If you’ve learned anything about the cannabis industry so far, it’s likely the fact that the market is ever-evolving.
From regulations to sales to consumer preferences, nothing stays the same for too long. As the cottage industry experiences massive growth due to advancements in technology, operational improvements, expanded accessibility, and beyond.
Simply put - as legalization grows, so do market factors that affect cannabis retailers, retail delivery, manufacturers, distributors, processors, and cultivators alike.
So, what are the latest US and California cannabis business trends to gain momentum?
Cannabis shared manufacturing facilities, white label cannabis brand expansions, cannabis contract manufacturer partnerships, and infused product manufacturer collaborations.
Which are all terms that are just a fancy way of saying - diversifying your product collection or consumer offerings through unique market entry methods and various California cannabis license types.
How can your retail dispensary, retail delivery business, or current cannabis operation capitalize on the latest trend for scalability and growth?
Keep reading our ultimate guide on cannabis shared manufacturing in California to learn more, including the why behind developing your own dispensary or delivery house brand and how to use unique Calcannabis license types to your advantage.
The Current State of California Cannabis Retail
Recently, a slew of California retailers reported to MJBizDaily that they’re struggling to make ends meet. This is because depressed wholesale prices haven’t rebounded as expected, and many retailers are forced to keep product prices low to compete.
Even more? POLITICO conducted an analysis of financial filings from two dozen of the largest publicly traded U.S. operators that showed the companies collectively lost more than $550 million in the first six months of this year on revenues of nearly $4.5 billion.
For retailers, there’s more competition than ever before, and more is coming.
In the first quarter of 2022, California’s Department of Cannabis Control issued 80 dispensary, 50 delivery, and 16 microbusiness licenses. That means that in less than one year, the DCC increased California’s retail footprint by more than 20%.
As we look towards November, if cannabis tax ballot measures pass as expected, some of the state’s most populous counties will see even more retail growth -
- 25 cannabis retail stores could be approved in Los Angeles County
- 10-20 cannabis retail stores could be approved in Sacramento County
- 20-40 cannabis retailer stores could be approved in San Diego country.
For cannabis stores already in business, these changes mean it’s time to look at how you can stand apart from the competition or reduce your costs to distributors and brands supplying you with products in order to raise your bottom line. So next, let’s look at how other innovative and big-time brands are already revolutionizing the retail space with product collections and collaborations.
Cannabis Retail + Shared Manufacturing IRL
Recently, we’ve seen an influx of shared manufacturing partnerships and white-label cannabis goods that are being launched to increase sales and profits for the brands involved. For the real-life application of the trends we’re talking about today, here are the most notable products and brands to hit the shelves with new offerings.
The nationwide Trulieve dispensary recently partnered with Wiz Khalifa in Florida to launch his own unique product line of ‘Khalifa Kush’. The Khalifa Kush brand offers a lineup of flower, pre-rolls, vapes, edibles, and concentrates, and is now available in over six states.
On the hemp CBD side of the industry, other businesses and brands like breweries, bars, and restaurants are equally cashing in on the cannabis-fueled trends. Like one Houston, TX brewery that recently launched a beverage with less than .3% THC to tap into the market.
The well-known brand, The Parent Company, recently partnered with FaZe Rain, the co-founder of esports powerhouse FaZe Clan, on a new brand called RCVRY. When it was launched, fans camped out starting at 4 a.m. for a chance to buy the Rainz Runtz strain that was released.
Elias Egozi, an amateur MMA fighter and medical dispensary owner of Alto in south Denver, recently launched his own line of solventless rosin, amid medical marijuana's lowest sales in the last decade.
Cannabis Shared Manufacturing in California
Interested in following suit and expanding in one of the most populous states and markets? You’re in luck. In 2018, California created the “Type-S Cannabis Manufacturing License,” which was designed to be a “shared-use” license. Simply put, a licensed cannabis contract manufacturer (a “Primary Type-S License”) can allow locally licensed “Type-S Licensees” to use their space.
That means the Type-S-Licensees can get their products on the shelves faster by using the Primary Type-S License’s facility, equipment, and space to produce their own brand or product.
Cannabis shared manufacturing through Type-s licensing also enables existing businesses like retailers, distributors, and cultivators to build their own teams, utilize already compliant spaces, and launch their personal cannabis brands without the hassle of traditional licensing and big-time capital raises to build a space, equip it, and employ it.
Another way to increase your brand’s portfolio or product collection is by sourcing trusted cannabis white-label California products or partnering with cannabis manufacturing companies that offer private label products, too.
With the white-label cannabis route, you can choose a quality product with consistent results and brand it yourself. With a private label product, you can choose a cannabis contract manufacturer and specially formulate your own blend for sale.
Expanding Product Collections with Reduced Costs
Last but not least, any and every cannabis brand looking to scale growth through expanded product collections will want to do so with reduced costs. Which cannabis white-label or private-label products, and My Green Network specifically, can also support. To help you better understand, let’s look at a typical scenario of how a cannabis product is priced, and sold.
Scenario A - Standard Market Entry
- The manufacturer sells the branded products to retail at a wholesale price.
- e.g. A cannabis brand sells a chocolate bar at $8 wholesale, while the retailer sells it at $16 for an $8 profit.
- The distributor sells branded products to retail at wholesale price plus distributor markup.
- e.g. A cannabis distributor sells the same chocolate bar for $8 + 10% markup for a total of $8.80, while retail sells at $16 for a lesser $7.20 profit.
Scenario B - MGN Value-Added Entry
On the other hand, MGN white label, and private label products are specifically branded for retail, which is equal to actual production costs + margin. Typically, the production costs + margin is less than a manufacturer's or distributor's wholesale price. This allows a retailer who white labels and private labels with the established cannabis contract manufacturer to capture extra margin compared to the standard market entry from above.
As seen by the comparative scenario below -
- e.g MGN manufactures chocolate bar for $4 and charges a service fee of $2 (total $6), then retail sells for $16 ($10 profit)
Additionally, if a retail license holder decides to go the cannabis shared manufacturing route vs white or product labels with a Type-S license, they can increase their margins even more. That’s because Type-S licensees who work with MGN only pay for actual production costs and can sell at the full retail price.
- e.g. A retail license with Type-S licensing manufactures chocolate for $4, but sells retail price at $16 ($12 profit)
Increase Your California Cannabis Business’ Profits with MGN
Back to our original message - as the industry evolves, so must you. And we all know that sometimes you have to spend money to make money. But the amount you spend doesn’t have to be so exorbitant that it takes years to make your money back.
By exploring California cannabis manufacturing license types, like the cannabis shared manufacturing type-s license or alternative routes like white or private labels - you can be creating, crafting, branding, and selling before you know it and for less.
Connect with southern California’s premier cannabis cloud kitchen and primary type-s licensed facility, My Green Network, to get started. Schedule a tour of our state-of-the-art facility, or learn more about our membership opportunities, here now.