|
Oversupply and consolidation
Right after OR passed the legalization law, a group approached me about being a partner in a business that was going to provide support to the growers and sellers in OR. I was going to be the "General Counsel" for the group. They pressed me pretty hard on it and tried to convince me how they were going to make a killing. They claimed to have $10 M in VC money - which was likely true. I spent a lot of time researching and had multiple meetings over several months.
In the end I was convinced that there would be a wringing out of the smaller businesses as part of the consolidation that would make the marijuana business look a lot like the alcohol business - most of the volume controlled by a few major players. In the end I said No because I was not convinced they had the business knowledge & money to survive the consolidation. Don't know what that group did eventually but I suspect they never actually pulled the trigger.
A couple of months ago I had drinks with a couple of friends including the owner of a Portland based chain of retail shops who said they are now buying pot from growers for less than the production cost. He said they are able to also buy the equipment of failed growers and retailers right now for almost nothing and are just cherry picking the good equipment to store for later because the prices are too good to pass up.
My point - I am far from a business genius. If I could see this coming it was obvious.
|