Stay Ahead of Cannabis Testing and Win Big When the Market Shifts

We’ve seen it happen before, in fact, a couple of times. An emerging market is starting to take off. The state hasn’t built out or required adherence to all of its compliance pieces around testing, yet. Products are flowing and it feels like this is how it will be forever, so we’re all good, living the life in the cannabis industry, right? Not so fast.

WHAM! Testing for microbials, mold, mildew and/or pesticides and now even vitamin E acetate becomes mandatory. Many cannabis businesses haven’t yet found labs with the proper accreditation or equipment to test for new requirements, or haven’t established their processes for testing and are completely lost. Everyone scrambles to get up to speed, but the regulators won’t let you sell until you are compliant.

Supply drops, prices go up, and the few businesses that were ahead of the game enjoy several months selling through everything they can produce at a premium price. What’s more, they’re establishing their brand, being recognized as industry leaders, and making long-lasting partnerships. At the same time, the non-compliant businesses miss out on sales and can even go under with missed revenue targets. Further, those businesses are now on the radar of the regulators, and who wants that?   

We saw this very thing happen in 2015 when the State Licensing Authority of the Colorado Department of Revenue rolled out its testing rules nearly two years after adult use cannabis became legal. The impacts were devastating and some business never recovered. However, the growers who had their testing ducks in a row were able to command prices reaching $3,000/lb, up from the going rate of $1,900/lb before the stringent testing requirements rolled out. Of course, prices came back down once producers got their testing under control.

So, what can you do to get ahead of the game?  Says John Manlove, CEO and founder of Apex Trading, “Whether your cannabis business is in an established market like Colorado or a new emerging market like Oklahoma or Michigan, you will constantly be faced with challenges. Some of these are a bit less controllable such as mother nature, increasing competition and supply/demand fluctuations which can all significantly impact your bottom line. Yet, it’s the more controllable things such as new testing and labeling requirements, process efficiency, etc. that if you don’t get in front of, can catch a business by ‘surprise’ and end up crippling your sales and brand value. Personally and across our entire team, we are plant-first. That starts with providing our clients an exceptional product, but also staying up-to-date with regulations and market fluctuations so that we can inform and empower our clients so they remain successful. If you’re not already a member of the industry group(s) in your state, I encourage you to join, so that your voice is heard.”

Beyond that and to summarize:

 – Learn what the requirements will be in your market and begin producing to that standard as soon as possible

– Actively engage in the process – ensure the agency(s) responsible for creating and enforcing these laws understand the entire picture and that you as stakeholders have a say

– If you’re state hasn’t quite determined what the rules will be or hasn’t yet shared their final plan, look to the more mature markets for examples

–  Join and become involved in the local industry groups who are lobbying and helping guide legislators through the rules making process  

In the meantime, feel free to reach out to us at Apex Trading. We’re happy to share our experiences and help you succeed. Or, to learn more about how Apex Trading can help your wholesale cannabis business stay ahead of the curves, please request a quick demo.