Busch: Colorado lessons for Missouri businesses
Growing up, Adolphus Busch V, went to Colorado for the outdoor activities (a predictable hobby for any of the Buschs – a family of avid wilderness and wildlife enthusiasts), he chose the state for his higher education, but stayed for the cannabis experience. From whitewater kayaking to cannabis marketing, Busch has ridden some of the roughest currents the country can currently offer.
Busch, now 28, has an enviable amount of legal market experience for a Missourian – Colorado went recreational just one month after he graduated from college. Busch felt the cannabis industry was the right path for him since he had passion for the plant.
However, he considered going into beer distribution, as well as beer sales, or other similar jobs.
“I applied for a job at Anheuser Busch in 2012 and was turned down due to the nepotism law they implemented within the company after it was sold in 2008,” Busch said. “That was a real punch in the gut considering I was applying for an entry-level sales or finance role.”
Busch spent an extra semester at Colorado State University for an entrepreneurship certificate program and started writing a cannabis company business plan – and kept working on that plan for months after graduation.
“Moving to Denver afterward to work in cannabis and learn as much about the industry as possible before I started my company seemed like the smartest route,” Busch said. He worked for BioTrackTHC, Lightshade, Keef Cola, and Pure Greens before starting his own company, Teal, a vertical facility applicant group.
Greenway Magazine sat down with Busch to pick his brain on what Missouri can learn from Colorado – and what lessons he’s bringing to his Missouri company. Read more about Teal in a feature in the Meet the Applicants series.
Of your 7 years working in Colorado, what is the biggest lesson you bring back to Missouri?
It is hard to narrow this down to just ONE of the most important things I learned during my experience in Colorado. If I was to choose one thing within the cannabis industry, it would have to be COMPLIANCE. Compliance is number one in the cannabis industry. Operating compliantly on all fronts and in every facet of your business is the most important and respected aspect of a cannabis company. You have to know the rules and regulations of each state you operate in like the back of your hand. There is no excuse or exception to not operate compliantly or to try and operate in a grew area for the financial benefit of your company. Compliance is number one at every level of a cannabis operation. From the grow to the manufacturing facility to the retail stores to the end products being sold to consumers, full compliance must be implemented and preached. We are here to operate legally, put a good light on our industry, be transparent with the regulating body and our end consumers, and create safe, clean and the most effective products for our patients.
How has a recreational market impacted the medicinal market in Colorado?
To be completely honest, the recreational market has taken over in Colorado. However, in my opinion, this is not a bad thing. There are just as many medically focused products on the recreational side as there are on the medical side and the price points have stabilized for the most part. The medical dispensary experience in CO is no different than the recreational dispensary experience. Most medical dispensaries have a recreational dispensary attached and in some cases, a patient purchases their medical product in the same room the recreational product is sold. In my opinion, the medical market needs some help in Colorado. Some medical patients take advantage of the system by applying for their extended count license which allows them to purchase far more cannabis than any one person should ever be able to purchase. These patients abuse the system by purchasing pounds of flower and selling them on the black market.
What are some of the more successful medical products in Colorado and what do you think made them successful?
This is a good question. Flower still outsells everything on the market by quite a large percentage. Vapes, concentrates and edibles are next in line for majority of sales. I think it a very medically focused market like Florida or like what Missouri will be, we will see capsules, tinctures, gel tabs, dissolvables, and transdermal patches sell very well and really stand out for some of the best delivery methods for cannabis patients. Flower and Vape products will probably still be high on the list in a medical market due to their quick onset and relief.
A major concern for applicants is price fluctuation. What causes value fluctuations in Colorado?
The main cause of price fluctuation in CO is the number of suppliers. I think MO did a pretty good job at deciding how many licenses to issue. In Colorado, it was a free for all and almost everyone who applied received a license. This flooded the market with grows and manufacturing facilities who were and are all fighting for market share by undercutting each other on price points.
How, if at all, do price fluctuations impact customers?
Price fluctuations hurt cultivations and manufacturing facilities far more than they hurt retail stores and end consumers. The retail price points hardly fluctuate because there is plenty of margin for most products on the retail side. However, when the price of flower drops to $550/lb from $1200/lb or $1600/lb because of increased supply, grows are really hurt by this drop and it has even put many grows out of business in Colorado. Additionally, the material cost for manufacturing facilities is usually very high. This material cost could be the cost of flower, oil, packaging materials, hardware, etc., all of which are expensive especially if you are using the best material and offering top of the line products. Retail stores are set on their price points and usually will not take certain delivery methods for more than a certain price even if it is a premium product. Therefore, you have manufacturing companies fighting for shelf space and reducing their margins significantly to gain that market share.
What makes one dispensary more successful than another? Is there an equation for success or is it a lot of luck?
Location and pricing! There are so many dispensaries in CO that having the perfect location means a lot. You need convenient parking, easy access, and high traffic areas to be really successful. Additionally, pricing is important. Like I mentioned above, the margins for dispensaries are great; however, there are certain dispensaries that find it necessary to charge 150-200% markup. The dispensaries that charge fair prices of 100-120% markup on their products to cover their costs and 280E are the dispensaries that do the most volume.
Most applicants are talking branding – what considerations make a brand successful?
Good, reliable, unique products create a good brand. In this industry, relationships also help. The market is so saturated in CO, it is hard for a new brand to survive. Having a good retail sales network and having relationships with managers and owners always helps. BEING FIRST TO MARKET is also one of the most important things with a new product. We will see brands come and go for a while until cannabis is federally legal and the big, well-capitalized companies take the lead and leave the other small brands to supply the “craft” market.
How important is branding to a facility? To a product?
Branding is very important for products and retail chains. Right now branding is the most important for retail chains in my opinion. This is due to the fact that cannabis is not federally legal. If you create a good brand for your retail chain in a medical and/or recreational market, you can draw in a large customer base to your stores. Customers feel safe and are loyal to large chains of retail stores that treat them well and offer perks. It is important but harder to create a large brand for a product company right now because you are limited to one state. Each legal state has many brands that are trying to create a brand name for themselves but without the ability to cross state lines, it is hard to really grow that brand.
What breaks a cannabis brand?
Inconsistent and unreliable products. Having a recall on your products also will crush a brand.
Do you think the product trends in Colorado will be similar to what will sell in Missouri?
Yes, I think the product trends will be very similar. MO has allowed for almost all of the same delivery methods as CO so I think the products will be similar. However, there will be more of a medical delivery method focus in the beginning with MO being just a medical market.
What lessons have other facilities you’ve worked with learned that you hold with you as your team prepares for licensure?
This is not a get rich quick opportunity like everyone thinks it is. Operate as efficient and as smart as you can to stay in business while all of the rules and regs are changing so frequently in the beginning. Stay ahead of the game and make sure you differentiate your business in the products you launch and the way you operate in all areas of the business. Efficiency is key.