Bad Cannabis Retailers

I wrote about a good kind of cannabis store recently. In that article, I explained a bit about what makes it good. Texas and many other places has a big problem with bad cannabis retailers, and today I want to discuss in depth more about what makes them bad.

Many readers may not understand the complexity of cannabis, which includes three different markets: state-regulated producers and retailers, hemp cannabinoid manufacturers and retailers, and, of course, the illicit market.

Most readers are aware of the illicit market, and most know that many states have legalized cannabis for medical purposes. Most of the states that have legalized medical cannabis also have adult-use programs that open the state up to a lot of sales. Colorado was the first state to do so in 2014.

What many people do not fully understand is that the federal government opened the door to the sale of psychoactive cannabinoids by passing the Farm Act of 2018. Of course, this was not their plan! The federal government wanted to help farmers of hemp!

The market for cannabinoids has changed dramatically since 2018, and all sorts of products that comply with the Farm Act of 2018 are available now as well as many that do not. Many of these retailers are gas stations. I have nothing against a gas station, but I don't every buy sushi from them!

As I have discussed before, Texas has a medical cannabis program. It has improved, but it is still terrible. The good news is that the program will be getting a lot better soon, with the number of providers quintupling to 15 and more qualifying conditions.

Texas is served currently by three providers: Texas Original, which I have visited in Austin, where they grow and sell, and Goodblend, which is owned by privately held Parallel, and Fluent (formerly Cansortium), a publicly-traded cannabis MSO. Because Fluent (CNTMF) is publicly traded, anyone can look at its financials. Based in Florida, the company just merged with RIV Capital's Etain unit , in New York, and it operates in Pennsylvania too. The company shares an investor presentation that can educate readers more. The Texas operations are tiny: My house is bigger than their 2240 sq. ft. cultivation facility! The company is essentially broke, with $4.8 million in cash as of 3/31 and just $1 million in tangible equity (equity less intangibles and goodwill). The current ratio (current assets divided by current liabilities) is just 1.0X, a big yellow flag.

I like Texas Original, but it struggles under the current Texas Compassionate Use Program (TCUP). Hopefully, it will do better under the new laws, and perhaps the state will see some better companies address the medical cannabis market.

Some Bad Cannabis Retailers

The biggest challenge for people who want cannabinoids in Texas is that it is confusing. I don't like that companies do not educate potential customers. Instead, they try to lure them in by showing low prices for "cannabis" without saying "from hemp". They can even deliver the "legal" cannabis!

So, getting people into the stores, which number 9000 in Texas supposedly, is a big trick, but a bigger problem in my view is that these retailers, that are not regulated at all, can sell untested product or even synthetic products which are not federally legal.

I have never visited any of these potentially "bad" cannabis retailers. I found them using a search engine for "$5 grams in Houston." I have seen a lot of signs outside of stores with that phrase.

"$5 Grams in Houston"

From its website: "THC Club was founded in 2021 and has pioneered the cannabis industry here in the State of Texas. Since inception, THC Club has become the premier recreational cannabis shop in Houston, TX." At least it has a website, but the website says nothing about who owns THC Club or who operates the 18 stores listed on the website, a big yellow flag.

Again, I have never visited any of these "dispensaries". How can they use that term? Maybe they are not as "bad" as I claim. I am for legal cannabinoids being available to those who want or need them, but I am for better regulation.

Besides the fact that these companies can help people get good products perhaps, I like that they are representative of the community too. I am for the small businesses in Texas, though many of these operators are already big. I am not for any of them to be put out of business. What I am for is better regulation and compliance with the rules.

What You Should Look For

When it comes to consumption, we are all responsible for what we consume. When there are no rules or regulation, this becomes even more essential. The challenge, though, is that there is a total lack of information readily available.

One of the things that people like across food and drink as well as things that they put on their bodies is "organic." I think organic is a good thing when it comes to cannabis, as this means no pesticides. Many retailers are selling synthetics and derivatives, and these can be a problem as well.

As I said above, the market seems very focused on low prices. I am all for low prices, but the lowest price goods are not necessarily the best. Not being "the best" is okay, but are they "good" or good enough? One way to measure how good a product is would be to look at a lab report. Good luck with that! There actually are some companies that do lab test and that do share the results, and consumers can look for this.

I do not have a lab, nor do I lab test products, but I am able to see some companies that seem to be doing it the right way, like Bayou City Hemp. I have only started to look at the companies, but I know that there are a lot more. Cannabis consumers can learn more about these companies.

Conclusion

As I said, I am for cannabis. It should be legalized and properly regulated. For now, it is confusing, and consumers should be very careful in how they buy it. I have discussed the crazy marketplace in Texas, where I live, but this is pretty universal. The Farm Act of 2018 made cannabinoids from hemp federally legal, and, not surprisingly, they are very popular. This popularity, though, has resulted in bad retailers selling bad products. As a cannabis consumer, you need to educate yourself! That is what I am trying to help do. You deserve safe and effective products.