Here’s Why You Should Avoid Cultivation and Retail as a Cannabis Brand

Cultivation and retail licenses carry significant financial and operational risks.

Cultivation faces crashing wholesale prices (down 50%+ since 2021 in California, per BDSA), turning flower into a low-margin commodity. High overhead, energy, labor, water, and compliance (e.g., METRC tracking) reduces profits, while pests, mold, or failed state tests can destroy entire harvests.

The biggest issue with retail storefronts are robberies. 72% of dispensaries experienced theft in 2023 (Cannabis Business Times). Cash-heavy operations (due to limited banking access) and high-value inventory make them targets for smash-and-grab raids. Compliance costs like implementing security systems, vaults and “green zone” rent inflation ($5+/sq ft in cities like LA) will further strain your margins.

What should you do instead?

Cultivation: Partner with established growers via white-label agreements, avoiding $1M+ facility costs.

Retail: Opt for delivery-only models (lower visibility, no storefront rent) or wholesale through distributors.

Both sectors demand heavy upfront investment with volatile returns, unlike distribution or manufacturing, which offer somewhat better scalability and lower asset-light entry points. Overall the key is to focus on building your brand first and outsource those high-risk roles until your brand revenue stabilizes.

If you have further questions feel free to reach out as always 🍃

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