that the vast majority of these websites do not have professional search engine optimization (SEO). Contrary to popular thinking, SEO still matters. Especially when there is high search volume, combined with a brand new industry.
- Hubris- There is a undercurrent of pride and superiority, when talking to some people in the cannabis industry. They pat themselves on the back for getting in first, being the biggest, and the “best.” There is sometimes an attitude of “if we don’t know it already, we are not interested in learning it.” This is especially true of some of the larger cannabis industry businesses. Thinking that your in house “marketing team” has it all covered is foolish. If they were really “experts” in digital marketing they wouldn’t be working for you!
Just because you are first, does not mean your cannabis business will last. Cannabis industry competition, consolidation, and lower prices are here to stay. The days of relying on the newness of the experiment, and the news media stories, are gone. Businesses who want to survive these industry trends need to realize that the Internet is the number one way to increase your business visibility. Having a well defined, and executed digital marketing strategy is vital. After all, you are running a business and not an underground marijuana society. Act now before it is too late.