Giving Away the Secret Sauce Recipe or Building Brand Loyalty?
While it may seem unusual, several cannabis companies have begun offering marijuana seeds as part of their product line. However, there is a reason behind this decision. Many cannabis companies have observed that individuals who grow their vegetables also purchase fresh produce from a grocery store or farmer’s market. Hence, they believe that providing customers with the option to cultivate their plants will encourage them to purchase more cannabis from the company.
According to Carl Giannone, co-founder of Trade Roots, a cannabis company based in Wareham, Massachusetts, “Just like most people who have a backyard garden during the warmer months tend to grow tomatoes, but still, purchase them from a store.” He explained that the company believes that allowing customers to grow their cannabis plants will only increase their desire to continue purchasing from them.
Today, many companies are venturing into the market of selling cannabis seeds as federal policies shift. While some companies see it as a profitable opportunity, others do it to strengthen their brand and share their genetics. Berner, the co-founder and CEO of the renowned international marijuana brand Cookies, recently announced at the MJBizCon conference that his company would start selling seeds for personal cultivation.
On the day following Thanksgiving, Cookies debuted its seed bank on Black Friday. Berner reported in an email to MJBizDaily that the launch was a success and “broke some internal records.” He added that the seed demand was strong and sees this as the next level for cannabis enthusiasts. Berner wants to empower people to learn more about the plant and to educate themselves about cultivation.
Marketing is Vital
The cannabis seed market has seen an upsurge recently, thanks to the U.S. Drug Enforcement Administration clarifying that it’s legal to sell and distribute cannabis seeds across the country. According to Ryan Douglas, a Florida-based cannabis cultivation consultant, in an email to MJBizDaily, This move has cleared up a previous ambiguity in regulation and savvy, legal cannabis companies are taking advantage of this opportunity.
According to Douglas, the key to success in the cannabis seed market is all about effective marketing. He sees this as an opportunity for companies with well-known and reputable brands that consumers already associate with rare varieties or high-quality cannabis to establish a profitable business model. Having exceptional cannabis genetics is of no use if no one is aware of your existence, he said.
Douglas points out that cannabis seeds can fetch a high price in the market, with vendors charging anywhere from $5 to $20 per seed. He also notes that with a well-pollinated plant, one can expect to yield thousands of viable seeds. This significantly differs from traditional horticulture, where a seed costing 20 cents is considered costly.
According to Douglas, given the high demand for desirable genetics and the large number of seeds that can be produced in a small grow room, seed production can be an excellent addition to any cannabis cultivation business. However, he also highlights that seed production is not as efficient as asexual vegetative plant propagation, where nurseries sell clones to growers. This is because sowing a hundred seeds of the same variety can result in various phenotypes and inconsistent genetic outcomes.
High Tide’s Ventures
In December, High Tide, a Canadian cannabis retailer, declared they would begin selling marijuana seeds in the United States. This announcement follows the DEA’s statement that seeds fall under the legal definition of hemp, which contains less than 0.3% THC. The CEO of High Tide, Raj Grover, stated that their target customer for seeds is the 19-35 years old demographic.
However, it’s important to note that according to federal laws in the United States, these seeds can only be sold for novelty purposes and not for germination.
“Selling seeds is a fresh and thrilling addition to our business,” said Grover, CEO of High Tide. He added that the company’s goal is to expand and fortify its integrated value chain and to offer customers a comprehensive cannabis experience. High Tide does not produce its seeds. It sources it from an authorized seed producer in the United States.
Grover agrees with Douglas that having a recognizable brand and reliable genetics is crucial to making this move a success. “In the same way that our customers trust us for our consumption accessories and CBD products, we want to earn their trust in the seed business, he said. Therefore, they carefully select the most in-demand and highly reputable seed brands.
Grover stated that High Tide has yet to make plans to expand its product line to include clones or young plants. Instead, they focus on items seamlessly incorporated into their existing system and infrastructure and aligning with their retail-centric strategy.
Highlighting The Breeder
For Trade Roots and Giannone in Massachusetts, the primary objective is to sell seeds in their store related to the strains they are growing in their cultivation operation. This allows customers who have found a flower strain they like to have the option to purchase the seed and try growing it at home. However, only some of the strains they grow are available in seed form.
Trade Roots employs breeders who work as cultivators to produce seeds that they sell. Their target audience for seeds is serious home growers or professional breeders who can take the seed and crossbreed it to create a new hybrid strain. The packaging of the seeds gives credit to the breeder who developed the strain, allowing consumers to recognize the breeder.
Giannone explains that the profit margin on seeds is not significant but carrying them is their way of supporting cannabis breeders. “The reason we sell seeds is to bring attention to the breeders and educate consumers on what a strain is and the breeding process,” he added.
In summary, the sale of cannabis seeds has become a more viable option for companies to explore as federal policies have shifted. Companies like High Tide and Trade Roots see this as a way to expand and strengthen their integrated value chain and provide customers with a complete cannabis experience.
On the other hand, some companies see it as a profitable opportunity, while others see it as a way to build brand loyalty and share genetics. However, all companies agree that having a solid brand and trusted genetics is essential to making this a successful move.