Colorado's cannabis industry has seen a wave of new owners over the past two years, with the majority of dispensary chains now owned by out-of-state corporations or publicly traded companies. Native Roots remains one of the largest Colorado cannabis brands that hasn't abandoned its Rocky Mountain ties.
Record-low cannabis prices and a sustained drop in dispensary sales have pushed the once-flourishing trade into trickier territory, however. Bringing Colorado Springs — where only medical marijuana sales are allowed and Native Roots owns four stores — into the recreational fold would have relieved some pressure, but in November, voters there rejected a ballot measure that would have allowed retail sales.
Political campaigns and a downward economy aren't the only challenges the company faces, yet they haven't prevented Native Roots from expanding into twenty locations across the state. To find out where the company is headed next and what Colorado cannabis should expect in 2023, we sent a handful of questions over to Native Roots executives.
Westword: Colorado's cannabis prices are at record lows, and economic forecasts from the governor's office don't expect revenue to rebound until 2024. Do you see the industry being stuck in a rut for another year?
Native Roots CEO Jon Boord: Given the continued supply-chain issues, post-pandemic changes in demand, the saturation of product offerings and general inflation metrics, we’ll likely see an industry "correction" in 2023, and potentially beyond, until these issues are stabilized.
How do dispensaries and product manufacturers pull themselves out of these tough economic times?
COO Beth Kotarba: Planning is key to managing supply to demand. Aligning our production to customer demand for flower, biomass and manufactured products while keeping quality a top priority is essential to ensure the market is not flooded, further impacting pricing. Disciplined spending is also key to match revenue expectations, and continuing to prioritize the customer by offering exciting products and a unique experience is a must.
Native Roots is one of the only large chains participating in delivery right now. How much of a challenge has that been, and how beneficial do you see delivery being for your Denver presence?
Chief sales officer Denise De Nardi: Native Roots is the only large chain participating in Denver delivery with a social equity partner. We believe in meeting customer needs based on their shopping preferences, and the demand for delivery grows each month. Delivery in Denver has given us the opportunity to develop a strong partnership, and it will continue to be a part of our customer experience strategy.
Colorado Springs voters rejected recreational cannabis sales in the 2022 election. With the Springs no longer on the table for recreational expansion, what towns or regions in Colorado are attractive for new Native Roots dispensaries?
Chief legal officer Kelly Archer: Native Roots is very much committed to the Colorado Springs market, and we’re working hard to support legalization of recreational cannabis in 2024. We have a dedicated expansion department that is continually evaluating optimal locations for the Native Roots brand.
There were over a half-billion dollars' worth of cannabis acquisitions in Colorado during a down year in sales, with many of those purchases made by companies located out of state. What makes Colorado's cannabis market attractive to buyers, even during a down year?
Boord: The Colorado cannabis market has many attractive qualities. It is a mature market with relaxed residency requirements and a tried-and-tested regulatory scheme. There is also a sense of professionalism in internal operations that only comes from years of experience.
Do you see 2023 having a similar pace of cannabis acquisitions in Colorado?
Archer: We think the feeding frenzy has passed and the multi-state operators are taking a look at streamlining their operations. That being said, unfortunately, the smaller operators are struggling, and we may see more companies closing shop. If the Safe Banking Act fails to pass this year and our state and local government regulators continue to raise taxes and place other regulatory burdens on our industry, the current hardships we’re seeing will remain.
Whether it be at the Colorado Capitol, on the business front or in the cultural sphere, what issues or trends do you see the cannabis industry and Native Roots navigating this year?
Public policy and affairs manager Liz Zukowski: At the Capitol, our industry has an opportunity — and what we see as a responsibility — to educate the historically large class of new legislators on the history of cannabis policy in the state, the struggles we face as an industry, and the work we are doing to uplift social equity in cannabis and our communities. Ten years post-adult-use legalization in Colorado looks a lot different than where we were in the early days, and the continued professionalism and institutional growth we see in the industry is an asset that legislators need to leverage.
Other industry trends we’ll likely see this year include smaller operators going out of business, potential movement on the federal government's scheduling review process and safe banking legislation, more municipalities opening up to recreational cannabis through council actions or ballot measures, and the continued struggle to seek adequate regulations and protect the health and safety of our communities from the unregulated sale of Delta-8 THC and hemp-derived THC products.
Are Native Roots co-owners Josh Ginsberg, Rhett Jordan and Peter Knobel still involved in an internal legal battle with each other over an alleged breach of their operating agreement? How does that affect the Native Roots operation and expansion plans?
Boord: Native Roots is not a party to the owners’ dispute, and since the majority owners are not involved in the day-to-day operations of the company, any dispute between them does not affect the continued success of Native Roots as the most recognized cannabis brand in Colorado. We continue to focus on the important work of maintaining a strong company culture, offering exceptional products and creating the best possible experience for our customers.