West Coast cannabis companies target price-sensitive customers
A trio of West Coast marijuana companies hosted separate investor calls on Thursday, but they all highlighted their focus on the same basic business fundamental moving forward: helping cannabis consumers find value-priced products in the regulated market.
The three businesses – Glass House Brands (OTC: GLASF), Lowell Farms (CSE: LOWL) (OTCQX: LOWLF), and Leafly Holdings Inc. (NASDAQ: LFLY) – also had another trait in common: They all lost millions in 2023 and are searching for a path to profitability.
During its earnings call, Glass House CEO Kyle Kazan announced that the company would be debuting a new line of eighths of an ounce of marijuana flower that will be sold for $9.99 or less, in a strategic attempt to lure more price-sensitive customers away from the cheaper illicit market.
Other brands selling eighths are typically priced 30%-40% higher than that, Glass House CFO Mark Vendetti estimated on the call.
Meanwhile, Lowell Farms said it’s reviving several of its in-house brands, including “House Weed, our value everyday brand,” said CEO Mark Ainsworth, as “an essential value proposition for our dispensary customers.”
Ainsworth also noted that Lowell Farms Services, the company’s consulting wing, has provided extra revenue by offering processing services to other California cannabis brands and farmers.
And online ancillary firm Leafly rolled out a new feature for its dispensary finder that helps cannabis consumers locate “the best prices near them,” CEO Yoko Miyashita said.
“That’s important because consumers are searching for the best prices at a time when their own wallets are under pressure,” Miyashita said, adding that the new feature also “increases the volume and variety of deals in our marketplace.”
While just a small snapshot of steps the trio of businesses are taking to improve their financial performance, Miyashita hinted that the examples underscore a wider trend in U.S. cannabis.
“According to a Whitney Economics report from June of 2023, less than 25% of the cannabis sector is profitable, reflecting the challenging operating conditions for retailers and brands,” she pointed out.
That’s a reality that most of the industry has been dealing with for more than a year. It’s also why many experts predict more market consolidation in the near future, a development that some companies – such as Glass House – are deliberately positioning themselves to capitalize upon, to capture market share as more competitors drop out of the increasingly competitive marijuana landscape.
