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The Future of Seeds

How access to retail will affect the seed game
By Colin Gordon & Ben Owens

The landscape of seeds as we know it is going to change so dramatically it will be almost unrecognizable.

In January 2022, Terrence L. Boos, Ph.D., Chief of the DEA’s Drug & Chemical Evaluation Section penned a letter clarifying that all parts of the cannabis plant are legal so long as they contain less than 0.3% THC.1 

‘The term “hemp” is “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”’

The DEA letter went on to state that, in addition to seeds, “tissue culture and any other genetic material that has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis meets the definition of “hemp” and thus is not controlled under the CSA.”1

In short, all parts of the cannabis plant that contain less than 0.3% THC are not considered controlled substances, and are unregulated (“legal”).

Since this clarification, some of the nation’s biggest distributors of consumer goods are starting to look at the different potentials of offering cannabis seeds as a product. But what’s most important is not what these distributors are trying to do—it’s the fact that there’s a new retail movement emerging.

When distributors—including one of the largest wine and spirits distributors on the west coast—reached out to ETHOS about this potential emerging market and their involvement and distribution of our product, we realized it wasn’t just about carrying seeds in liquor stores, but the possible crossover into the retail sector.

The DEA greenlight will change everything we know about seed buying.

Let’s start with the domino effect that this kicks off with merchant services. It may take a month (or six), but merchant services will begin to allow seed sales because the government has outright stated that this is an unregulated product.

All of the distributors that already exist just had their jobs made easier because they can use normal merchant services (credit cards) without getting shut down or having funds seized.

As far as its classification on a federal level, cannabis seeds are the same thing as a “hemp bracelet.” 

You could not ask for a better scenario than ‘unregulated.’

Legalized means red tape, which is not a thing when it is an uncontrolled and unregulated product, and this will cause a massive butterfly effect. The second that people see cannabis seeds on retail shelves—hydro stores, garden centers or otherwise—it will trigger the thought of, ‘Where else can they be sold?’

People who do not know how to buy online, or otherwise don’t enjoy buying online, will now have access to seeds in familiar retail settings. 

A generation of people that won’t ever know the challenges of the current seed buying market can now pick them up at a familiar retail establishment. Some people that buy online may start buying brick and mortar, but seeds being available at retail stores likely won’t change how current shoppers buy their seeds based on initial availability. These distributors will be supplying multiple markets. 

Retail access will bring in a huge wave of new seed buyers.

Maybe they are people who get cuts or seeds from other people and don’t know how to access seeds or who to trust online. There have always been obstacles when purchasing seeds, especially for the uninitiated. Soon, a person will be able to walk into a store, buy a light, nutrients, a tent and a pack of seeds.

And for those that continue to buy online, there will be less friction when it comes to purchase and delivery of the product. 

I don’t see retail sales as a threat to online distributors. Operations will be easier for them thanks to merchant services, and the ability to operate and advertise with impunity.

90%+ of current seed companies won’t be here in 10 years.

This is a comet—a “once in every 60 million years” comet—to this industry. Most seed companies won’t make it because they won’t pivot properly in an industry that is dramatically changing and will continue to do so.

There is going to be an influx from various companies trying to take advantage of these new available markets. Whatever that means in terms of pivots—taxes, operations, compliance—most of the current industry will not be able to meet demands at scale. 

Retail access to seeds normalizes seed purchasing. 

It is normal to go buy weed at a store now. It’s never been normal to do that. Even places like New Jersey and Montana that have historically been conservative to cannabis have gone recreational. And those markets are full of people who are new and are not remotely savvy to the seed game, and are hesitant to order online for a variety of reasons.

There’s a new bell curve that’s being created, a new architecture to support our potential reach; the zeitgeist surrounding cannabis seeds will exponentially expand into a much larger group than currently exists.

It is challenging to speculate on the growth of the market in the US, but if it is not 10-20x in the next 2-5 years, I will be shocked. 

Reputation has never been more important.

Those who come to market without putting their best foot forward, without their best stuff, are going to get ridiculed. And it won’t just be underground forums and social media reviews talking badly. You’ll have 10s of 1000s of customers having experiences and going on Google to share them, and brands won’t be able to hide behind the perception of their company. New players that will come into the game selling cheaply purchased, wholesale seeds won’t sustain for very long.

There will be multiple phases of inclusion and acceptance, like anything new to a society.

At some point, it is going to be normal behavior to know that when it’s April or May, you go to the garden center and they have a rack of cannabis seeds for you to choose from. You’ll get to pick based on your planning. Selections will likely vary for indoor and outdoor in different regions, based on regional compatibility and demand. But as far as first to market, most won’t survive because of an inferior product due to them being short-sighted and myopic.

