In order to maintain the standards of local governments and provide quality service to customers at a competitive price point, the industry has had to rethink many aspects of its business model as marijuana legalization becomes widespread.
Perhaps two of the most important aspects that are changing are related to how the product is both sold and grown. Perceptions around the bud are shifting; something that was once prohibited is now something to be celebrated, and both the private and public sectors are taking note of what this means for their bottom lines.
Pricing And Quality
When a legal cannabis market emerges, the government has an opportunity to tax the herb at a high rate because, like alcohol, it has huge revenue potential. However, this broad marijuana client base that the government is targeting is used to paying a particular price for cannabis. Because of this, the government can’t raise cannabis prices too high otherwise buyers will simply look to buy the product elsewhere. By researching current street prices of marijuana, emerging industry leaders and governments can set prices that both support the economy and give patients the product they need at an affordable rate. Still, because cannabis in legal stores will be tested and regulated, customers may choose to pay a higher price for a guaranteed quality product.
In states where marijuana is currently legal for recreational or medicinal use, adults are allowed to grow their own marijuana plants—for personal consumption and sharing, not for commercial selling. In Oregon, you can grow four plants while in Alaska, Colorado and Washington, DC, you’re allowed to tend to six. However, you’re still not allowed to do so in the state of Washington. A current bill in the state is attempting to consolidate the medical marijuana market into the hands of recreational businesses, which would prevent those without recreational licenses from growing the bud. While it’s too early to tell how other states’ policies might follow once they legalize, one thing is clear: someone somewhere in the United States will be growing cannabis legally.
Dealers VS. Dispensaries
Talk to anyone with a medical cannabis license or anyone who lives in a recreational state and they’ll tell you that buying marijuana from a store is a much better experience. Dealers can lack information about the product they’re selling, plus meeting in someone’s basement for a deal doesn’t have very much cachet. Dispensaries provide customers with a selection of strains to suit their various needs and with attentive and knowledgeable staff like budtenders who can recommend products. The service is professional and takes the stigma out of buying, making it a pleasant experience for everyone involved.
One of the least convincing arguments for anti-legalization is that an increase in dispensaries and access to marijuana will encourage young kids to start smoking cannabis at a higher rate. This new model of legal cannabis distribution mimics regulations like those seen in the alcohol industry and would prevent kids under 21 from acquiring the drug. It’s the responsibility of the shop owners to verify the age of their customers or they risk losing their selling privileges. If anything, parents might be more inclined to discuss the risk factors around cannabis with their children now that it’s a legal substance. Ultimately, the amount of underage patrons who do manage to buy marijuana will likely be minimal.
The birth of a new industry allows for new jobs be created within it. In places where recreational use of cannabis has been legalized, such as Colorado and Washington, entrepreneurs have expanded into this new space, creating businesses and jobs for those involved, such as budtenders and growers. This type of entrepreneurial ingenuity around the plant will be amplified in coming years and we will likely see a large expansion of the industry.
Marijuana legalization is becoming mainstream in the United States and it won’t be long before the federal government steps back from the issue and allows individual states to dictate their cannabis laws. A potentially massive industry is already emerging and we’ll soon see how entrepreneurs will continue to shape the future of the cannabis business.
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