Ron Strider
Well-Known Member
It's been three years since Clark County's first cannabis businesses appeared, and this corner of Southwest Washington has grown into the fifth largest cannabis market in the state, according to sales and excise taxes collected. What started out as a chaotic industry with major supply-side issues has dramatically changed and matured into a both a revenue generator and a job creator for the region.
"Locally Clark County stacks up quite well (in the Washington cannabis market)," said Gareth Kautz, co-owner of the High End Market Place dispensary in Uptown Village. "We have some of the best weed in the state, some of the best low-cost product in the state and one of the best medical processors (Fairwinds Manufacturing) – if not the only one – in the state."
Clark County today has 23 growers and processors and 13 stores clustered in Vancouver and Battle Ground, the only two jurisdictions that allow cannabis businesses. Those operations employ 250 or more, although there is no formal tally.
By excise taxes collected, Clark County ranks fifth in the state, behind King, Spokane, Pierce and Snohomish counties. From 2014 through 2016, Clark County residents paid about $34 million in excise tax, which helps fund addiction health services, research and public schools, among other things. In comparison, King County, the largest market, paid about $116 million over the same time period.
Clark County's retail stores have done especially well, capitalizing on their close proximity to the Portland market. Vancouver's largest dispensary, Main Street Marijuana, is also the largest store in the state, with $41 million in sales since 2014. That store expanded last year with new locations in Vancouver and Longview. The Herbery also expanded to three stores – all in Vancouver – since its first location opened in 2015. Together those stores have netted $23.1 million since opening. New Vansterdam had the third-highest sales in the area, with $22 million since 2014. And a host of other dispensaries including High End Market Place, High 5 Cannabis and the Cannabis Country Store are all in the $5 million to $7 million range since opening.
The story is a bit different on the grower/processor side, however.
A maturing industry
A maturation and sorting out of the grower/processor industry has led to stiff competition for dispensary shelf space and basic survival – and some smaller farms are starting to get crushed.
"It's definitely changed," said Brian Stroh, owner of Cannaman Farms, the first licensed grower in Clark County and the third one in Washington state. "There's so much supply. You have to stay relationship driven with stores, otherwise you may not get shelf space. It's a very capital-intensive business, and there's constant downward price pressure."
Originally the Washington State Liquor and Cannabis Board limited the canopy – the amount of cannabis allowed to be grown – to about 2 million square feet total. The agency also licensed the first stores in 2014 before there was enough product on the market to sell, which led to spikes of $40 a gram for a product that now generally sells for between $8 and $14.
Since that time, WSLCB has further expanded canopy to about 12 million square feet, and has allowed growers in its three-tiered canopy system to expand production as well. But that, in turn, has led to a bit of an oversupply, Stroh said.
"Family farms, small farms, are having problems unloading everything they grow," Stroh said. "And in general if you lose one crop, you lose too much money to stay in business."
Cannaman Farms, for instance, had problems with crop loss after an electrical fire broke one night. It's taken a long time to recover, he said.
"We've had a lot of failures," Stroh said. "It's a very capital-intensive business for sure. But we're in the same boat as a lot of people. It's a struggle. Payroll, rent, bills, these things aren't just a given. There's not a lot of people making money right now."
At least two small Clark County growers have gone out of business already. One failed after burglars stole a harvest; the other closed due to pesticide issues.
Kautz said he sympathizes with the struggles small growers face.
"Most of these growers are one harvest away from going out of business," Kautz said. "I'm talking about the big guys, too. If you lose one crop, you're in a lot of trouble."
Still, not all small farms are struggling. Skord, a Tier 2 grower in Battle Ground, has been successful using a slow roll-out strategy, said owner Joshua Anderson.
"We're trying to not oversaturate stores, so our plan is to have one store in each community," said Anderson, who in Vancouver sells through High End Market Place.
"So far, that's worked out for us. It's been advantageous for us to demand the price we want and to have some exclusivity in stores. Our reputation is spreading and we're doing very well."
Growing big
Two of Vancouver's larger grower-processors also are doing very well – Cedar Creek Cannabis and Fairwinds Manufacturing. Each has its niche.
Cedar Creek, operated by Clark County native Mark Michaelson, has found its niche by providing consistent quality, which has led to an unusual problem. Its products are now found in more than 20 stores statewide, but at least a dozen more stores want to buy product from the company. Michaelson doesn't have enough supply to meet all the demand.
"We can't expand fast enough," Michaelson said. "We're afraid of losing market share if we don't expand faster. We're actually hoping to buy more grower licenses at some point."
From 2014 to 2016, Cedar Creek had $3.6 million in statewide sales. It sold $800,000 more in the first five months of this year.
To ramp up production, the company recently rented a 20,000-square-foot facility in Kelso, in addition to its current operations in Vancouver. The plan is to expand the grow operation at the Kelso site while also ramping up cannabis oil and concentrate production in Vancouver, he said.
