More than 30,000 listed for attendance, with some 1,000 booths, and some 50 different sessions over three days, this was the largest show I’ve been to. And I saw a ton of things.
I got shlepped to a dispensary one day – an investor pitch combined with a tour of the operations. It was busy in the store, and they pound out the poundage. Products are segregated by quality: low, medium, high – and prices are variable accordingly. I also peeled off to one on my own lonesome, to see what wasn’t a scripted visit.
The thing that stands out in the Nevada market is price retention at the store level. It’s not hard to find $40-$70 eights – and +$10/gram medium quality is relatively standard. the gear smells good, and quality is definitely the end all of the market, at least in the shop I saw.
It begs some questions though: some of the financials I’ve seen from US based outfits don’t show the price uplift at the wholesale level, and I couldn’t really get straightforward answers to why I see a break there.
But there’s a strong theme about the US based cannabis industry – that’s very different from the one Canadians are building out. More on that later….
Peter Horvath did a presentation at the first one I saw – pretty much landing on the ‘we’re building a lululemon of cannabis, and we’ll have thousands of stores as soon as we can’.
And, flower is part of the market, but from what I saw, extracts look like 50% of the market if facings are a guide. Most products are offered, from fizzy drinks to BHO, and all in-between: wax, budder, shatter, and isolates. Vape cartridges are ubiquitous.
Whisper was that the store front does $17MM/yr. Absolutely no way to validate that either.
At the show proper, extraction was everywhere, from small to large, from distillation to super & sub critical CO2, ethanol (very high interest btw), rosin presses, and even a smattering of ISO and BHO platforms. For those of you not familiar, ISO & BHO are the relative ‘black sheep’ of the bunch. This is due to adulterants within the media itself. There’s all kinds of bullshit around it as well, as black market remnants of ‘psst, buddy, don’t you know?‘ back alley crap persists. And yes, hexane and acetone and a plethora of solvents can be used for cannabinoid extraction. But, whether in PPM or not, adulterants are left within most BHOs. And, certain temperatures create VOC’s and such – not good for ingestion. BHO is notable because when compared to CO2, because butane retains most terpenes, where CO2 strips them. Concentrates from CO2 need to have terpenes added back – if that’s the thing you’re going for. Thus, it’s probably why it’s preferred by the purist set.
I’ll leave the science of it to a real scientist (like u/Cytocromep4) – but I did hear the ‘get rid of BHO’ refrain more than once, and heard compliments that Canada was on the right path by banning it. I’m a pressed hash and vape and flower fan, and I’ve never done a dab, so, there.
The Chinese manufacturers are at it and willing and earnest. And of note they are also hard at it in the rosin press arena as well – offering repurposed t-shirt screen printers for very low cost.
For domestic, Access Rosin had a ton of buzz at their booth when I went by. And that’s another thing about the ‘murican market compared with the Canadian one: the seam between black market and white one is wafer thin down there. Lots of sideways hats, gold chains, and a look that would get down the nose stares up here are common down south. Badge of honour kind of thing in some circles, notably with Access and the BHO extraction companies.
Well, I got the wall of silence at these guys’ booth when I asked about terpene ratios and composition. They said it was a secret recipe and all. And it was pretty much the only terpene booth out of maybe a dozen that was doing anything remotely connected with terpene psycho-activity in tandem with cannabinoids.
It was somewhat frustrating to me – I see terpene ratios and combinations as the key to effects, and thought I’d see terpene companies all over it. They’ve been around for decades in many cases (think aromatic oils, perfumes, and flavourings). Cannabis also sucks (relatively speaking) for terpene extraction – there just isn’t alot of them in cannabis. Lots more in other sources from nature, which means legal across the globe, even if blends are made to copy existing cannabis. Many of the terpene companies simply emulate known ‘strains’ such as girl scout cookies or gorilla glue#4, and sell it in bottles. Just take a sample, run it through a gas chromatograph, and you got your recipe.
A minor scandal emerged over the past year in Washington State – when hard candy edibles were being bought cheap by the ton then sprayed with THC: essentially lowballing/shortcutting the edible manufacturing process. The state gov’t heard complaints from real kitchens who infused from scratch, and it’s become somewhat of a debacle as it’s unfolded. The issue has a few corners on it, and the noise from various parties has obscured the core concerns at issue.
