Cooperativism and capitalism in the cannabis industry
Everywhere you turn, the forces of cannabis are mobilizing for the survival of their livelihoods and the future of the plant itself.
Sooner than expected, California cannabis farmers are contending with highly sophisticated multinational businesses with huge operations that can leverage economies of scale and vast financial resources. And it’s not only a concern for us, but also you, the consumer, who above all should possess the power to cast the deciding ballot in this.
A few weeks ago, for instance, Cresco Labs acquired California distribution company Origin House for $825 million, the largest acquisition yet of a US-based cannabis company. It’s just part of a flurry of activity throughout the industry, both in the US and Canada, which has only increased over the last two years. In addition, we’re also seeing megagrows develop throughout our state — for instance, one company, Central Coast Farmers Market Management, holds a whopping 89 permits, allowing it to grow on 20 acres. These developments create networks to market that the OGs cannot hope to penetrate, not to mention commoditized prices your average grower cannot hope to undercut on her own.
IMHO, it’s way too soon to speak about acquisition for most cannabis brands in our state, because there is no stable market to speak of, and won’t be for some time to come. But I do believe that massive consolidation actually hurts the industry. It places control in the hands of a few mammoth players who have all the money and resources and signals an extinction-level event for the state’s thriving cannabis culture and its unique innovation-collaboration. Ironically enough, none of this would have happened without the initial collaboration between a community of growers, sellers and consumers that has created the value the plant enjoys today. This is threatened by a top-down, corporate hegemony whose priorities can cripple both the plant and its potential to heal and change the world.
Thankfully, the farmers in our region and elsewhere have rediscovered an age-old strategy for beating back the big boys, and it’s fully Medicine Box-endorsed. It’s called a co-operative, and it’s used by farmers throughout the country and the world. In short, by formalizing the innovation-collaboration between growers, processors, manufacturers, distributors and consumers, an entire tradition can be preserved and extended into the future. Moreover, it will pose that choice between extractive vs. conscious capitalism you, the consumer, should rightfully determine. Whenever that choice exists, we all know which one ultimately prevails.
The corporation appreciation
Co-ops in America arose initially during the 18th century during the Industrial Revolution. Spurred on in part by consolidation and market forces, businesses and agricultural professionals alike pooled their resources to create economies of scale that could compete with the big boys. From there durable brands have emerged that we as consumers are all familiar with.
Two examples of such brands are Land O’Lakes and Blue Diamond. With nearly a century under its belt, Land O Lakes has built a venerable reputation upon its dairy products, specifically its iconic butter sticks. Blue Diamond has established its base here in California as a premiere grower and distributor of almonds. Both these organizations were founded on the principles of collective branding. They are both member-owned and operated, offering their members the opportunity to come and go as they please. Both these organizations leveraged a semi-autonomous organizational structure with a unified brand identity and economies of scale.
Moreover, farmers both draw from shared resources, such as genetics and standard operating procedures (SOPs), and a simple obtainable goal: to cultivate one crop to be manufactured into value-based end product. This lets the farmers farm and also gives them control over the end-product. This corresponds directly into the Medicine Box vision: a family of small and medium-sized farms cultivating source material. Rather than force former black/grey-area farmers to take on the chores of branding and distribution, we at Medicine Box partner up with growers that share our vision and meet our standards. In turn, they receive genetics, a guaranteed market for their produce and access to the market.
Moreover, in keeping with the innovation-collaboration that fueled many of the early cannabis era’s greatest discoveries, our growers are stakeholders in Medicine Box as well. Because we work with veteran farmers growing in a unique terroir, our products benefit from a braintrust – with the emphasis on TRUST – that the big boys will never penetrate no matter how much money they throw at it. For out there, we know that for every product on the market, there are consumers asking the hard questions: What do these brands represent? Do they have a mission that is more than just selling cannabis? Who is growing and manufacturing the material they are consuming? By their very design, co-ops answer those questions with foundational values based on sustainability, community and heritage.
Right in our own backyard
Here in Nevada County, CA, licensed growers are limited to a 10,000 square-foot canopy, which really doesn’t compete with the 20 acres Central Coast Farmers Market Management possesses. When these parcels unite, however, they can bring notoriety and purpose to an entire community, through the power of innovation-collaboration.
I absolutely do think co-ops can compete with the big boys, especially if they are organized effectively and intentionally. The organization of passion and talent cannot be matched by the corporate model, where the emphasis on scale and efficiencies leads to an inevitable race to the bottom. Once the industry matures, more educated consumers will demand more of their brands and insist on products and processes which reflect their values. Craft cannabis growers in this region already meet these requirements. Thanks to visionaries like Hezekiah Allen and his new co-op Emerald Grown, there’s a lifeline for them to hold onto during this time of turbulence. Then as now, it will be possible to not only survive but thrive if we work together.