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Wikipedia describes a captive market as “a market where the potential consumers face a severely limited number of competitive suppliers; their only choices are to purchase what is available or to make no purchase at all. The term therefore applies to any market where there is a monopoly or oligopoly.” Dictionary.com focuses on the monopoly piece of the term, but the outcome for consumers is the same no matter the reason why or on whose behalf a captive market is created, and sadly, the forces that are so easily unleashed in a captive market are usually ones that are antithetical to a free and open marketplace and the best interest of consumers and, in this case, patients.
But what exactly does that mean in real-life? Captive markets are usually depicted as ones we accept, like food concessions in movie theaters, airports, and music or sports venues, but what does it look like when a captive market leads to a level of product scarcity that leaves the consumer with little to no choice where to shop for that product?
As it turns out, Connecticut’s current market in cannabis flower happens to provide just such a vision, and it isn’t pretty. With just under 30 dispensaries currently serving medical patients and adult-use consumers individually or as a hybrid, as I write Thursday morning, several dispensaries in the state have one or two SKUs of flower on their adult-use menu, and maybe five or six flower options on their medical menu, with menus varying store to store if it is a chain. Meanwhile, other stores, sometimes in the same town as the flower-lite store, have adult-use flower menus with 20-plus SKUs and medical menus with 25 or so SKUs.
The situation is so fluid that the number of SKUs is changing in real-time, but in the current environment of scarcity the laws of supply and demand rule with an iron fist and without compassion. Product is grabbed up quickly, prices are kept high, and those with an advantage in the supply chain use it. In the case of cannabis and Connecticut, that means the state’s precious few vertical operators have a decisive edge, and the result of that does not feel theoretical if you happen to live here. At the moment, if one wanted to purchase adult-use flower in Manchester, Connecticut, for instance, and they wanted have a choice of more than a few strains without driving 20-30 minutes, they are limited to one dispensary. Even if they make the 20-30 minute drive, however, they will still have a much smaller selection of flower to choose from than if they had remained local and shopped at the vertical company dispensary where a selection of flower is available, and prices are sticky and high.
For experienced cannabis consumers, of which there are many throughout the nation, that scenario sounds a lot like the dealer world they inhabited before states went legal, only without the taxes, the mind-numbing regulations, and the mids that far too often have been remediated to death. That’s not to say there is anything wrong with mids – they have their rightful place! – but it’s also fair to say they should not define the pinnacle of a state’s weed-producing capabilities.
More to the point, the situation in Connecticut is utterly unacceptable from a consumer and patient point of view. After all, who would not resent having to pay a tax for the privilege of being forced to shop at a particular retailer, only to be offered a selection of flower much of which was produced by that same retailer? It’s simply maddening when experienced first-hand.
To the credit of activists in the state, and not the state itself, Connecticut does have home grow, which is huge despite the weird rules that are around it. Still, home grow is not the answer to the problems that bedevil the state’s program overall. That will only come with a diversity of choice at the retail level, and the ability of consumers and patients to decide for themselves where they want to shop, and for what, and that is not the case for cannabis flower consumer in Connecticut right now. Ironically, there are plenty of preroll SKUs on most menus, and prerolls are flower, so that’s good, but it could also mean that preroll production has been prioritized over raw flower because they make everyone more money.
Whatever the present looks like – and it doesn’t look good from a flower perspective – things are reportedly going to change in the state as far as new cannabis businesses opening, including a number of cultivators, but the time-frame and makeup of these new businesses remains to be seen and a slew of questions remain how the current situation came about in which the supply of the core product of the industry has run dry. Yes, the other categories – prerolls, vapes, edibles, concentrates, tinctures, and topicals – have remained more or less consistent with their normal levels, but flower, the one item that accounts for over 50 percent of monthly sales in Connecticut, has for some reason become a scarcity in some stores, but not in others. These are hallmarks of a captive market that has tipped in favor of a few vertical companies, and the question for Connecticut is why it happened – was it a quirk of fate or by design – and what needs to be done to fix it in the present and prevent it from happening in the future.
Cannabis Business Executive has requests for comment out to the Department of Consumer Protection, to several Connecticut retailers, vertical and otherwise, and to the state’s only cannabis lab. One written response has been received thus far.
Benjamin Zacks, COO of Fine Fettle, which operates four dispensaries in the state, with more on the way, replied last night in an email. “There is definitely a supply shortage right now,” he wrote. “We are buying all we can and moving through it.”
Fine Fettle is one of the retailers with limited flower for sale at the moment, but Zacks said they are adding more flower whenever it becomes available. “Stores who still have supply are, as of now, on their way,” he said. “We are optimistic it’ll get better, but this isn’t too bizarre for early markets. We just hoped we’d have enough. With new stores, but only one micro-cultivator fully built, the equilibrium is a bit off. We know a number are under construction, but it takes time.”
This story, a cautionary snapshot in time, will be updated as necessary.
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