Cannabis executives spent years predicting that flower would fade as consumers shifted to concentrates, edibles, and vapes. They were wrong, according to Grown Rogue CEO Obie Strickler.
Strickler argues that industry leaders fundamentally misread the market when they bet against traditional bud. Despite waves of innovation in extraction technology and new product formats, flower has maintained its dominant position with regular consumers.
The miscalculation represents a significant strategic error for companies that reduced their cultivation capacity or pivoted away from premium flower production. Many operators assumed that as legal markets matured, consumers would mirror patterns seen in other industries where novel products typically displace traditional formats.
The Numbers Tell a Different Story
Flower consistently accounts for 40-50% of total cannabis sales in mature markets like Colorado and Washington, even years after legalization. In California, flower represented 42% of the $5.3 billion legal market in 2023, according to state data.
Concentrates and vapes grew their share, but largely by expanding the overall market rather than converting dedicated flower consumers. The predicted wholesale collapse of flower prices happened, but demand volume remained robust.
Grown Rogue, an Oregon-based cultivator trading on the Canadian Securities Exchange, maintained its focus on premium flower even as competitors chased higher-margin extract sales. The company operates cultivation facilities across Oregon, Michigan, and Illinois.
Why Executives Got It Wrong
Industry analysts point to several factors behind the miscalculation. Many executives came from industries like alcohol or pharmaceuticals where product innovation typically reshapes consumer behavior quickly. But cannabis consumers proved more loyal to traditional consumption methods than anticipated.
The rise of vaping did pull some consumers away from combustible flower, particularly among health-conscious users and those seeking discretion. Yet the core market for flower held steady, driven by price-conscious consumers, connoisseurs who value cultivar-specific effects, and users who simply prefer the ritual of smoking.
Several major MSOs reduced their flower cultivation in 2021-2022, expecting concentrates to dominate. That shift left gaps in the market that smaller, flower-focused operators like Grown Rogue filled.
What It Means for Cultivators
The persistence of flower demand has implications for how operators allocate capital and cultivation space. Companies that maintained robust flower programs weathered the market downturn better than those that over-invested in extraction infrastructure.
Premium flower also offers differentiation opportunities that commodity concentrates don't. While vape cartridges have become largely interchangeable in many markets, top-shelf flower still commands loyalty and price premiums from consumers who can identify quality.
But the flower market remains brutally competitive. Wholesale prices in Oregon dropped below $500 per pound in 2023, forcing cultivators to compete on operational efficiency rather than just quality.
The Path Forward
Strickler's perspective reflects a broader debate in the industry about whether cannabis will follow the premiumization path of wine and craft beer, or the commoditization path of tobacco. The answer appears to be both, with distinct consumer segments demanding very different products.
For now, flower smokers never left. The question is whether the next generation of consumers will maintain that loyalty, or if younger users entering legal markets will gravitate toward the convenience of vapes and edibles.
Early data from newer markets like New York and New Jersey will provide insight into whether established legal markets are outliers, or if flower's dominance represents a fundamental characteristic of cannabis consumption that transcends market maturity.
This article is based on original reporting by hightimes.com.
