When it comes to selling cannabis products, there's a lot of pressure to do things the "right" way. But what if the right way isn't actually the best way? What if the best way is actually the counterintuitive choice?

In the cannabis industry, this counterintuitive choice is choosing between CPG (Consumer Packaged Goods) and bulk sales. Each approach has its own set of advantages and disadvantages, and choosing the right strategy can make or break your business.

Let's dive into the specifics:

CPG: Branded Products That Consumers Can Trust

CPG refers to cannabis products that are pre-packaged and labeled for direct sale to consumers in retail stores or online. Examples of CPG products in the cannabis industry include pre-rolls, edibles, and vape cartridges. These products are often branded, consistent, and packaged in a way that makes them more appealing to consumers.

Advantages of CPG

One of the main advantages of CPG is that it allows cannabis businesses to create a consistent, branded product that consumers can trust. According to a report by Brightfield Group, branded products accounted for 44% of cannabis sales in 2020, up from 37% in 2019. CPG products are also easier to market and sell, as they are packaged and labeled in a way that makes them more appealing to consumers. Additionally, CPG products can be sold at a higher price point, as consumers are willing to pay more for a packaged, branded product.

Disadvantages of CPG

The main disadvantage of CPG is that it requires a significant investment in packaging, labeling, and branding. According to a report by New Frontier Data, packaging and labeling costs account for up to 10% of the wholesale price of cannabis products. Additionally, CPG products require compliance with strict regulations surrounding labeling and packaging, which can be time-consuming and costly.

Bulk Sales: Selling Cannabis Products in Large Quantities

Bulk sales refer to selling cannabis products in large quantities to other businesses or wholesalers. This approach is often used by cultivators or manufacturers who want to sell their products in larger quantities, rather than packaging and selling them to consumers directly.

Advantages of Bulk Sales

The main advantage of bulk sales is that it allows cannabis businesses to sell their products in larger quantities at a lower price point. According to a report by BDS Analytics, bulk flower accounted for 68% of all cannabis sales in 2020, up from 62% in 2019. This approach is often used by cultivators or manufacturers who want to sell their products in large quantities to other businesses or wholesalers. Additionally, bulk sales require less investment in packaging and branding, making it a more cost-effective option for cannabis businesses.

Disadvantages of Bulk Sales

The main disadvantage of bulk sales is that it requires a strong network of business connections and relationships. Cannabis businesses that want to sell their products in bulk need to have strong relationships with other businesses or wholesalers in the industry. Additionally, selling products in bulk can be riskier than selling CPG products, as there is a higher chance of products being rejected or returned due to quality issues.

Which Strategy is Best?

The choice between CPG and bulk sales ultimately depends on your specific needs and goals. According to a report by Headset, the choice between branded products and bulk flower largely depends on the consumer demographic being targeted. For example, baby boomers and Gen X consumers tend to prefer pre-packaged, branded products, while millennials and Gen Z consumers are more likely to buy flower in bulk.

It's also important to consider the current market conditions. During the COVID-19 pandemic, for example, the demand for CPG products increased as more consumers shifted to online ordering and home delivery. According to a report by Brightfield Group, the pandemic led to a surge in demand for cannabis products, with sales increasing by 38% in 2020.

Ultimately, the key to success in the cannabis industry is to understand your target market and their preferences, as well as the current market conditions. This will help you choose the strategy that aligns with your goals and resources.

Final Thoughts

CPG and bulk sales are two approaches that can make or break your cannabis business. While CPG products can create a consistent, branded product that consumers can trust, they require a significant investment in packaging, labeling, and branding. On the other hand, bulk sales can be a more cost-effective option, but require a strong network of business connections and relationships. There’s also much debate whether it’s a viable long term model for many, however that’s a post for another day.

The choice between CPG and bulk sales ultimately depends on your specific needs and goals. By understanding your target market and the current market conditions, you can make an informed decision that sets your business up for success in the dynamic and ever-evolving cannabis industry.