Inflation has been one of the hot topics on the economic agenda since the COVID pandemic started affecting prices across industries. The cannabis industry is lacking a serious conversation about inflation, says Tim Seymour, portfolio manager of the Amplify Seymour Cannabis ETF (NYSE:CNBS).
The asset manager led a live conversation with leading executives in the cannabis space at the Benzinga Cannabis Capital Conference on April 20 at the Fontainebleau Miami Beach.
The Cannabis Supply Chain: Matt Darin, president of Curaleaf U.S. (OTC:CURLF), said cannabis has a different supply chain than other businesses.
Since the industry works on a state-by-state basis, it is not as impacted by international factors as much as other industries.
“Cannabis is very market-dependent. In some markets, supply is exceeding demand. They're not seeing inflation in cannabis prices, they’re seeing deflation,” says Darin.
Is Cannabis Purchasing Power Falling? Although some cannabis products have seen a drop in prices in specific markets, inflation can still affect those markets, as “people’s hard-earned dollars are coming out of their pockets, and you’re getting less of their share of wallet because of inflation in other parts of their lives,” says Jen Drake, COO at Ayr Wellness (OTCQX:AYRWF).
For Drake, the key to fighting inflation is quality. With consumers having less purchasing power at hand, it becomes more important to offer “excellent products, excellent brands with consumer loyalty and an excellent customer experience in the store.”
Aaron Miles, chief investment officer of Verano Holdings (OTCQX:VRNOF) agrees that “quality is key.”
“If you’re not putting out a quality product, it doesn’t matter what the packaging looks like,” he says.
In that sense, the market has matured a lot in the last four years.
In his opinion, every MSO in the cannabis space is fighting for the same consumers, so everyone is looking at pricing trends — but these can be hard to discern given the political instability of modern times.
“We haven’t operated in a normal environment in years. So when we’re trying to find trends and put metrics out there, to give the market ease that we’re actually seeing some consistency with pricing, we really don’t know at this juncture just given some of the dynamics of COVID and omicron,” says Miles.
CNBC's Tim Seymour leads a panel discussion on MSO investment opportunities Wednesday, April 20 at the Benzinga Cannabis Capital Conference in Miami Beach, Florida. Photo by Dez Smith.
