There are serious business concerns with cannabis

Dec. 1, 2020 | G. Michael Dobbs
news@thereminder.com

So, I covered the opening of the first recreational cannabis store in Springfield recently. I was a little apprehensive.

I was worried whether or not I could find a parking space and if the place would be mobbed by prospective customers. That’s happened before.

I was amazed by what I saw. There were two other reporters besides myself, a police officer hired to manage the traffic and crowds and officials from the company. What was missing were customers.

Later that day I went back to go into the store and checked it out. It was neat, inviting and has enthusiastic customer service. And there were some customers.

The experience made me think about several aspects of the cannabis business in the Commonwealth. First, I wondered if we’ve already hit a saturation level. Are there simply too many stores now for the existing customer base?

If that is the case, now is the time for any recreational cannabis business to start doing what other businesses in competitive situations do: market and advertise.

Some cannabis stores do indeed advertise, but it’s clear to me that like any other consumer product simply being there isn’t going to be enough for continual success.

Especially in 2020, businesses must provide reasons to potential customers to acquire their business. An important thing to note is there is still a gray market cannabis businesses which offers consumers products at prices that are often extremely competitive.

Let’s talk about the alcohol business. How do package stores survive? The number of stores is dictated by the size of the community through state regulation. So, what’s the difference between them?

Well, I think most people will have a quick answer: price, selection, convenience and customer service. Not all package stores carry the same inventory.

Since alcohol and cannabis are both controlled adult use products, I think the comparison between the two is appropriate. Liquor is a competitive business. Cannabis will be the same.

Another thought is about local versus national chains. I have nothing against national chains as for many types of merchandise that is my only option. As I’ve stated many times before, I support locally-based businesses as much as I can.

It interests me that with the liquor business in the state there are no national chains – as least as far as I can tell. You will have companies that have multiple outlets, but all of these are located in Massachusetts.

And by having all local businesses there is a certain leveling of the playing field although the corner package store in your neighborhood may be completely different than the supermarket sized stores.

It does concern me that we are now seeing multi-state national chains selling cannabis here. I’m sure there was some sort of reason behind it in the legislation, but I’m worried the national businesses might affect those businesses – pardon the pun – that are more homegrown.

After all, one of the reasons we approved the sale of cannabis here was the role the new business would play as an economic engine.  This is a new industry providing additional jobs in a variety of disciplines.

I had hoped the cannabis business would not be unlike the craft beer business. Yes, I know the two products are very different and the cannabis, unlike craft beer, isn’t legal on the federal level as yet.

We have seen how the growth of craft beer has become a local economic gamechanger. I had hoped more local cannabis firms would have a similar effect. There are new jobs created by the cannabis business so far and there is new tax revenue, both are very good things at this time.

I’m just hoping the locally-based businesses are able to effectively compete against the larger multi-state firms. I recall how the video rental business was first a mom-and-pop business. That industry changed with the emergence of national chains.

For cannabis to be the driver of a new economy people have predicted, a healthy local base is essential.

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