Is your neighbor farm or neighboring business a collaborator or competitor? The conventional approach to business asserts they are competitors. Conventional business strategy
suggests that if someone is operating in your space, they are the ‘other’, the opposition to knock out of the market to make space for your products. At Hive Mendocino, we see business through a radically different lens. This lens- one that positions our fellow farms as partners - has allowed our companies to stay strong during this difficult and turbulent time in California cannabis.
In 2018, the dust was still settling on the newly legalized recreational California cannabis market. It was clear to us that the regulations, market structure, and consumer demand would be in constant flux for the foreseeable future. Any astute entrepreneur would have looked at entering the market as high-risk to say the least. Yet, our farms - still individual operations at that time - were committed to finding a path to carving out our market share.
The path we found was to create the Hive Mendocino Cooperative of Mendocino-based wholesale craft cannabis farms. As a co-op, we’ve faced the hardest aspects of operating in this industry together, making it easier for each individual member to navigate. As a collaborative group mutually dependent on each other’s success, we are able to leverage our collective experiences and networks, we distribute the time and costs of industry engagement, and we pool our financial resources to tap into sales and marketing resources. As individual farms, we’re small. As a co-op we benefit from the scale similar to operations much larger than any one of our members.
Leveraging the Brain Trust
One of the biggest vulnerabilities to a small cannabis farm is experience in operating a business. As a cannabis co-op, each one of our members is experienced in building a thriving cannabis company in
complementary ways. When cannabis regulations change and we need to interpret what that means to our cultivation operations, we task our most appropriate member with reporting back on how we respond to new requirements. If one of our members faces an issue with their crops or has a new idea they need support implementing, another member is always there to support. Most recently, Mendocino County has launched social equity grant programs to support the legacy farmers struggling in the current market conditions. As a co-op our members were able to submit stronger applications for those funds because we worked together to craft them.
Distributing Industry Engagement
Any successful leader in cannabis has to engage with other industry leaders to continue growing their success. Even small farms have to participate in local, regional, and even statewide associations in order to stay knowledgeable on the market, remain relevant in the industry, and to build the relationships key to generating revenue. As a co-op, we deploy our members strategically so no single farm has to take on this burden alone. Instead of one leader spending 50% of their time engaging with other cannabis folx, we can deploy 3-4 leaders who spend 10-15% of their time participating in various industry activities.
Funding PowerMarketing & Sales
When it comes to generating revenue, having the resources to build a brand, grow relationships, and ultimately make sales is a serious constraint to farmers facing steep expenses simply to cultivate. Operating a cannabis business means navigating high costs and small margins. On an individual basis our farms have to pay for licensing, permitting, legal fees, accounting, utilities, farm operations, and high taxes. This leaves very little room for investing in the sales and marketing activities required to bring in revenue. As a co-op, each member contributes a percentage of sales to a co-op fund used to bring on a brand and marketing team to run our public outreach programs. Individually, we would not have had the means to do so, but together, we’re able to access top-notch partners.
As a benefit to both our members and our customers, being a co-op has also allowed us to streamline our sales & fulfillment processes through a single wholesale cannabis menu and account manager. By doing so, we make it easier for buyers to access the wide range of cannabis products our farms cultivate from top-shelf flower to trim for distillate. This feature of our co-op is a differentiating factor that helps us stand out from the competition from the perspective of the buyers themselves.
As we look forward to the future, we’re focused on sharing the learnings we’ve gained from establishing our co-op to help cannabis farmers nationwide form similar groups. We believe any market in the industry is incomplete without the legacy small & medium-sized cultivators who hold within their businesses decades of cannabis wisdom. Stay tuned for more co-op building resources from Hive Mendocino or reach out to our team to schedule a consultation call today.