Emerging Cannabis Market in the U.S.

March 2020
Navigating America’s Transition to Legal Cannabis By Joshua Mezher

A large market of people and businesses are already —or will soon be — growing cannabis as a hobby or as a profession … and it is creating a potentially new product category for garden centers.

America has opened for business when it comes to cannabis, and it is emerging as a new category for garden centers. As legalization spreads across the country, the old stoner stigma of dreadlocked hippies is quickly being replaced. This was fueled by the political machines of bygone years, and helped brand cannabis as a drug that causes various mental ailments and social disorders. This stigmatization was mostly driven by industries that did not want to compete with hemp.

However, the new propaganda machine that is feeding America is painting a picture of trendy Baby Boomers who are hip to the times. They can be found rubbing their sore joints with the latest fast-action nano CBD cream or moms who are switching from the glass of wine for a puff on the peace pipe. This new image is being driven by the $22 billion legal cannabis industry, which is hard at work erasing the old stigma with their truth: cannabis is an amazing herb for the body and mind.

As it turns out, many Americans are enjoying the beneficial effects this plant has on the human body. When cannabis was banned federally in the 1930s, we had not even discovered the compound we now know as CBD or its counterpart in the human body, the endocannabinoid system. Yes, that is a thing. The human body has been consuming cannabis for so long that it literally evolved a whole system to process and consume the compounds found in the cannabis plant. Ironically, it turns out you might be a healthier human if cannabis is in your diet.

In 2018, approximately 55 million Americans (about 22%) consumed cannabis once or twice that year. And every day new users are lighting up. Recent polls show 61% of Americans are in favor of legalizing cannabis, according to the Associated Press and the National Opinion Research Center (www.apnorc.org/PDFs/Drugs/ AP-NORC Drugs Report Topline.pdf).

Navigating America’s Transition to Legal CannabisIn fact, the 2018 National Gardening Survey reported that when cannabis is legal, around 19 million homes across the country will grow it as a backyard garden variety. Capitalism has gotten a grasp onto the cannabis plant and, in true American fashion, it is changing the laws around the country to fuel its growth.

Currently, 11 states and Washington, D.C. have embraced cannabis for recreational use for those 21 years and older. And it is legal in 33 states for medical consumption with a doctor’s note. Some states have lax medical requirements and others far more stringent. Even the most conservative states have been considering legalization. Regardless of your personal viewpoint on cannabis, as a garden center you have a large addressable market of people and businesses who are already —or will soon be — growing cannabis as a hobby or as a profession.

It just so happens that cannabis and garden centers have a lot in common. After all, it is just a plant. It needs only sun, water and soil to grow to a size that would dwarf a typical tomato plant and amaze even the most hardened botanist with how vigorously it will grow under the right conditions.

Learning from Legalization

For garden centers in all states, regardless of legalization, there are lessons to be learned of how the transition from black market to medical and into a fully recreational market can potentially benefit your business, and how to best position your business to take advantage of this growing market.

California was the first to pass medical and the third state to go recreational. We see a repeating pattern emerging with the sale of goods and equipment used for growing cannabis. These trends can be identified through the legislative transition from a black market, where growing cannabis has been absolutely illegal, into a “graymarket,” where growing cannabis has been legalized for medical patients, and finally to a fully legal recreational market where anyone over the age of 21 can walk into a cannabis dispensary and make a purchase. The final stage will be federal legalization, which will open the door to the aforementioned 19 million people who want to grow this plant as a garden variety.

Currently, federal legalization seems unlikely to happen in 2020. Cannabis is going to be one of the hot topics this election cycle. Promises will be made by competing candidates about legalization. Regardless of who wins, you can be assured nationwide regulation is not going to be racing through America’s bureaucratic machine any time soon.

Capitalizing on an Emerging Market

In the meantime, how can your garden center profit from this emerging market without running afoul of the law or jeopardizing your business’s ability to use the banking system? When it comes down to it, there is nothing illegal about educating your staff on how to talk about and advise customers on growing practices for cannabis. This can be done by encouraging staff to self-educate on the plant, telling them it’s OK to talk about it, or even asking your new cannabis product suppliers to educate and empower your team. Only stereotypes and fears that are no longer relevant are holding us back.

Related: The State of Cannabis & Hemp in North America

Stocking a variety of products designed for growing cannabis comes with a free pass. There are no regulations around selling products for growing the plant. No one is getting arrested for selling ancillary products that do not contain any THC or CBD. A 1,000-square-foot area can easily stock all the items needed to grow cannabis such as hydroponic nutrients, growing mediums, grow tents and specialty lighting.

This new marketplace has a wide range of customers. Not only do a lot of people from very diverse backgrounds and ages enjoy this plant, but people who don’t even consume it still want to try growing it, as it’s one of the most amazing plants we know of.

At what scale your customer is going to grow largely depends on your state’s legal situation. If you are in an illegal state, these customers might still be seeking out the hydroponics store or an online shop for privacy, but a complete grow kit and grow tent is a good place to start picking off the lower hanging fruit.

Garden centers in medical states should have a good amount of growing equipment. If you don’t, the hydroponic store down the street will mushroom up. During this stage of legalization, grows are commonly six plants indoors. As states transition to recreational, more hobbyist growers start to grow this plant at home on their windowsill, or casually disguised in their tomato patch.

Related: Growing Cannabis

The medium-sized grows of six to 40 lights tend to fall out of fashion as grows are forced to scale or fail. Trends have also proven that when cannabis markets go recreational, the small semi-pro grower of under six lights flourishes due to tax increases. Regardless of your state of legalization, you will always find a local customer base who want to grow this plant at home, and there is nothing illegal about selling the goods for them to grow it.

While the expense of stocking new products, or the fear of putting off customers who have are not of the same mindset, might give you pause, know that there are far more customers who will be pleased by the presence of cannabis and willing to spend money on learning to grow it.

Perhaps most importantly, the sharing of knowledge and encouragement from your staff is a service a gardening center might want to consider. It is free to do and it helps keep one of the most amazing plants free to grow at home for those in need — after they buy a grow kit from you, of course.

Joshua Mezher

Joshua Mezher is founder of A Pot for Pot. Learn more at www.apotforpot.com.


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