Flags: Bidermann | Dreamstime.com

Year-to-date through May, Colorado’s cannabis industry is up 36 percent in retail revenue, averaging $97 million per month, according to BDS Analytics, a Boulder-based firm that tracks retail cannabis sales by brand, item and category. Washington state, for which detailed data is available through March, is up 153 percent in the first quarter. In both states, all categories are growing, but no major category exceeds concentrates’ growth, with sales more than doubling in Colorado and quadrupling in Washington over the same respective time periods one year earlier.

Colorado adult-use and medical dispensaries sold $22 million worth of concentrates per month through May this year, while Washington’s adult-use shops tallied $8 million per month through March. (Data is not yet available for Washington’s medical market.)

The most popular subcategories vary across the states. Shatter is the No. 1 subcategory in Colorado, with $5.7 million in sales per month (adult-use and medical combined) and growth of 90 percent over the same period last year, while Washington’s top subcategory spot goes to prefilled cartridges with $3 million per month (adult-use only) this year on 364-percent growth. But shatter, prefills and wax occupy the top three subcategory positions in both states.

Photo: Daniel Stewart | Dreamstime.com

For a meaningful comparison to Washington data, especially with respect to pricing, we can eliminate Colorado medical sales of concentrates and focus on adult use. Colorado still has larger volume, with $12 million in total concentrates sold per month in the adult-use market, compared to Washington’s $8 million. Colorado’s shatter and wax prices per gram were about 22 percent greater than Washington’s. But in prefilled cartridges, for which prices are calculated per unit sold rather than per gram of cannabis, Washington’s unit price averaged $58.30, which is 27 percent higher than Colorado’s $45.74 per unit. (Data sourced from GreenEdge, BDS Analytics' proprietary data mining tool.)

Source: A University of Washington study conducted by UW’s Cannabis Law and Policy Project for the Washington Liquor and Cannabis Board.

Copyright 2016 New Leaf Data Services, LLC. All rights reserved. Source: Cannabis Benchmarks ® Weekly Premium Report; CannabisBenchmarks.com

Nic Easley is the founder and CEO of Comprehensive Cannabis Consulting (3C). Easley, a U.S. Air Force veteran, and 3C have helped more than 60 clients start up, design, build and optimize their commercial cannabis operations. Easley’s scientific background, combined with over 15 years of agricultural field and biological experience, offers the industry new possibilities of productivity, profitability and professionalism.

Adam Koh is the chief cultivation officer for Comprehensive Cannabis Consulting (3C). Previously, he served as cultivation manager of a Denver-area medical cannabis facility that was awarded the High Times Cannabis Cup for Best Medical Hybrid in Denver in 2014. Koh has experience cultivating more than 100 different strains, including high-CBD varieties, and in his previous position oversaw the care of roughly 3,000 plants.

Susy Wilson is co-owner and operator of W.O.W. Weed, a Tier 2 producer/processor in the central Columbia Gorge. W.O.W. Weed was one of the first 10 licensed i502 businesses in the Washington recreational market. Wilson operates the company with her business partner, Hayden Woodard, and the help of her daughters Sophy and Rachael, along with four full-time employees. W.O.W. Weed grows both indoors and outdoors in soil, with over 160 strains in cultivation.

Scott Lowry is a licensed medical grower and caregiver residing in Michigan, and has focused on organic cannabis cultivation for 8 years. He also is founder and COO of a large-scale Canadian cannabis production company in Tecumseh, Ontario, Canada, called Global Organiks Engineering, which is in the application process to become a Licensed Producer under Canada’s Medical Marijuana Program.

David Bonvillain owns and runs Elite Cannabis Enterprises and Elite Botanicals out of their center of operations in Loveland, Colo. The businesses include a 25-acre organic CBD farm leveraging a low/no-till permaculture methodology, a 6-acre greenhouse property and botanical-extraction laboratory that operates year-round, producing organic CBD for national and international markets through Mary’s Medicinals, Mary’s Nutritionals and Mary’s Pets. He is a speaker, author, consultant and High Times’ Cannabis Cup winner.

Kerrie and Kurt Badertscher are co-owners of Otoké Horticulture, LLC and authors of “Cannabis for Capitalists.” They have worked with large-scale cannabis producers for more than 5 years. Kerrie has been involved with plants her entire lifetime and earned certification as a Professional Horticulturist by the 100-year-old American Society for Horticulture Sciences. Kurt brings his 34 years of corporate experience and operations management skills to bear on the business challenges of cannabis cultivation.

Margaret Battistelli Gardner is an experienced editor and writer, and is a frequent contributor to Cannabis Business Times. She can be reached at megmgardner@aol.com.