I heard the same ‘nudge-wink’ with terpenes – as sub-par gear ‘could’ be enhanced by adding them. It all goes silent after that. Lone Mountain Partners is an extraction company diving straight into terpene enhancement of cannabinoids.
The other thing that’s emergent in the states is a dialing in of dosing in edibles. Most legal states recognize that 500mg brownies are a bad idea (for several reasons) and are putting in caps of total THC that can be in a serving. There was even a breakout session on the subject.
Getting back on track, vapes and vape companies were in pretty much every row. The Chinese are here (2 manufacturing regions), and they build discreet ‘state of the art’ stuff – for low cost and in 2 months can deliver a bazillion of them. That hasn’t stopped alot of home grown outfits, specialty vendors, and even blue tooth apps for them now coming to market. The data gathered from use of these is gonna be merchantable to be sure, and I suspect they’ll all be hooked up in one way or another.
I even saw a portable vape dab rig being offered by one of the Chinese outfits (I didn’t stay for the pitch).
To me, there was two clear views from attendees on vapes/cartridges:
1. this is the future
2. this is a fad that’ll wane
Time will tell. As it stands, vapes were absolutely everywhere at the show.
Indeed, extraction, vapes, and terpenes were largely the bulk of commercial engagement to this observer.
LEDs (and notably COB’s) were well represented. LED’s have had this promise for years about ‘being as good as HID’ – for, well, years. And the promises remain: same light less power. They never have, yet.
But greenhouse deployments – with LED lighting being a small footprint and used as supplemental – are very in vogue.
Products ranged from bare bones to stuff that looked like it was from Star Wars.
A slick recap of the conference can be found here.
My take is that the US is *definitely* distinct and different than the Canadian experience.
This takes form in not only product categories, but also with a deeply fragmented and molecular market that’s driven by the odd situation of state ‘legality’ within a larger context of federal prohibition. States are ‘islanded’ in production, and location is a big driver in value propositions. California’s Humboldt and Mendocino counties (google ‘Emerald Triangle’ if you want the skinny) sell their top for $3,600/lb, down to $500/lb for Oregon regular if you believe what you hear on the floor.
Basis differentials apparently exist, as legal states exist beside prohibition states, and price differentials are wide across state lines. I heard a little about it, but this was a legal show after all.
The retail experience is also different. Where I’ve seen dispensaries in BC hold an amazing array of products, they’ve nothing on a US dispensary – at least what I saw in Nevada. And they’d probably drool at the prospect of $70 eighths. Yet when I’ve looked at MPX’s & TGIF’s wholesale numbers, someone is making out, but it ain’t producers at this point. Maybe the buildout needs to continue.
US Market Notable – Florida
This one is an odd one, but, should be mentioned. FLA is a ‘smokeless’ state – that is, no flower can be sold there, as in ‘no combustion’. They only sell vapes and edible oils, technically speaking. But one of the retailers there sells buds/flower in a ‘collector case’ – which is a small plastic ball that’s supposedly unopenable. I think the idea is a souvenir or keepsake kinda thing. And yeah, that’s what I thought too if you’re thinking what I’m thinking. As in ‘unopenable my ass’.
That’s one of many shining examples of US retail innovation and regulatory avoidance I witnessed down there. Up here, there is timidity on behalf of companies (to varying degrees) and presumeably a larger regulatory hammer that may drop.
But the fragmentation of state legality has truly made it a ‘wild west’ industry that’s – if anything – moving faster with many more actors – than Canada is.
Instead of say – 75 large actors in a relatively linear build – the US market appears to me as a gold rush of thousands, from a variety of industries, varying experience, and nothing really tethering them all together from a consolidated point of view.
Ultimately, as a trader and investor, the US is different. Different in risks at the state level, different in risks across operations in the value chain, and very distinct from Canada. I had no idea how different it is…..and now….all I know it is a mile apart from up here.
Competitive pressures are intense, and commerce is intensely cut-throat comparatively. Here, our regulators seem to like oligopolies and foster them. Down there, it’s far more local in my perception.
If there is one thing I’d like our subscribers to take away: the risk profile you may hold in exposure to US production and transformation and retail is not the same as in Canada. Not even close.