The Bengal Bite 🐯 | "Canna"nomics | October 23, 2020
In comparison to mature, established sectors, the market dynamics of cannabis are distorted. Interstate commerce is prohibited, the supply chain is immature, and traditional infrastructure is lacking. Given the nascent stage of the cannabis industry’s development, accepted rules of economics do not yet quite apply, leaving the sector to sort out its own laws of “canna”nomics.
That said, we are beginning to see some familiar forces at play in cannabis - supply and demand dynamics for biomass pricing, commoditization, and the emergence of brand equity. We are in the midst of witnessing the gradual evolution of an emerging industry.
The Bengal Capital Team
CBD vs. THC flower: Why the price difference?
To answer the question in two words: interstate commerce. Due to the 2018 Farm Bill, hemp is traded across state borders and is beginning to show signs of commoditization with the latest spot price for smokable hemp down to $148 per pound. THC cannabis flower, however, fetches $1,100-$4,000 per pound (depending on the state) because it cannot be shipped across state lines. Read more in Cannabis Business Times.
Cannabis vape companies are experiencing a sales boom during the pandemic
Consumers “locked-down” then“lit-up” as evidenced by record vaporizer device sales since the emergence of this global pandemic. The pandemic has accelerated demand for cannabis and accessory products and is straining an already-stressed supply chain. Read more about how vape companies are faring in TechChrunch here.
A PBR seltzer spiked with THC hits shelves, aiming at the 'canna-curious'
In a recent Bengal Bite, we discussed the “power of authenticity” in branding. It remains to be seen whether or not existing consumer brands will be able to transition into cannabis in a way that resonates with consumers, but Pabst is bringing its Blue Ribbon reputation to the industry. Through a partnership with Pabst Labs, “PBR me ASAP” now comes with the option for THC during those nights out on the town. Read more on this classic consumer brand entering the cannabis market in National Public Radio here.
Recreational cannabis brand and product expansion slow in US markets
Cannabis companies are slowing the rollout of new brands and products in what might be the latest sign of market maturity in states that have legalized adult-use sales. This is good news for established cannabis brands as competition for shelf space declines while sales continue to grow. Read more in Marijuana Business Daily.
