Banking on your micro’s future
August 23, 2021 By David Brown
So, you’ve got your federal Health Canada licence, you’ve grown your crops or processed your cannabis products, and now you’re looking to get your unique micro cannabis products on shelves. What happens now?
As most who have arrived at this stage in the industry will tell you, getting the licence and growing good cannabis is the (relatively) easy part. Getting those products into a provincial market and building brand awareness around them is where new businesses often find themselves facing challenges they are unsure of how to tackle.
Planning ahead to know what products are in demand and what products are already over-saturated are steps to take early on, in terms of cultivar selection, for example. Understanding the unique process each province requires to get those products onto shelves is another. Just because you have some great weed at a good price, doesn’t mean provinces will want it.
One of the first steps in taking this on is understanding the procurement and product approval process for most provinces and territories. Most provinces have a procurement process to first approve vendors and then each product SKU that vendor will want to sell into the market. They will require a new producer to first get approved to even sell products in those markets. Once approved, they will then allow those companies to periodically pitch new products to be sold into their retail systems, public and/or private.
As an example, some provinces, like Ontario, only allow companies to pitch a product every two months or so, while others such as British Columbia, have weekly product calls. Some provinces have caps on how many producers they will even allow to sell into their system, while some have no such limits. Saskatchewan, for example, has no provincial distribution but still requires producers to be onboarded before they can sell products.
Micro cultivators looking to get products onto retail shelves require a partnership with a sales-licenced processor, and finding one who is already approved to sell into certain provinces can be a big step towards a smoother process.
The right processing partner for a cultivator means not only matching approaches to business, but one who can take on all the steps beyond harvest that a company needs to go through: procurement, product selection, insurance (provinces require any producer to have recall insurance, for example, which can cost tens of thousands of dollars), as well as potentially managing branding and marketing.
A partner who can take on all these tasks will mean a cultivator can focus on what they love, growing cannabis, while leaving many of the logistical challenges to those with experience in managing everything else.
Nonetheless, understanding the steps these processors will take can help in both selecting the right partner who fills the right boxes, but also in understanding the scope of what they provide. A processor isn’t just taking your cannabis products and reselling them, they are handling all of these additional steps as your proxy.
Looking back to those provincial procurement processes, understanding the timelines and logistics required can help growers and processors better plan their product launches to meet provincial timelines. For example, Ontario’s product call is every two months and requires full finished crops, as well as certificates of authenticity before a product can even be pitched to be sold in the Ontario system, both online and through nearly 1,000 private retailers.
Knowing what products consumers are looking for in each market is also an important step in planning out what products to produce, and where to send them. If you have a great Black Cherry Punch, but so do 10 other producers that month, will the province want yours? If so, what will make yours stand out among the others? High THC and high terpene counts are an important piece of the puzzle, but also having a recognizable brand is important in convincing a provincial buyer that your specific Black Cherry Punch will move off shelves.
This is, in part, because in the early days of legalization, many provinces bought large quantities of cannabis that have not all sold well. In response, some provinces are now requiring products to sell in a certain timeframe, otherwise they are de-listed and sent back. This means no payment for an unsold product, that has now aged several more weeks or months, and has already been packaged, labelled and tax stamped for sale in that specific province.
Understanding current market demands and trends, what consumers are looking for, and what products are already saturated can better ensure that you and your distribution partners can make wise choices beforehand. And baking in the known timelines to have a product approved and then sold into those systems will help keep products as fresh as possible, while setting realistic timelines in terms of revenue streams.
It’s no longer as simple as growing some weed and selling it to a store. Any grower or processor needs to be thinking very long term, months or even years down the road, with every choice they make.
David Brown is the founder of StratCann, a cannabis industry publication with a special focus on micros and nurseries. Prior to StratCann, David was a senior policy advisor to Health Canada’s cannabis branch from 2018 to 2020.
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