Cannabis Companies Are Downsizing and Specializing to Compete in a Cut-Throat Market

Cannabis operators across California are downsizing, divesting, and allowing licenses to expire to save money in a challenging business environment.

Marijuana Business Daily lays out several examples, including retail closures at NorCal Cannabis Co., which already gave up on deliveries in 2020. Likewise, Santa Rosa-based cultivator Eco Farm Holdings/Thrive Society says it won’t plant this year, and possibly won’t plant next year either. Euphoric Life Inc. has downsized across the board and is officially exiting the distribution market.

“It’s just nearly impossible to break into the green,” Euphoric’s Chief Operating Officer Aiden Rafii said. He recounted one example of regulatory torment in which the fire department asked him to remove a waste disposal cage that it had initially asked him to install. The cost of removal was $20,000.

It's not all bad news. Many businesses are benefiting by scaling back and specializing. Napa Valley Fumé outsourced all manufacturing some time ago and now focuses solely on growing and brand development. Its profit margin has greatly improved. NorCal Cannabis Co. too sees its divestment in a positive light.

“For the first time in many years, it’s given us the opportunity to focus strictly on our core business and really strategize on how to build brand in California,” CEO Jigar Patel told Marijuana Business Daily. “It’s such a competitive market.”