I am a purchasing manager for a cannabis retailer in Los Angeles. I have noticed in the past six months, or so, that there are more and more exclusive deals going on between certain brands and retail/delivery services. Some retailers (a couple I know of backed by hedge funds) are getting exclusive deals with popular brands by buying out huge amounts of inventory on their top products ($30,000+ at a time), or even going as far as paying sales reps directly for exclusive deals. Sales reps love this because they earn bigger commissions and hit sales goals quicker and will comply with requests to not offer top products to neighboring retailers. Some brand owners are even unaware their sales reps are engaging in it. I know this because I've spoken to ownership partners of retailers doing this.
As you would think, some of these retailers can't even sell through their big purchases because they don't have enough foot traffic. A lot of times this leads to massive BOGO deals and/or forced destruction of huge amounts of unsellable/expired product. One would think it wouldn't be cost efficient to do this - it isn't - but the long term game being branded as an exclusive retailer may pay off down the road if you can afford it, which is a gamble all in itself. I believe this disadvantage to other retailers without that purchasing power is going to be a huge problem in the future as it becomes more prevalent and as brand awareness grows at the same time. The bigger, more interesting part, is the SEC may have laws against this behavior. The question is, do they apply to the cannabis industry?
If not, are we seeing more signs of corporate cannabis taking over the industry?
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