Today’s estimated $75 billion legalized marijuana market enjoyed the highest of times in 2014, two years after recreational weed became legalized in Colorado. Dispensaries opened their doors to the delight of millions of Americans who could finally partake legally in the United States. Growers, retailers and the state government were basically printing money as premium pot flew off the shelf for upwards of $3,000 per pound—wholesale. As the fledgling industry matured, supply inevitably began outpacing demand, contributing to the commoditization of cannabis that sent prices plummeting over 60%. This drastic correction in the market forced many once profitable businesses to go up in smoke.
Which companies will ultimately survive Colorado’s mercurial marijuana industry remains to be seen. But the four cofounders of Toast Holdings Inc. say they built their company with this exact scenario in mind. By leveraging their collective brand-building experience, thinking outside the box, and implementing a cannabis portfolio that mirrors a luxury alcohol model, like Moët-Hennessy, Toast is steadily building a marijuana empire, one state at a time.
Much like consumers’ current demand for transparency in food, Colorado residents have come to expect the same in their cannabis. While it might seem natural for every brand to jump on the “weed” (i.e., flower or bud) bandwagon, surprisingly few companies focus on pot in its natural form. These days, producers can literally extract more “bang for the buck” with high-potency concentrates such as oils, edibles and wax.
Despite being all the rage right now, the truth is that marijuana extracts are engineered in a lab and combined with chemical ingredients that have barely been studied for long-term human interaction. In all fairness, while marijuana flower has existing guidelines to regulate pesticides and fertilizers, insiders confess the rules are difficult to fully enforce, and unethical growers have been known to take advantage. For this reason, Toast CEO Punit Seth, formerly of Bridgewater Associates, the world’s largest hedge fund, believes that cannabis will follow the transparency trends in the food and liquor industries, but at a much faster rate.
“As consumers become more educated, we expect them to demand responsibly-sourced products and have an increased interest in natural cannabis flower, especially when dosed appropriately. When we launched Toast, we agreed we would never take shortcuts that compromise product quality for quick profits and self-regulate at standards defined by the food and beverage industry.”