Complaints about the high cost of cannabis have become common across Canada ever since the nation legalized recreational consumption last month. But rather than addressing that problem by offering cheaper buds, Canadian cannabis CEO Torsten Kuenzlen wants to do the exact opposite. Torsten and his company Sundial - an Alberta-based cannabis producer - plan to begin selling $100 grams.
"Look out for our hundred dollar grams next year," he announced earlier today at the Marijuana Business Daily Conference in Las Vegas. "It’s going to be a helluva ride.”
And it's a ride that Kuenzlen encourages other cannabis businesses to take in order to grow the industry, which he says is stuck in an outdated mindset that values how many square feet of cannabis you can grow, rather than looking at how much revenue each square foot can reap by cultivating premium cannabis.
This comparison of quality over quantity "needs to be massively corrected, so we’re going to swim massively against the stream," he said. "Right now, the highest quality gram is about $27 — that’s going to be a joke in the future when we’re selling hundred dollar grams."
Sundial's bold move is an attempt to cater to an obvious yet overlooked area of consumer demand, according to Kuenzlen.
"Consumers want more variety, connoisseurs want more quality. Right now, the gap between good cannabis and the best cannabis is about $2 [per gram]," he noted. Meanwhile, the gap between cheap and premium wine is hundreds or dollars or more. So Sundial wants to create a similarly broad range for cannabis brands.
And for skeptics who think that the market for premium marijuana is unsustainable, Kuenzlen recommends taking a look at the market trends for premium alcohol.
"Do the prices ever go down for the best brands of wine and whiskey in the world? No, they don’t, and they never will," he said, and he expects the same will happen with premium cannabis.
Swimming 'massively against the stream'
Kuenzlen's advice not only goes against conventional wisdom but government policy. Undercutting the black market is one of the main goals of cannabis legalization in Canada, where Prime Minister Justin Trudeau has repeatedly stressed that to cut illicit dealers out of the marijuana market, businesses must offer competitive prices. That's why he insisted on imposing a low tax rate for cannabis.
"The fact is that if you tax it too much, as you saw with cigarettes, you end up driving things toward a black market, which will not keep Canadians safe—particularly young Canadians," Trudeau said after introducing his plan to legalize cannabis in 2015. Two years later, the C.D. Howe Institute - a Canadian think-tank - suggested keeping the price of a gram around $9 so that legal retailers to compete with the black market.
But Kuenzlen disagrees. "The cannabis industry is not going to win by outproducing and underselling the black market," he stressed at the MJBizCon. Instead, he thinks it's far more important to offer competitive quality instead of trying to help consumers save a nickel here and a dime there.
"It’s not about how much bad cannabis you can produce, but how much good cannabis you can produce," he explained. "We’re going to stamp out the black market when consumers get better value than they can get from their current brand. And what is their current brand? Some guy. Where does it come from?" Wherever that guy claims, added Kuenzlen, who argues that legal retailers will only defeat the black market "when we can replace 'some guy' with a brand that offers consistent quality."
And the first step to doing that, he added, is to stop obsessing about price and start stressing the importance of value.
"Price is what you pay, value is what you get. There are people out there who are willing to pay $20 or even $30 dollars a gram. We just haven’t given them the opportunity" to buy it yet.
Stop marketing cannabis strains
Part of offering better quality is improving customer service. And that means putting a stop to the obsession with strain names in cannabis culture, according to Kuenzlen. To illustrate how overrated strains are, he displayed four words on the jumbo screen: Cavendish, Dokha, Criolla and Perique. And when nobody in the audience could identify any of the four, Kuenzlen explained that they are names for tobacco strains.
"Do we care? No. Neither do millions of [tobacco] consumers around the world. Do you see any parallel to our industry? What are we talking about today? We’re talking about strains...but will [average] people really go into a store and say, 'Do you have any Purple Monkey Balls?' Is that the kind of industry that we want it to be? Is that the kind of industry that consumers want it to be?"
But while few people will weep if 'Purple Monkey Balls' disappears from dispensaries, they might object to Kuenzlen's larger vision for a reassessment of cannabis nomenclature.
"Do consumers really care about names like indica, sativa and hybrid?" he asked the crowd. "[Should] we bother them with the nomenclature or just focus on the effect they want?"
To do that, Sundial plans to replace strain names with three categories for cannabis: Heal, Help and Play.
Most consumers "use cannabis to heal, to help with their general wellbeing, and to play," he explained. "We need to be able to let consumers know what they are getting and how they should take it...So is there going to be a shelf for sativas and one for indicas and for hybrids in future dispensaries…or should we not go down the proven path of motivation and need states?" In other words, labelling and organizing cannabis strains based on why the consumer is interested in them and what needs the strain can fulfill, not its genetics or its funky nickname in cannabis culture.
"The consumer doesn’t give a shit about any of that," Kuenzlen said. "They use cannabis to heal, to help with their general wellbeing, and to play….If we make this less scary for them, there is no limit to how far can we go."