For those in the sourcing part of the cannabis industry in Europe, farmers’ descriptions of “the best bud in the world” no matter where they cultivate, fall far short of what the market requires
Here is a portrait of an “average” sourcing deal in Germany these days. To set the scene, it will probably happen in the offices of a specialty cannabis distributor, with a pharma license. Or in my offices when I act as a consultant and matchmaker between producers and distributors.
Full disclosure. When it is successful, I get a fee and or a commission. When it isn’t, as is, unfortunately, the case, I don’t get paid.
These days, the people on the other end of the phone are usually from countries located in Africa and South America, but it could be Europe too. Geography in this case does not matter. The discussions are remarkably similar – and further not only limited to the medical side of the industry (flower and dronabinol) but CBD (particularly isolate) too.
Here are three anonymized, dramatized, combined sketches which cover just about all bases and have a remarkable similarity to the kinds of conversations I have almost every day grouped by the three products I work in the most.
EU GMP, High THC Flower
Cultivator/Agent/Etc: Hi there. I found you via Linked In. I have awesome bud. Best in the world because of (XYZ) factors (including “sunshine” even if grown indoors, which all EU GMP flower must be).
Me: Awesome. I need it by the kilo, it needs to be EU-GMP, which means that you have to expect another euro to buck twenty-five to be added per gram as it lands because you are NOT GMP.
Cultivator/Agent: But I can get six euro a gram in Australia.
Me: Go for it. See my article on pricing and exporting to the German market. Wholesale prices and the value chain have been effectively set by the government.
Cultivator/Agent: I can’t sell it for that. We need to build out our capacity. And our bud is better than anything else on the market.
Me: Do you have stability tests, a local certified lab, and, and, and (fill in the blanks, and there are many)???
Cultivator/Agent: Editor’s note: This is also where things usually fall apart.Usually the answer is some variation of “not yet,” “in progress” or “why do we really need to do that? When it is yes, there is inevitably another wrinkle.
Me: I need this by the multiple liters per month. Escrow, certs, the works. International sales, including beyond EMEA.
Producer: No problem.
Me: I need this at a price that will be competitive in this market. Plus I am buying in bulk.
Producer: I want a guarantee (from your clients) to protect us from price wars in this market.
Me: (Under my breath)…no fricking way.
Agent: Hi, I saw your profile on Linked In. You are looking for CBD isolate?
Me: Yes, by the multiple ton per month. Highly price competitive, but I need to satisfy bulk clients.
Agent: Sure, we can do this kind of volume. Price, yep, we can do that too. No worries. Let me get back to you.
These are generalities but you get the idea.
Agent Answer A: Yes we can, but not at that price.
Agent Answer B: No, we can’t. We are not producing at that volume.
Agent Answer C: How about Delta 8?
Agent Answer D: We only accept bitcoin
Agent Answer E: You just have to trust us, man. COA, what’s that?
Market Realities Are Meeting Craft Sensibilities
Here is a reality that growers are having a hard time accepting everywhere. There may be a retail market, at varying degrees of legality, but tapping it with craft strategies and pricing is not the answer. To survive, farmers need long-term contracts, which means bulk, not craft production. This is going to be true even after legalization here. See California if you don’t believe me.
This is very hard for many people to accept, philosophically. It is even harder to accept when there are intervening financial considerations – for example expecting to get a much higher return for one’s product when selling overseas and building infrastructure based on such assumptions.
However, if you want to sell into this market, it is a reality one has to accept.
NOTE: I am always open to talking to farmers and cultivators and have helped firms get into the German market but the first step is realizing that the market here is tricky and that preconceived notions are usually, unfortunately, completely misaligned with the needs of this market.