"Probably the most important thing that gets you on store shelves is consistency," Michaelson said of his success. "Consistency of the quality of the product. Consistency with the lab results. That, and relationships. The relationship you have with your retailer is critical. They take care of you and your customers, and you take care of them as well."
Finding and retaining quality employees has been a good strategy for keeping his products consistent, he added.
"We don't pay our help minimum wage," Michaelson said. "When you find good people, you have to pay them well to keep them."
Fairwinds may have found a niche by becoming the most diverse and unusual grower and processor in the state.
The company, owned by James Hull, a mechanical engineer who used to build military ships, is one of only a handful of Washington businesses that makes Department of Health-compliant medical marijuana wellness products.
Fairwinds got into the market early with cannabis infused coffee and K-Cup compatible beverage pods, which made a national splash on a handful of TV networks fascinated by the novelty factor. Since then the company has built a reputation for having very clean, easy-to-consume products like tinctures, pills and vapes.
At the same time, Hull has also worked with scientists and patients whenever possible to develop products for the medical side of the industry, although Fairwinds' products are available through the recreational market as well.
Those products include Flow, a topical gel which can be used externally to alleviate pain; menstrual relief suppositories; rectal suppositories to relieve symptoms of irritable bowel syndrome and Crohn's disease; and more recently a pill-based product called PTSFree, aimed at veterans and others suffering from post-traumatic stress disorder.
The PTSFree product was developed with Operation Ward 57, a veterans group based in Seattle. Fairwinds gives a portion of the proceeds to the group, and recently completed a fundraising effort with The Herbery which netted $5,000 for the nonprofit.
"We want to lead this industry with information, science and facts," Hull said. "And we want to help people along the way."
So far, Hull's business model is paying off. Fairwinds is the largest producer-processor in Clark County, netting $6 million in sales from 2014 to 2016, and another $1.7 million through May 2017.
"Fairwinds has been blowing up – and they're blowing up everywhere," Kautz said. "They have everything down to a science."
Both Fairwinds and Cedar Creek are likely immune from the shakeout that's consolidating smaller growers and driving some out of business, but both companies also remain aware of the threat.
"Thousands of licensed growers are out there, but that's going down," Michaelson said. "I think we'll end up with somewhere around 100 of them in the end, out of the 1,000 or so that are out there. Personally, I don't want to be the biggest, or even the absolute best necessarily – I just want to be one of the biggest and the best."
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: Clark County cannabis market booming | The Columbian
Author: Sue Vorenberg
Contact: Contact | The Columbian
Photo Credit: Ariane Kunze
Website: The Columbian - Serving Clark County, Washington
"Locally Clark County stacks up quite well (in the Washington cannabis market)," said Gareth Kautz, co-owner of the High End Market Place dispensary in Uptown Village. "We have some of the best weed in the state, some of the best low-cost product in the state and one of the best medical processors (Fairwinds Manufacturing) – if not the only one – in the state."
Clark County today has 23 growers and processors and 13 stores clustered in Vancouver and Battle Ground, the only two jurisdictions that allow cannabis businesses. Those operations employ 250 or more, although there is no formal tally.
By excise taxes collected, Clark County ranks fifth in the state, behind King, Spokane, Pierce and Snohomish counties. From 2014 through 2016, Clark County residents paid about $34 million in excise tax, which helps fund addiction health services, research and public schools, among other things. In comparison, King County, the largest market, paid about $116 million over the same time period.
Clark County's retail stores have done especially well, capitalizing on their close proximity to the Portland market. Vancouver's largest dispensary, Main Street Marijuana, is also the largest store in the state, with $41 million in sales since 2014. That store expanded last year with new locations in Vancouver and Longview. The Herbery also expanded to three stores – all in Vancouver – since its first location opened in 2015. Together those stores have netted $23.1 million since opening. New Vansterdam had the third-highest sales in the area, with $22 million since 2014. And a host of other dispensaries including High End Market Place, High 5 Cannabis and the Cannabis Country Store are all in the $5 million to $7 million range since opening.
The story is a bit different on the grower/processor side, however.
A maturing industry
A maturation and sorting out of the grower/processor industry has led to stiff competition for dispensary shelf space and basic survival – and some smaller farms are starting to get crushed.
"It's definitely changed," said Brian Stroh, owner of Cannaman Farms, the first licensed grower in Clark County and the third one in Washington state. "There's so much supply. You have to stay relationship driven with stores, otherwise you may not get shelf space. It's a very capital-intensive business, and there's constant downward price pressure."
Originally the Washington State Liquor and Cannabis Board limited the canopy – the amount of cannabis allowed to be grown – to about 2 million square feet total. The agency also licensed the first stores in 2014 before there was enough product on the market to sell, which led to spikes of $40 a gram for a product that now generally sells for between $8 and $14.
