Although cannabis is recreationally legal in eleven states, black market sales are still prevalent within those markets. This is especially true in California where taxes on cannabis products can be as high as 40 percent per transaction.
Flower Co. is seeking to offer an alternative for customers. The wholesale cannabis producer has been pursuing partnerships with growers directly in order to offer the most cost-effective products as the company builds its own brand. Flower Co. refers to itself as the “Costco of Cannabis,” and they seem to be looking to develop their very own “Kirkland of Kush.”
The cannabis producer just announced it received $2.8 million in investment. According to Flower Co. Chief Executive Officer Ted Lichtenberger, the company’s main objective is not focused on peeling off customers from dispensaries, but to target consumers still purchasing cannabis on the black market. Lichtenberger feels lower prices and good deals will make legal sales more appealing to consumers on a budget.
Like Costco, Flower Co.’s plan is to build a robust membership base. Members can save up to 40 percent on purchases, though all qualifying customers over age 21 have the opportunity to purchase from the wholesaler.
Annual membership costs $119 but can pay for itself within several transactions. An ounce of the strain “Forbidden Fruit,” for example, retails at $192 without a membership but only costs members $142 dollars.
Although Flower Co. is just getting its feet wet in select California markets, Lichtenberger is planning on a slow but steady expansion.
“We understand that we’re in the first inning of what’s probably a pretty long game, because this industry, as it goes federally legalized is going to have another massive transition moment just like it’s having right now as it’s getting legalized and regulated in California,” Lichtenberger said. “So if we have a great understanding of our customers and stay focused on keeping them delighted, and then be nimble in the face of that change, then we can come out as the dominant player in the delivery market.”