7 ways grading standards are improving the legal cannabis market
By Gregory Frye
Imagine running a commodity-driven business in an industry where there is almost zero standardization and a lot of communication gaps. Throw in a gauntlet of compliance and regulations, widespread stigma and little to no banking access along with complete federal restrictions — and there you have the cannabis industry.
Fortunately, stakeholders and industry players are seeing progress. The cannabis sector is gradually finding itself in a new era of maturity and smarter business practices. One of the most exciting pieces of the puzzle—up and down the supply chain—are the grading standards provided by entities such as the International Cannabis and Hemp Standards (ICHS), as well as Aperon Corporation and its ecosystem of cannabis grading, brokering and tech solutions.
To get a better idea, here is a breakdown of some of the biggest benefits grading standards bring to the cannabis industry.
1. MAKING LIFE EASIER FOR SUPPLIERS
Cannabis cultivators have a tough job. We all want them focused on growing the best possible products for their market, and having to go out and find buyers for that product—at a fair market price—can be a big distraction.
Jhavid Mohseni, CEO and founder of Aperon, whose subsidiaries include Big Tree and Tamerlane, has a saying – “farmer first,” because he believes a healthy supply chain begins with a healthy grower.
“Suppliers and farmers, the main thing they get with standardization is fair market pricing, consistent sales and it allows them to focus on their core business rather than worry about how much their product is going to be sold for and if they are going to have the right buyer,” says Mohseni.
2. ELIMINATING CONFUSION ABOUT MARKETPLACE VALUE
Fair, accurate marketplace pricing goes both ways for buyers and suppliers. Because cannabis is such a fickle and sensitive crop, third-party, objective standardized grading is absolutely necessary for the integrity of smooth transactions between suppliers and buyers.
Having that certificate of grade verifies the true quality and market value of the product, so that buyers and suppliers know exactly how to manage their expectations and budgets.
3. BUYERS KNOW EXACTLY WHAT THEY’RE GETTING
On the wholesale marketplace, buyers need to be able to make informed decisions. In fact, their jobs and businesses depend on it.
Rather than a cultivator trying to subjectively pitch them on the quality of their product, grading standards provide all the quantitative and qualitative data a buyer needs to select the exact type of cannabis they require. Eric Cozens, CEO of Big Tree Grading, weighs in on the nuances and value of the grading standardization process.
“We’re not saying a specific cannabis lot is good or bad. It’s more like ‘this is what it is,’ and it’s not based on effect or consumer preference, it’s more commodity driven,” says Cozens. “How is it grown, what’s the structure, what’s the smell — the focus is on the aspects we can objectively define and talk about, rather than a connoisseur or sommelier approach.”
4. CREATING A SECURE SUPPLY CHAIN
A healthy supply chain is important for the success of the entire industry. Grading standards add value to all parts of the cannabis supply chain in several ways. The most important factor here is that grading standards ensure sound buying decisions, fair market pricing and can help prevent contaminated products from reaching the marketplace.
In other words, everybody in the supply chain wins — from growers to retailers and everyone in between.
5. CREATING A CLEAR, COMMON LANGUAGE
The cannabis industry is rife with different ways of describing the same thing. This can make it confusing for buyers and sellers, which translates into a loss of time and money.
“The market is fractured because in the past people had to operate with security and confidentiality in mind. Best practices weren’t shared, and so people established their own language systems and processes,” Cozens says.
When we bring cannabis grading standards into the equation, suddenly everybody has a common language to work from — which creates a much more streamlined approach to buying and selling on the marketplace.
6. BUILDING TRUST BETWEEN BUYERS AND SUPPLIERS
Long-term relationships in any industry are important, and it takes time to build the necessary level of trust where people can move forward together with confidence.
However, grading standards can speed up this process significantly because they allow buyers to immediately verify what suppliers are producing by way of qualitative and quantitative data points. A lot of the necessary due diligence needed to build the foundation for that trust is right there in the certificate of grade.
While this may be new to the cannabis industry, as Mohseni points out, this is commonplace in other, long-established industries — because it works.
“All we’re doing is taking something that’s proven, tried and tested in other industries and adapting it to cannabis and hemp to increase the validity in trade and build trust between the counterparts in the transaction,” says Mohseni.
7. OPERATORS CAN SCALE MORE QUICKLY AND EFFECTIVELY
The bottom line with cannabis grading standards is a healthier business environment where people can focus less on product procurement and more on improving overall operations. In an industry strangled by tight regulations, stakeholders need to find any way they can to better streamline day-to-day business dealings.
“When we work together we increase the efficiencies, we move things faster and that pushes into other areas such as legislation and overall business acumen,” Cozens says.
By embracing cannabis grading standards, the industry is essentially positioning itself on a launchpad, rocketing toward the success and sustainability that we all desire.
Gregory Frye is a storyteller, writer, editor and award-winning journalist with a love for meaningful collaboration. Most recently, he was part of the founding team at Green Flower Media, where he spent almost five years as executive online editor.