How to Survive the California Cannabis Industry?
Even with its progressive approach toward cannabis legalization, the California cannabis market has definitely seen its ups and downs since 2018, when voters legalized the recreational California cannabis industry through Proposition 64. But now, the once-booming industry is seeing licensed cannabis businesses struggling to make ends meet. High taxes and the wholesale price per pound decreasing since legalization led to a volatile, difficult market today. So how can California cannabis companies navigate the ever-changing market? Take a close look into the California cannabis market and you will find both challenges and opportunities.
What is Happening in the California Cannabis Market Now?
Since the recreational market opened in California, legal cannabis sales have decreased a staggering eight percent in 2022, according to numbers released by the California Tax and Fee Administration. However, industry insiders point to the fact that the decrease is compared to a 21% jump in 2021 and 68% in 2020, both likely due to the COVID-19 pandemic and the federal stimulus payments.
One factor in California’s cannabis industry sales decreasing is that there are only roughly 1,000 licensed cannabis dispensaries for the nearly 40 million residents of the state, which is in part due to city and county regulatory hurdles. Another cause is likely due to the 15% cannabis excise tax, which is driving many cannabis buyers back to the illicit market. Despite these nuances, some businesses across the supply chain are being affected by the overall decrease in sales.
In spite of the significant drop in sales, the California cannabis market still makes up approximately 20% of a billion-dollar industry, and some insiders still have high hopes for the California cannabis industry. People are still buying weed and cannabis is a demand-driven market. While many companies small and large have felt the impact of the statewide reduction in prices, others are indeed surviving. They continue to manage the ever-changing climate and those that can stick it out are coming out on top.
How are Smaller California Cannabis Brands Surviving?
Smaller California cannabis brands are surviving through thoughtful, innovative approaches to community engagement, branding, marketing and collaborations and partnerships. These tried-and-true methods of reaching consumers go a long way to increasing brand visibility and customer retention and are providing smaller, niche cannabis brands relief during what many are calling a difficult time for California cannabis. Smaller cannabis brands are also surviving through quality and craftsmanship. Many smaller brands emphasize quality over quantity and it shows. Another way smaller brands are surviving is by focusing on a niche market. Focusing on specific demographics like women, the aging population or athletes can certainly help your brand stand out in a crowded market.
The Power of Partnerships and Relationships
One of the many ways small and large California cannabis businesses are surviving is through the power of partnerships and relationships. Collaborating with complementary brands, thought leaders and organizations can help cannabis brands expand their reach and provide opportunities for success in an evolving market. Forming thoughtful partnerships through cause marketing campaigns, collaboration on limited edition products, joint marketing campaigns or co-hosting events can go a long way toward customer retention. By leveraging each other’s strengths, smaller brands can also gain exposure and access new markets. In the dynamic and competitive California cannabis market, partnerships and relationships hold immense power.
Don’t Just Survive in the California Cannabis Industry — Thrive!
While what’s happening in the California cannabis market can be scary as the cannabis industry continues to struggle, there is still hope for success, especially for smaller cannabis brands. Finding your niche, having a solid marketing plan, engaging with the community and fostering thoughtful partnerships and relationships are crucial to ensuring your company’s success. Through leveraging the resources, expertise and reach of others, cannabis businesses can navigate challenges, foster a sense of community and achieve sustainable growth despite the tumultuous, ever-changing market.
Interested in starting or growing a California cannabis business? Then don’t miss CannaCon West in Long Beach on Friday, Aug and Saturday, Aug 5, 2023. Grab your tickets here and join us in Long Beach to network with like-minded entrepreneurs who are building a bold new industry.
Attend CannaCon for all of your cannabis business needs, from seeds to seed money. CannaCon is a one-stop shop for cultivation supplies, the newest industry innovations, world-class genetics, business and legal advice, retail displays, extraction technology, scientific and financial trends, marketing, branding and so much more. If your goal is to thrive in the California cannabis market, get a head start at CannaCon.