Why we focus on selling “ingredients”

Scott Willis of Grizzle has an excellent article today — Edible Economics: The Gold-Plated Marijuana Cookie — that explains (indirectly) why the Thai Cannabis Corporation is focusing on selling ingredients rather than cured flower.

Here’s the key infographic:

path-flower-to-cookie

Among other things, note that the article cites a retail price of $12/g for “high quality cannabis oil.” Our business plan assumes that we’re selling such oil for $5/g, which leaves room for a retail markup of 2.4x (140% margin), which is in line with industry norms.

The article goes on to say that “Edible prices generate extremely attractive margins at almost 92%.”

The money quote:

“The legal producer that wins will be the first to become a large-scale extraction supplier and the one that is vertically integrated and can take the marijuana from seed to flower to oil to cookie.”

Which we agree is 100% true, except that we would append, “…at an internationally-competitive price,” which no North American producer can deliver. At that game, only Thailand can win.

We’re focused on selling cannabis ingredients because

  1. We can make a lot of money doing it, and
  2. Ingredients are the critical element needed to establish Thailand as the leader of the global cannabis industry, from flower to oil to cookies (and to beverages, cosmetics, medicines, etc.).

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