Hello All,
New member here, I too went thru the entire thread yesterday and have to say its the best source of information I have come across ($300/hr consultants didnt have all this info). Anyways, I no nothing about MJ (I can hear the gasps behind my screen), nor do I really need to, my experience lies on the business side of things. Im a new PR in Canada, and worked on WallStreet in NY and London for over 10yrs (you think the underground MJ business is shady? you havent seen anything like I have), I moved to Van Isle recently and have been running #'s and refining a business plan for a team I put together (very, very senior Horticulturalist w/15+ yrs doing MJ consulting and managing large scale greenhouses, and an ex-grower I trust). The capital part and business plan is pretty straightforward, I have been fortunate to have both seed $ and investors who are willing to add capital if need be. While I dont know much about MJ, I know a good deal about suppy & demand and managing risk. The aspect that concerns me is the excess supply that will flow into the market in the coming months. Let me give you just a back of the envelope type calculation of buyers & sellers.
Buyers: ~40,000 prescriptions. Of those ~70% are on disability or lower income folks. Those who currently get their "medicine" from the current system pay little to nothing for their daily dose (most likely grossed up to 5-10g /day just to have a little extra to to sell to friends w/out prescriptions to pay for the whole process , or simply traded to a CC for their own consumption). So to be conservative, lets say of those 70% of patients, 50% of those will somehow come up with a way to purchase their ACTUAL personal use (5g/day to be safe..$1,140 month @ $7.60/g) on the open market, the other 50% will grow 1-4 plants themselves or have a funny uncle do it for them or maybe just buy on the BM. Now lets say the other 30% of your buyers all are well off and can pay any price for their medicine (same 5g/day, $1,140/month @ $7.60). Where does that leave us? 26,000 customers((40k x .3 + 28k x .5)) paying $1,140 month for 5g/day, thereby consuming 47.5k KG of MJ.
Sellers: As we just heard, Tweed was just authorized to produce 15k KG of MJ per year. There are 4 other growers already with very similar size licenses (but lets say 10k KG each to be safe, 40k KG combined). There are approx 300 LP in the pipeline right now, lets say that just 30% get approved (90), those that get approved are just small time guys, lets say 100lb/month or 1.2k KG/yr. Thats 108k KG/yr. So total we are at 163k KG/yr in production.
Now you will say, "yeah, but they cant produce that much right away" and your correct, but they are going to scale up as they get people into the pipeline(and they can scale faster and cheaper than almost all the sub 20k sq ft guys). The thing is that the Pipeline is at least 3.5X bigger than the market!! That is why scale is going to be soo important in this business. If your business model doesnt work @ $4/g you should really be asking yourself some tough questions. I get the whole idea that people pay for premium product, but look at your customers, really look at them, if you opened their fridge at home, you going to find the fancy craft beer in there or the cans of Molson (i have been told thats what Canadiens love to drink? )
Im not trying to piss on anyone's parade, but the real kicker here is the recreational legalization front. If you dont think that happens in the next two years, you might be in the wrong business. But thats just my two cents. Would love to know why people think prices will be in the $7-10 range. I get that the medical users will grown @ 30% yr, but even that doesnt do you much good for 10yrs. And given the reception from most doctors I know (only 4 granted), its going to be hard to get growth larger than that.
All that being said, we are still doing our homework and have some plans in place, anyone on Van Isle want to hook up and brainstorm Im up for it.
