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Growth in the cannabis industry slowed in 2022 and hasn’t picked up in 2023, causing some VARs and ISVs to question their resource commitment to the vertical. At a recent meeting of the RSPA Cannabis Community, members discussed how they view the market from both a short-term and long-term perspective.
- I just attended NECANN (New England Cannabis Convention) in Boston. The biggest topic there was price compression in the cannabis space. Are you seeing that? If you are, are you focusing on other verticals and less on cannabis?
- Until things get better federally, states will be growing and overgrowing product, and they can’t take that product out of their state, so prices are going to go down.
- We are bringing new products for dispensaries that are a lower price point to meet the money issue. We are also bringing programmatic advertising products that make money for the owner as a way to pay for equipment. We have to be more creative and listen to customers.
- I have reduced my attendance at cannabis shows because of how the industry is struggling now. This industry relies on investors, and the Fed keeps raising rates, so venture capital money isn’t out there to the extent it was before. I’m focusing more on retail now and will do that until the federal government changes how it operates.
- I’m seeing market saturation. Only so many people will buy cannabis, and states keep increasing licenses, so we’re coming to a crossroads. Taxes are nipping at the heels of everything dispensary owners do, and buyers know they can walk around the corner to another cannabis shop – it’s a litany of reasons.
- We are focusing more on our other verticals as well. We were asked to build a website for a cannabis client, and my web guy said, “I hear they don’t want to spend money.” I let him know that’s not our problem. Our job is to deliver on our product, and it’s their job to bring in the money.
- We’ve been doing cannabis payments for years and have grown to $200m per month in cannabis payments today. We saw a similar trend in the CBD space five years ago. That portfolio has dropped 72% in the past few years. Before we were the only bank; now we see seven others.
- I’m not giving up on this space. I believe the quality of the product will drive business decisions. Long-term this industry will emulate the craft beer industry. Today, they have aisles and aisles of beer, and people see the value of certain brands than others. The quality of the product will determine who’s successful and who isn’t.
- Those committed to this space need to put pressure on the people in Congress. We need to hold our politicians accountable.
- While driving sales is essential, I think mitigating labor expenses could be an even more significant factor when selling into the cannabis space. We’ll do a slight pivot and lead off with that.
