Despite lingering controversy, legal cannabis is a rapidly growing market. As of 2020, the worldwide (legal) cannabis market was valued at $9.1 billion with a projected CAGR of 26.7% through 2028.
The rising demand for cannabis products is caused primarily by an increasing number of countries legalizing cannabis for medicinal and recreational use.
Although the COVID-19 pandemic slowed growth in the market because of supply chain issues, disruptions won’t affect all cannabis companies. Companies that control every aspect of product creation and sales will be untouched by most supply chain disruptions.
While most people are looking to open retail shops to sell cannabis products, the real money is made by creating a cannabis empire, which begins with growing the crops and owning the manufacturing process.
Umbrella cannabis brands are more profitable
The majority of companies work with just one aspect of bringing cannabis products to the market. For instance, dispensaries, cultivators, and manufacturers are usually run by separate entities. Dispensaries source their products from manufacturers who source their products from cultivators.
When someone creates an umbrella brand, they’re able to enter multiple markets, which greatly increases the potential for revenue. For example, Verano is a national operator of licensed cannabis cultivation, manufacturing, and retail facilities.
Verano operates the Zen Leaf and MÜV branded dispensaries and distributes a variety of cannabis products under five different brands: Avexia, MÜV, Encore Edibles, Agri-Kind, and Verano.
By existing in multiple cannabis markets, a brand can exponentially increase profits. For example, in addition to selling retail products, branded dispensaries can quickly become a neighborhood favorite, producing loyal customers and brand ambassadors.
When a brand cultivates and manufactures its own cannabis, there’s more control over the process. For example, Verano can ensure all cannabis cultivation meets company standards for organic production. When there’s an issue with manufacturing, it will be resolved much faster in the absence of third-party dependency.
Another benefit is adherence to regulations. There’s no room for error, since penalties for non-compliance are harsh. When a cannabis brand manages its own cultivation and manufacturing processes, there’s no excuse for not being compliant with state and federal laws. It’s a hefty responsibility, but one best carried by the brand itself.
Cannabis empires support local cities
Owning and operating a cannabis empire is a great way to generate taxes for the city. Brands that do well can generate upwards of $500,000 in yearly tax revenue for their city.
You’ll also find more local jobs being created by umbrella cannabis brands. It’s beneficial to keep the entire process local so that each community can benefit from every aspect of the business. Keeping the entire operation local makes companies less reliant on third parties and largely unaffected by supply chain breakdowns.
Local cannabis brands will be the future
The future looks bright for companies willing to cultivate, manufacture, and sell cannabis products under one main brand. Brands that follow this model will not only achieve greater profitability by owning a larger portion of the market, but they’ll also help local communities.
The tax revenue potential alone is outstanding, but people are also starting to see the value in supporting locally-made goods. The 2020 and 2021 supply chain disruptions have caused many to realize the perils of importation, including sourcing goods from another state.
Cannabis companies that dominate the market in multiple segments are a perfect match for people who care about where their goods come from and want to support more local businesses. For the companies, it means more revenue. U.S.-based consumers want products made in the U.S. more than ever before and are willing to pay up to 20% more.
Now, local production seems to have become a necessity, as supply chains are breaking down and cargo ships have been prevented from docking for several months.
Future brands will own multiple segments of the market
Those getting into the cannabis industry now will have an advantage by getting into multiple markets at once. Owning and operating every aspect of a cannabis business will become a necessity at some point in the future.
Self-sufficiency through localizing the entire process will reduce costs, simplify logistics, and improve quality control. Most of all, it will ensure that cannabis products remain available to consumers even if the supply chains break down further, or we experience another disruption.