Change, Challenge in Cannabis Sector
To say that the still-emerging cannabis sector has had a profound impact on the local economy, and the local landscape, would be a huge understatement.
Indeed, this sector, now just over six years old in the Commonwealth, has brought much-needed revenue to area cities and towns, several hundred new jobs, and new life to dormant or underperforming properties ranging from old mills in Holyoke and Easthampton to the Springfield Newspapers building.
No one really knew just what to expect when this new business took off, but few could have expected this kind of impact.
And while nothing was easy for anyone getting into this sector — there are steep costs and a mountain of regulations to meet — it has been, for the most part, a ticket to success.
That’s has been.
As the stories make clear, the cannabis sector has already entered a new and exponentially more difficult phase of its existence. Competition is growing, both in this region and in neighboring states; prices are coming down; margins are becoming ever-more thin; and profitability is becoming more difficult.
To make a long story short, the laws of supply of demand are starting to catch up with this sector.
In the beginning, meaning just a few years ago, there was huge demand and not nearly as much supply as there is now. We can all recall the long lines of people around those first dispensaries that opened in this region.
It was these lines that hinted at just how lucrative this business could be, and they helped lead entrepreneurs with capital and a sense of adventure to stake a claim during what some came to call a ‘green rush.’
What these entrepreneurs are realizing, and most of them realized it long ago, is that there is a limit when it comes to just how big this pie can become. And as more people want a slice … well, the slices will get smaller and smaller.
In this environment, communities — smart ones, anyway — will take steps to limit the number of licenses, thus enabling those operating at least a fighting chance to succeed. Meanwhile, individual business owners will have to focus on quality, customer service, branding, and, overall, separating themselves from the competition and finding what it will take to survive in a changing, more competitive environment.
In that respect, they will have to be like business owners in every sector where the consumers have choices and exercise their right to choose.
History has shown that, in situations like this, it becomes a matter of survival of the fittest. And it will be the same with this sector, which has changed the landscape in all kinds of ways and continues to do so.
Cannabis has been a game changer for this region and this state, but now, the cannabis game itself is changing. It will be interesting to watch as the new chapter in this intriguing story unfolds.