Since that time, WSLCB has further expanded canopy to about 12 million square feet, and has allowed growers in its three-tiered canopy system to expand production as well. But that, in turn, has led to a bit of an oversupply, Stroh said.
"Family farms, small farms, are having problems unloading everything they grow," Stroh said. "And in general if you lose one crop, you lose too much money to stay in business."
Cannaman Farms, for instance, had problems with crop loss after an electrical fire broke one night. It's taken a long time to recover, he said.
"We've had a lot of failures," Stroh said. "It's a very capital-intensive business for sure. But we're in the same boat as a lot of people. It's a struggle. Payroll, rent, bills, these things aren't just a given. There's not a lot of people making money right now."
At least two small Clark County growers have gone out of business already. One failed after burglars stole a harvest; the other closed due to pesticide issues.
Kautz said he sympathizes with the struggles small growers face.
"Most of these growers are one harvest away from going out of business," Kautz said. "I'm talking about the big guys, too. If you lose one crop, you're in a lot of trouble."
Still, not all small farms are struggling. Skord, a Tier 2 grower in Battle Ground, has been successful using a slow roll-out strategy, said owner Joshua Anderson.
"We're trying to not oversaturate stores, so our plan is to have one store in each community," said Anderson, who in Vancouver sells through High End Market Place.
"So far, that's worked out for us. It's been advantageous for us to demand the price we want and to have some exclusivity in stores. Our reputation is spreading and we're doing very well."
Growing big
Two of Vancouver's larger grower-processors also are doing very well – Cedar Creek Cannabis and Fairwinds Manufacturing. Each has its niche.
Cedar Creek, operated by Clark County native Mark Michaelson, has found its niche by providing consistent quality, which has led to an unusual problem. Its products are now found in more than 20 stores statewide, but at least a dozen more stores want to buy product from the company. Michaelson doesn't have enough supply to meet all the demand.
"We can't expand fast enough," Michaelson said. "We're afraid of losing market share if we don't expand faster. We're actually hoping to buy more grower licenses at some point."
From 2014 to 2016, Cedar Creek had $3.6 million in statewide sales. It sold $800,000 more in the first five months of this year.
To ramp up production, the company recently rented a 20,000-square-foot facility in Kelso, in addition to its current operations in Vancouver. The plan is to expand the grow operation at the Kelso site while also ramping up cannabis oil and concentrate production in Vancouver, he said.
"Probably the most important thing that gets you on store shelves is consistency," Michaelson said of his success. "Consistency of the quality of the product. Consistency with the lab results. That, and relationships. The relationship you have with your retailer is critical. They take care of you and your customers, and you take care of them as well."
Finding and retaining quality employees has been a good strategy for keeping his products consistent, he added.
"We don't pay our help minimum wage," Michaelson said. "When you find good people, you have to pay them well to keep them."
Fairwinds may have found a niche by becoming the most diverse and unusual grower and processor in the state.
The company, owned by James Hull, a mechanical engineer who used to build military ships, is one of only a handful of Washington businesses that makes Department of Health-compliant medical marijuana wellness products.
Fairwinds got into the market early with cannabis infused coffee and K-Cup compatible beverage pods, which made a national splash on a handful of TV networks fascinated by the novelty factor. Since then the company has built a reputation for having very clean, easy-to-consume products like tinctures, pills and vapes.
At the same time, Hull has also worked with scientists and patients whenever possible to develop products for the medical side of the industry, although Fairwinds' products are available through the recreational market as well.
Those products include Flow, a topical gel which can be used externally to alleviate pain; menstrual relief suppositories; rectal suppositories to relieve symptoms of irritable bowel syndrome and Crohn's disease; and more recently a pill-based product called PTSFree, aimed at veterans and others suffering from post-traumatic stress disorder.
The PTSFree product was developed with Operation Ward 57, a veterans group based in Seattle. Fairwinds gives a portion of the proceeds to the group, and recently completed a fundraising effort with The Herbery which netted $5,000 for the nonprofit.
"We want to lead this industry with information, science and facts," Hull said. "And we want to help people along the way."
So far, Hull's business model is paying off. Fairwinds is the largest producer-processor in Clark County, netting $6 million in sales from 2014 to 2016, and another $1.7 million through May 2017.
"Fairwinds has been blowing up – and they're blowing up everywhere," Kautz said. "They have everything down to a science."
Both Fairwinds and Cedar Creek are likely immune from the shakeout that's consolidating smaller growers and driving some out of business, but both companies also remain aware of the threat.
"Thousands of licensed growers are out there, but that's going down," Michaelson said. "I think we'll end up with somewhere around 100 of them in the end, out of the 1,000 or so that are out there. Personally, I don't want to be the biggest, or even the absolute best necessarily – I just want to be one of the biggest and the best."
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: Clark County cannabis market booming | The Columbian
Author: Sue Vorenberg
Contact: Contact | The Columbian
Photo Credit: Ariane Kunze
Website: The Columbian - Serving Clark County, Washington