The second stage of inclusion begins as median retail prices start to go down.

Prices matter. Having worked retail, having worked in grow stores, companies that sell a similar product for 5x more will be non-competitive to the general public. Customers look for better value, and a less expensive price goes a long way. 

Any time an emerging market becomes competitive, prices drop.

Colorado weed went from $4200-4800/pound in 2009 to $800-1600/pound in 2022 for the same quality. Supply and demand will correct market pricing. Companies won’t be operating from the clandestine perspective anymore.

New labels will emerge at lower price points; their value will be determined relative to the quality at that price.

But even these new lines must be able to produce a consistent product or be left behind. This market will, like all markets, galvanize into what it is going to be over time. 

As the market develops, certain price ranges will emerge, as will their correlated expectations.

If you are selling lights in a hydro store and one is 5x the cost of another light, the former will sell more than the latter. I don’t care how much shine it has. Is anyone going to buy them? Yes. But very quickly they will be dramatically outpaced.

Distributors and stores don’t want to hold products that don't sell quickly.

They don’t want to buy product to have it sit in a warehouse or on a shelf, they want something that moves. Their job is transport and storage. The quicker the reorder, the better.

High priced stuff is going to do pretty well at first because of the novelty. 

There’s something to newness that people gravitate to across the board. Eventually, that shine wears off. Once your buddy has a great cut from an expensive pack, just get a cut. Why hunt another $400 pack?

If a store is selling packs at $500 that sold initially because of novelty and are now just sitting around, frustrations will be taken out on the distributors. In turn, these distributors won’t want to carry these products that don’t move quickly.

Retail and online distributors won’t cannabinalize one another, they’ll flourish even more as seed purchasing is normalized. And they’ll carry inventory that sells well and is consistently available. 

Retail is a larger market that will develop in tandem with the online market—which I also see increasing.

Initially, this artificial bump will make people feel good at what they do. Those high prices will be difficult to maintain.  After a few years, as the dust settles, so will prices and demand. Just like predicting that the price per pound would drop as the market established, it isn’t hard to predict that seed prices will experience a similar phenomenon. These prices are determined by production and sustainable margin, not just choosing what they believe to be a fair retail price. 

We dropped our prices a few years ago based on where I thought prices were going.

We had to evaluate what it actually costs for production and a fair margin for both the customer and for our sustainability as a company. And we try to maintain that. I’m sure there will be companies that come along that are cheaper than us, but I don’t think anyone will put out a product that has a better value. 

Above all, easier access to better merchant services will be good for the customer, and will allow for a more diverse market at a better value. 

Major institutions will adopt seeds based on internal politics.

Banks and large institutions move slowly when adopting change. They are aircraft carriers, not speedboats.

As people start calling hydro shops and garden centers and nurseries asking for cannabis seeds, they will start to carry them. The more interest, the quicker businesses will respond. 

But, as the industry develops—how I see it—there will end up being two markets: organically-made seeds and “others.”

Genetically-modified and digitally-edited seeds certainly will find their way to market, both knowingly and unknowingly to the commercial and retail customer. Commercially, there is an attractiveness to the ability to grow from homogenized, predictable seed that’s also pathogen and mold resistant.

It will come down to the decision of the grower, of the dispensary, and whether their customers will be cool with GMO cannabis products.

The infiltration of cannabis GMOs will be insidious, mostly due to people unknowingly breeding with GMO offspring. But they will find their way to the markets. It’s what they do.

A lot of people won’t feel comfortable buying flower from companies that grow seed from known GMO sources. But there will be large facilities that are struggling or simply failing that will be under too much pressure to not use whatever tools are at their disposal to succeed.

They’ll be told that these GMO seeds are consistent, and easy to grow at scale. For companies that are just doing extraction, or who just want THC for edibles and topicals, it just makes sense to grow “Monsanto Sea of Green.” It will start with production, but it will inevitably take over a portion of the commercial market.

The question is: will organic seed makers like us stay relevant by offering a competitive product so people have a genuine choice?

That is a goal we have been working towards. 

I believe that GMO seed producers will be focusing on autoflowers based on their current models.

Although I am a big fan of our autos and our auto breeding program, we simply won’t be able to compete when it comes to the budgets and R&D of companies like Monsanto. As soon as they get a license, they are three years away from having every variety, every flavor, every desirable expression in genetically-modified, autoflowering seed.

Growing from seed cuts costs drastically, autos being the most efficient. 

Get rid of your mother rooms. Streamline space and staff. 

‘Every round from seed’ becomes the model, and it works.

Pennington, Shane. U.S. Department of Justice. DEA Letter. January 6, 2022.

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