Mario Ceretto is the founder of New Era CPAs, LLP, and has been helping clients in the cannabis industry with litigation support, compliance, 280E strategy, and tax preparation for over six years. He has spoken at numerous cannabis and accounting events. Ceretto holds CPA certificates from the states of Oregon and California.

Kenneth Morrow has been writing cannabis-related articles and books for more than 20 years. He owns Trichome Technologies, a cannabis R&D company. Morrow also is an award-winning grower and breeder. Has made contributions to many of today's extraction methodologies and holds multiple patents. He consults on all cannabis-related subjects. Find him on Facebook at: Trichome Technologies or Instagram: TrichomeTechnologies.

Steven Nelson covers legal affairs and drug policy for U.S. News & World Report. He lives in Washington, D.C., where a green thumb would be useful.

Bethany Gomez is the director of research for Brightfield Group, a cannabis research and analytics company. She has extensive experience in quantitative and strategic research, specializing in the market research of the consumer goods industry. Prior to joining Brightfield Group, Gomez worked with a leading fast-moving consumer goods (FMCG) market research firm, managing the company's syndicated research of industries such as packaged foods, alcoholic drinks and tobacco in Mexico.

William Honaker is an analyst with Brightfield Group. He holds a Master's degree from UC San Diego's School of Global Policy and Strategy and a Bachelor's degree from San Diego State University. Since 2015, he has been analyzing the distribution and market shares of branded cannabis products across the United States. He has also researched the statistical relationship between recreational cannabis dispensaries and criminal activity in Washington and Colorado.

Michael Sexton is the founder/CEO of Mile High Genetics, a Colorado-based, veteran-owned and -operated company that specializes in veganic, pesticide-free cannabis breeding and genetics. Sexton, a former Combat Marine, has more than 10 years’ experience growing cannabis and is especially skilled at growing at high elevations.

Jonathan Katz is a freelance writer based in the Cleveland, Ohio, area.

If one message speaks loud and clear from this issue, it’s that more challenges and risks face cannabis cultivators than many people realize. It’s not an “if you build it, they will come” scenario, to say the least. Of course, if you’re in this market, you know this all too well.

In this issue’s Guest Column, “The Green Rush Fallacy” (page 26), cultivator/business owner David Bonvillain outlines a boatload of these challenges. We’ve all talked about them, and written about them in bits, but to see them all listed together should give wannabe business owners a better idea of the landscape ahead of them, and could even change the phrase “green rush” to “green risk.”

To learn that the second-highest revenue generator among Tier 2 producer/processors in Washington makes a marginal profit some months, and zero in other months (see the Guest Interview, page 32) — and largely the profits are just enough to dump back into the business — along with the fact that many cultivation businesses in Washington are barely staying afloat, is not only disheartening, but should sound an alarm to those looking to launch cultivation businesses and to states working on regulations surrounding newly legal (or soon-to-be-legal) markets.

Regulations can change direction faster than the wind, and business owners can be … well … completely screwed. As Avitas Agriculture’s Adam Smith explains in the Guest Interview, state regulations and local zoning regulations changed, shattering his business’s plans to expand with a greenhouse build-out. Random zoning shifts not only can dismantle a business’s development plans, but also can threaten to shutter thriving businesses (think: Pueblo, Colo.). Cannabis businesses contribute millions of dollars in tax revenues to states and municipalities, and create tens and tens of thousands of jobs (more than 20,000 jobs were created in Colorado alone, based solely on licensed businesses and their employees, and not considering ancillary businesses — per the Colorado Dept. of Revenue), and yet can be voted out of existence.

If we could speak to legislators and marijuana control boards that are and will be developing regulations, we would say that if they want to create a viable marketplace and help business owners thrive (and continue to generate major tax revenue), they need to work hand-in-hand with these businesses to ensure the regulations serve everyone.

We’ve said before how important it is for cannabis businesses to be involved in regulatory planning meetings. More than ever, this seems imperative. Also, joining groups like the Cannabis Farmers Council (Washington), California Growers Association and Cannabis Commission (see the Guest Interview) can give cannabis businesses a stronger, collective voice.

While notions of a “Green Rush Fallacy” are not uplifting, it can be affirming to hear reality vs. the media hype we hear so often. All this said, some businesses are thriving. And lessons to be learned lurk around every corner. In this issue’s Cover Story, for example (page 44), in my opinion, Scott Reach shares insights that should be heeded by every cannabis cultivation business. It is not helpful to operate in a vacuum. Read, and talk to your fellow business owners and cultivators. You are part of one of the fastest-growing, craziest, most exciting and challenging industries ever to exist. Don’t go it alone.