Over the last five years, Headset has been a proud supporter and member of the California Cannabis Industry Association (CCIA). When I first joined the team 3.5 years ago, I was tasked with launching our California expansion. One of the first introductions our CEO, Cy Scott, made for me was to the CCIA team, and a budding relationship blossomed from there.
I have worked with the team in multiple capacities over the years, mostly in educating association members on the trends we’re seeing at Headset. This became incredibly important when the pandemic hit, as we started to see rapid shifts in the way people consume cannabis.
Understanding these trends is imperative to businesses adapting and thriving in what I feel is the toughest market to navigate in North America. This knowledge is especially important for first time business owners and equity applicants, which is why I joined the Diversity, Inclusion, & Social Equity (DISE) committee.
The market is maturing, but some are left behind
The last two years in California have been tough for many operators, but especially for equity license holders. A fair and equitable industry is part of mine and Headset’s ethos, which is why I felt it was very important to get involved in initiatives that would directly impact the success for all.
The report provides a deep dive on city-run equity programs to find out what’s working and what isn’t. The committee spoke with equity license holders throughout the state, and based on these data points, came up with some recommendations for policy makers and regulators to consider in order to create a fair and equitable industry.
California is a complicated market. There is a high concentration of brands, with limited retailers (there are around 825 storefronts and 300 delivery companies servicing a state of 40M people). This has created an uneven dynamic for the marketplace, which has made it very difficult to compete as a small brand. Retailers have different challenges that make it difficult to compete against a thriving illicit market, in part due to regulations, high taxes, and other macro economic challenges we’ve been facing through the pandemic.
These dynamics, plus a handful of others, make it very challenging for even the most seasoned entrepreneurs to navigate. So to even the playing field, we must acknowledge the differences and challenges.
Necessary context: Equity and access to data
At Headset, we measure trends like ‘Brand Concentration’ and found that the top 10 brands in California make up around 27% of total cannabis sales in the state. These brands are making tens of millions in sales, while there are smaller brands making less than $50k in sales a year. While other industries like beer, wine, chips, etc., also see a large concentration of sales coming from a handful of larger companies, cannabis arguably is different because of such wide variations in products, uses, and types of consumers.
It’s only natural that the larger, more well resourced companies will prevail in any industry. However, the regulatory restrictions at play are creating an unlevel playing field that gives more well resourced companies an advantage because they’re better equipped to overcome the high hurdles of taxation, regulatory compliance, and licensing fees.
Shouldn’t there be more diversity of brands and companies because there are so many different consumers and uses of cannabis? If the state doesn’t facilitate policies and regulations that allow for more fair competition, how can cannabis keep its diversity?
Recognizing the situation and providing a solution
I’ve learned over my 3.5 years in the industry that it’s really hard to create change on your own. You have to have people that are leaned into a common goal or cause. This report is a testament to people working together, bringing in their networks, and contributing individual skill sets.
Our hope is that the report will provide understanding and empathy for equity applicants and license holders, and that those in positions of power will feel inspired to contribute their time and resources if they believe in an equitable industry.
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