![Courtesy of Full Moon Farms](/remote/aHR0cHM6Ly9naWVjZG4uYmxvYi5jb3JlLndpbmRvd3MubmV0L2ZpbGV1cGxvYWRzL2ltYWdlLzIwMjIvMDUvMTYvY2J0cGhvdG9mdWxsbW9vbmVyaWNrc29uYW5kZnJpZW5kczEuanBn.TslRiZjTRkg.jpg?w=948&h=533&format=webp&mode=pad&anchor=middlecenter&scale=both&bgcolor=F0F1F2)
Courtesy of Full Moon Farms
![full moon farms grower](/fileuploads/image/2022/05/16/CBT%20Full%20Moon%20cultivator.jpg)
Another spring planting season for California’s legal cannabis growers is a time for optimism, an outlook curbed by a bevy of issues holding back the industry from its full potential.
Operators interviewed by Cannabis Business Times pointed to an ongoing supply glut, ever-changing state regulations and the still-thriving illegal market as obstacles negatively impacting their work this year. Yet, cannabis entrepreneurs continue to stay nimble in their daily functions as they wait for the pendulum to swing the other way.
Full Moon Farms, a small-scale business with three separate properties in Humboldt County, has 2.6 acres of sun- and greenhouse-grown cannabis canopy. Owner Nik Erickson works from a trio of disparate microclimates in growing strains such as Ice Cream Cake and Northern Berry.
Erickson enjoyed a hot sales year in 2020 before backsliding somewhat in 2021 with a declining market share for flower that remains a thorn in the side of California’s licensed cultivators. According to the California Cannabis Industry Association (CCIA), flower sales in March 2021 totaled $207 million, or just above 43% of total sales. In 2022, flower sales totaled about $150 million, or 37% of total sales.
“Farms got stuck sitting on product, which hit the bottom line for smaller operators that don’t have the wiggle room of the bigger, well-financed farms,” says Erickson.
Even as legal cannabis sales in the state increased by 7% from February 2021 to February 2022, transactions on a month-to-month basis over that time have contracted to pre-pandemic levels. Additionally, an unequal balance of supply and demand has created a bottleneck for businesses in Humboldt County and elsewhere. Roughly 1,000 brands in California have created a surplus for approximately 850 licensed retailers, making it difficult for Full Moon and others to gain much-needed market access.
“Ask an L.A. dispensary for Humboldt County sun-grown and you may find one brand,” Erickson says. “The access is not there, especially if you’re trying to kick up your own brand. Everything is so saturated, and consumers get lost in that.”
Tapping Into New Markets
Stone Road Farms, which grows its cannabis on a 10,000-square-foot plot in Nevada County, recently completed its first-ever spring crop. Founder Lex Corwin is excited to package “400 pounds of grade-A buds” into jars, prerolls and a new line of bubble hash.
“Everything went right this season, which never happens in cannabis,” says Corwin. “This is an opportunity to bring fresh product to market while other brands are getting gouged, and outdoor farms not having their product out until the end of August.”
![stone road farms](/fileuploads/image/2022/05/16/CBT%20Stone%20Road%20cultivation%20shot.jpg)
Stone Road has enjoyed a strong sales year so far, with the company’s infused prerolls a particularly popular product. (Corwin also recently launched in Massachusetts, selling 30,000 joints in nine days.) The company founder aims to finish 2022 with $5 million in topline sales, even if not every aspect of operating in California is sunshine and rainbows.
READ MORE: California’s Cannabis Industry Marred by Limited Supply Chain and Heavy Tax Burden
Following two years of buildout and working with the county to become legal, Stone Road must still contend with an illicit sector that exceeded $8 billion in sales in 2020, per figures from Global Go. The increased cost of licensing alone ups the stakes when illegal growers can simply ignore those regulatory hurdles.“It’s ridiculous how much of our business goes toward a county cultivation tax, but a mile from my office is an unlicensed consumption lounge,” Corwin says. “I went in there and never heard of any of their products. It was clear that it wasn’t a legal shop.”
Price compression sparked by competition between legal and illicit markets hasn’t stopped Stone Road from getting its product into dispensaries. After serving on average 30 to 50 retailers a month last year, Stone Road is now selling its wares in more than 300 dispensaries.
Shop owners are hitting up Corwin on the NABIS distribution marketplace. Stone Road’s best-selling SKU is a five-pack of hash infused joints. Overall, the cultivator sells between 400 and 500 pounds of cannabis each month.
“We’re also trying unique collaborations, like one with Sundae School for our first edible hash-based gummy,” says Corwin. “They have a clothing line they’re going to design along [with the product]. We have to tap into new markets.”
Getting Nimble in Tough Times
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Flexibility is the watchword for Erickson at Full Moon, who in recent times has turned to white labeling for a financial boost. About 90% of the company’s grow is sold to a purchaser, which then uses its own brand to market the product.
Erickson is also scaling back spending around cultivation by relying more on automation. What’s more, Full Moon grows later in the season, cutting man hours while producing a smaller plant.
“A small plant is better than a ten-pound seed plant which is going to have so much wasted biomass,” says Erickson. “We have to pick the right strains, and it’s got to have that eye-popping bag appeal no matter what. But we’ve definitely been scaling back on infrastructure upgrades, unlike the last five years.”
Although the market is forcing growers to produce high-THC strains, Erickson is confident that consumers will return to the more nuanced artisanal space. Part of the onus is on cultivators to educate the public on the gulf between cheap vs. good.
Erickson says, “We see it as a craft product while competing with the commodity market. It’s apples and oranges, but the commodity market pulls down everyone including the craft farmers. We can’t let quality slip. As long as we meet the commodity market’s price point, then superior quality can sail over top of the commodity product.”
Grim present aside, there is a positive path forward for small regional growers, Erickson says: “It’s about adapting, and it’s our fight to lose. We were here before legalization. I see a future for us and good things coming for Humboldt County.”
Corwin of Stone Road is similarly optimistic about a larger-scale embrace of authenticity and quality, even if waiting for the tide to turn is the hardest part.
“Please support small-craft farms,” says Corwin. “You don’t even have to support Stone Road, just make sure your dollars are putting a roof over the heads of the people who built this industry.”
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