This newsletter is pivoting to pets

Friday State Spotlight, grandmas for weed, pet TAM

Poll Update

Yesterday’s poll results are rolling in, and we need more answers from retailers/cultivators/processors! As it stands, over 80% of respondents say they get their pricing data from sources other than Weedmaps/Leafly. Leave a comment or send an email to liam@moneypuff.co with your suggestions!

Reader Polls

State Spotlight: New York, Part 2

** Read Part 1 of New York’s State Spotlight here **

This newsletter is a huge fan of the New York Yankees. After every win, the stadium blasts Frank Sinatra’s ‘Theme from New York, New York,’ where ‘The Chairman of the Board’ croons, ‘If I can make it there, I'm gonna make it anywhere.’¹

New York cannabis czar Axel Bernabe has a similar view of the Empire State:

We have high tourism, a lot of brand visibility, a lot of money in the state. So whatever we decide to create in New York, whatever our dispensaries decide to carry, is actually going to impact consumption patterns globally.

That’s why you hear of MSOs, they’re like, “I don’t actually want to be in the retail game in New York in the sense of owning 500 dispensaries, I just want my flagship store,” which is going to lose money. The Nike store, they lose money, but everybody leaves saying, “I need to go buy Nikes and I need to go buy this product when I go back to Iowa.”

That means that we have a responsibility to make sure that the most number of products, the greatest diversity products, gets to our dispensaries. What we’re busy creating is a model where it’s actually hyper-competitive but not concentrated. That’s what TPI and the two-tier (market structure) does.

This is true, particularly in Manhattan.² But it is only one retail strategy out of many, because New York is more than just tourists! People also live, work, and write cannabis finance newsletters here. What do those consumers want? Cheap weed!

That’s not all, of course; we also want all the high-end, craft cannabis products that Bernabe hopes retailers will supply. The two-tier market structure is supposed to enable that: retailers can’t sell their own product, and brands aren’t allowed to provide an inducement to subsidize their shelf space. Bernabe says that structure is the reason ‘you go into a wine store and they come out with some obscure (wine).’

That’s great, but what if I just want some beer on my way home from work? I would stop in at one of the thousands of bodegas and grab a six-pack. The same concept can apply to cannabis: you should be able to buy cheap weed, quickly and easily, from thousands of retailers.

What is the cheapest product a dispensary sells? Pre-rolls! Operation P.R.E.-R.O.L.L. would allow bodegas and everyone else to sell pre-rolls, and only pre-rolls; everything else will be sold at CAURD locations until the tax revenue from the program provides enough support to the social equity fund.

Speaking of taxes:

Brad Racino @bradracino

Woof. Numbers just came out for February Dept. of Taxation and Finance tax collections for adult-use cannabis. In January, the state got $20,000. February? ... $7,000.

The adult-use program in New York clearly needs a jump start. Money Puff has sent in the proposal for Operation P.R.E.-R.O.L.L. to the Office of Cannabis Management, and we encourage our readers to make their voices heard!

Medical reimbursement

Yesterday, over at Mindset Value, Aaron Edelheit broke down another proposal hoping to jump start legal weed: medical reimbursement. He wrote:

Nothing would set up a legal market quicker than to allow people to get free or $5 co-pay cannabis. The guaranteed customers and the demand for legal cannabis would be a boon for the legal industry. Just imagine someone hearing that grandma got free cannabis for her glaucoma. Imagine the demand those type of stories would create.

This newsletter also supports grandmas getting weed! The proposal has a lot of hurdles to get over, because it relies upon the healthcare system and this is the United States. But it’s great to see folks trying to think up creative solutions for the tortoise-like pace of ‘legal’ weed sales in New York.

Speaking of healthcare…

Pet TAM

We talked about TAM earlier this week. At the high end, the cannabis market in the United States is projected to be $100 billion by 2030. Which is why this stat from Bloomberg’s ‘The Open’ newsletter this morning really jumped out:

Woof. The global pet economy is projected to be worth $493 billion by 2030, putting creature caring on par with cybersecurity and fintech.

• That’d be a 54% jump from today, according to Bloomberg Intelligence, as animal lovers ramp up spending on pet pampering and health care, including $10,000 cancer treatments.

• A wave of pandemic adoptions in the US boosted the industry.  Average household pet spending reached $770 in 2021, up 13% from 2019, according to official data.

The inflated costs of healthcare, along with declining birth rates, may make this reasonable at first blush. But Money Puff readers will notice a potential error with the analysis, as it is the same one a lot of cannabis companies made. They are projecting off of inflated sales metrics from the pandemic!

Money Puff is still betting on weed, but if you are fed up with the pace of play and wanted to jump into pets, we wouldn’t blame you. (Not financial advice!) But please use realistic projections for your business!

Have a nice weekend.

King Henry, my girlfriend’s cat.

1. It’s called ‘Theme from’ because it was originally written for Martin Scorcese’s 1977 film New York, New York. This newsletter is trying to pitch Scorcese on Money Puff: Pot, Pumps, and a Pandemic.

2. I’m not sure if this exactly the point Bernabe wants to make, though. He actually seems to make two separate points in the interview: on the one hand, he likens cannabis retail outfits to profitable liquor stores, but on the other he’s saying those stores will be money-losing brand advertisements.