The Broccoli Report
Monday, December 20, 2021
Time to read: 7 minutes, 6 seconds. Contains 1422 words
As we begin drafting OOO auto-reply messages and wrapping up gifts, allow me to suggest a fantastic last-minute gift idea for any colleague or loved one interested in the commerce and culture of cannabis: a gift subscription to the Broccoli Report!😏 Substack makes it very easy to give a subscription for a month—or a year.
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We’re going to take the next couple of weeks off to reconnect and recharge, so this is our last newsletter for the year (hence my sentimental tone today 🥲). But before we close out the year in cannabis news, it felt like it was worth taking a quick look at the trends that dominated cannabis conversations in 2021 and asking whether they were as popular as redundant headlines made them out to be.
So when I reached out to Vince Ning, founder of California wholesale platform, NABIS, I asked exactly that. As a distributor of over 100 brands across a saturated state, I figured who better to provide a litmus test for trends everywhere in weed.
Were the trends of 2021 actually trending?
A quick sesh with Vince Ning of wholesale platform, NABIS.
LY: Tell me something that surprised you this year.
VN: California’s cannabis market was projected to be US$4.4 billion, but it’s not growing as much as people thought it would; the market technically shrunk this past quarter by about 6%. A large part of that is the commodification—the oversupply and saturation we all expected. So while we’re all shipping the same amount of units and selling through the same amount of products, prices have dipped, and so have sales.
In the long run, though, this is good. It’s making regulated cannabis more affordable, which appeals to the consumers yet to be lured away from CA’s unlicensed market. Black market weed is easier and cheaper to access; until that changes, consumers are driven there.
What about product trends?
VN: Resin-related stuff continues to blow up. Consumers are craving resin-based products in the concentrate category, but it’s becoming more of a thing with edibles—tons of new hash-infused gummies hit the market this year and did really well. It’s interesting to see these category trends blur and bleed into each other.
A ton of celebrity weed brands launched this year, but the question remains: Do they sell?
VN: They do—for the most part. We were part of Justin Beiber’s Peaches launch, and it sold through in a week. TBD on whether it’ll stay on shelves, though. Some “celeb weed brands” are really just one hype drop as a marketing promotion for something else they have going; they’re not meant to be long-term.
Everyone talks about the beverage space, yet every data report shows the category represents, like, 2% of sales. Is the beverage trend real?
VN: There is a ton of hype, especially from (and for) investors. It makes sense that beverages will pick up; I think they will. But there are a lot of challenges for this category. For one, people don’t have experience with drinking cannabis. It’s a new physical habit that may have to be established over the course of a generation. Beyond that, the cannabis supply chain is really not set up for it. Cannabis beverages are more expensive to distribute. The units are physically larger, often in a heavy glass bottle that primarily contains water and still costs, like, $5. It’s not the most lucrative thing to ship. We’re really thoughtful about which beverage brands are worth bringing on. And at the retail level, many stores aren’t equipped with full-size refrigerated units to display them well. There’s a lot of physical limitations on the operation side.
Stay tuned for more in-depth looks at trends—hyped or otherwise—in 2022, as well as business tools like an upcoming dispatch on affiliate marketing, an update on the NY scene, and a whole lot more.
One-Hitters: Cannabis News at a Glance
Don’t be too thrown by the headlines about 400 New York municipalities opting to block shops and consumption lounges. The same thing happened in New Jersey, and many of those naysayer towns (including Atlantic City) are now open for cannabis business. As NJ delivery operator Precious Osagie-Erese put it to me in a past interview, “This is a ‘wait-and-see-how-things-play-out kind of move. It’s not final.”
I didn’t make it to the more consumer-facing edition of Hall of Flowers in Palm Springs this month, but Alex Halperin of WeedWeek did. Read his top five takeaways here, which unsurprisingly includes the observation that the major trade show’s overall vibe remained “very dude-heavy.”
At the same time, the Emerald Cup went down in Sonoma County. (I tip my hat to the ambitious souls/brands that made it to both events). Although attendance was lower than last year, this 6th annual cannabis celebration, awards show, and music festival saw over 15k attendees over the weekend.
Microbusiness licenses are becoming an interesting approach for states to build equity into their regulatory systems. This license type allows businesses with less collateral and liquid assets to do cannabis business in smaller spaces. For example, California defines a cannabis microbusiness as a business that does three different cannabis business functions in less than 10,000 square feet—think small-scale cultivation, processing concentrates, and delivering product without a retail space. New Mexico is upping the ante by creating a $5 million loan fund for microbusinesses operated by members of communities disproportionately impacted by previous cannabis law enforcement or located in rural communities. Individual loans will be up to $250,000, with an expected average loan size of $100,000.
Well, I believe some Canadian and Israeli scientists just figured out how to grow cannabis without growing cannabis. BioHarvest Sciences Inc. announced they successfully “produced 10 kilograms of full-spectrum cannabis biomass at a commercial scale without growing the plant itself.” It’s not genetically modified per se; rather, it’s produced using the company’s “proprietary BioFarming technology platform, which grows plant cells in their natural structure in proprietary bioreactors.” Yes, we are talking about petri dish cannabinoids and terpenes. Although concentrate makers will drool when they see the mess of dense trichomes this biomass creates unhindered by little plant tendrils and stems, it looks gross and weird to this flower child. There’s also suspiciously little detail speaking to the taste when consumed.
Fundraising? A little birdie shared that Bespoke Financial—a busy player in the realm of debt-financing cannabis companies of every size and license type—just raised $125 million to expand lending capacity. The company currently works in 12 regulated markets from California to Maine, financing lines of credit up to $15 million. That little birdie was Highly Objective, a cannabis industry Substack that I find most useful for those interested in fundraising leads like this one, as well as tips on middle-to-upper-level job openings at bigger cannabis companies.
The Cut profiled Hillary Peckham, chief operating officer of NY medical cannabis brand, Etain.
Instead of a physical weed advent calendar, fashion-weed brand Sundae School is dropping a fresh, funky fleece every day for their Kushmas campaign—notably announced on IG by OG weed gal Ilana Glazer.
Theodore Musa is among the most interesting cannabis/cannabis-adjacent brands I found this year. (I’ve written about them here before, and you can read an interview with the founders in the latest issue of Broccoli.) If you happen to be in Atlanta visiting family, you can immerse yourself in their second drop of accessories and packaging—themed “Toys”—via “installations designed through an exploration of nostalgia, play, and the pleasure associated with the two” at 684 John Wesley Dobbs Avenue NE. On view through the end of the month.
The International Jewish Cannabis Association wishes you a Happy Chronukkah, and I wish you a very happy end of the month, however you celebrate. Thank you so, so much for reading the Broccoli Report, for believing in what we do here, and making it possible each week.
I’ll see you in the new year, deep-cleaned bong in hand and pen at the ready for whatever this wild industry brings. ✿
Happy holiday seshing,