Although big business will likely be a large part of the cannabis industry’s future, smaller craft companies still have room for success in providing niche markets and product diversification, according to John Billings, head of cultivation for The Farm Dispensary, an indoor craft cannabis company located in Boulder, Colo.
Here, Billings shares how small businesses can compete in the broader global landscape, as well as his outlook on the U.S. hemp industry, Canada’s cannabis market and broader international trends.
Cannabis Business Times: With all the market consolidation, buyouts and publicly traded companies emerging in the cannabis space, is big business the future of cannabis?
John Billings: I believe that big business will be a large part of the future of cannabis. Obviously, with the amount of capital that big business can obtain and invest, they will have a large influence on the industry. If you look at other similar industries, like breweries and grocery stores, you will find there is space for both big and small craft companies to succeed. Smaller companies will provide niche markets and product/strain diversification. The cannabis space has room for both, as well.
As more states come online for recreational and the move toward interstate commerce becomes a reality, there will be significantly more consolidation. We believe that we will see the market consolidate in a significant way in the next one to five years, but there will remain the small business mindset, as the small business employees still hold the knowledge and experience. Although educated consumers will still want local and craft, it may take a while for the demand for the small businesses to bounce back after a consolidation period, as we saw with alcohol prohibition.
CBT: What are some ways that small businesses can survive and compete in this landscape?
JB: Promoting the amount of focus and dedication that goes into every process that is applied to creating the cannabis or cannabis products. Educating the consumer about connoisseurship. Some of these focus points could be individual plant care, IPM methods, how it’s harvested or trimmed, or how the product is extracted into concentrates. Creating recognizable brands and associating them to certain products and/or varietals is one way. If a company can grow one or two highly desirable strains that no one else has, or grows them better than other businesses, they can set themselves apart. The creation of cannabis products’ appellations could also help set apart smaller businesses.
CBT: What are your predictions for the U.S. hemp industry now that the Farm Bill has legalized industrial hemp?
JB: I believe the hemp-CBD market will help to propel the cannabis movement, especially the need for science and education, forward. It will be interesting to see how the FDA regulates CBD in food. How they choose to do so will have a huge impact on the CBD market, and ultimately will dictate how much product will be needed to supply the emerging national edibles market.
Over the coming years, it is likely we will see the hemp-CBD market flex with the cannabis-THC market, and we will see how consumers approach them separately and together. I only see ways that the hemp-CBD market will assist with combating the stigma that cannabis has had for such a long time. We will likely see this plant take over in ways we haven’t yet fully grasped. This plant can be used as medicine, food, fibers, textiles, fuels, paper, body products and more. We have only scratched the surface.
"The United States needs to figure out the future of cannabis and make a decision federally in order to compete, as we don’t want to get left behind."
- John Billings, Head of Cultivation, The Farm Dispensary
CBT: What overall market trends do you think will unfold in the U.S. versus Canada?
JB: Canada currently has restrictions on the production and sale of edibles. The demand of the edibles market in Canada will give some insight on the national demand of edibles in the States. The United States needs to figure out the future of cannabis and make a decision federally in order to compete, as we don’t want to get left behind. Market trends in the United States will continue to build foundational structures for national companies poised to go international.
The U.S. is facing an opioid epidemic. Many suffering from withdrawals find comfort with OG strains, which usually provide a heavy body high. These kinds of strains, flower and concentrates will be popular everywhere in the United States. Cannabis vape pen trends will continue to increase with demands for higher quality.
CBT: What trends do you see emerging in other international markets?
JB: As more markets open, international trade begins and research and science take a front seat in the coming years. Vape pens, they caught on so fast and the technology has advanced rapidly. There’s no reason to think this trend will not continue. People like the convenience of the pen. Growing plants/varietals with higher concentrate returns will help keep production costs down. You have old players (Israel, Jamaica, GW Pharmaceuticals and the U.S.) and new players (Canada and Mexico) coming into the scene with their own ideas and plans.
Editor’s Note: This interview has been edited for length, style and clarity.