And before you guys get into any conclusions, no, we’re not gonna become drug dealers, we’re not gonna be selling weed, we’re not gonna be growing weed, we’re not going to be touching, transporting, packaging, smoking, or doing anything with the weed itself.
And sorry for being such a party pooper, but we’re gonna be doing something much more boring, a lot less fun, but hey, it puts money in our bank account without doing anything shady.
So, what I would want you guys to understand about weed is that it’s one of those beautiful industries where the law itself keeps creating customers for you. What does that mean? Well let me explain.
See every time a farm grows a new batch, because if you guys didn't know, in order for them to grow weed, they need like an actual farm. And within that farm, they produce it. But the issue is that in order for them to actually sell it they have to go through something called lab testing, they legally cannot sell it until they pay a lab to test it for them. (It's called compliance testing, and it’s basically like a piece of paper they need to have which is called a Certificate of Analysis) so without it, they can’t sell. And what’s interesting is that it’s not like they have to do this once, for every new batch, they actually have to test again, and again, and they pay again. So every single time new weed gets produced, the law creates another reason for money to change hands. And that is exactly where we’re going to get the customer.
https://oklahoma.gov/omma/businesses/commercial-licenses/grower-license.html
Well, think about this for a second you guys, the farm produces weed, literally cannot sell it without paying a lab to test it first. Their next dollar is literally genuinely blocked because of this. They can grow the weed, they can even have somebody ready to buy it, they can have the best quality, but until the lab tests it, none of that can happen. That’s the pain.
So what do we do? Well: weed farm needs lab, so we sell them the lab. And the weed farm becomes our customer.
Good question. And this requires us to actually sit down and think, and it’s really useful because it will help you guys a ton when it comes to how much should you price, because I get questions like, “How much should I price?” or “How much do you charge Saad?” Well, let me show you guys how I break it down to first principles.
Through my research in this industry, I learned something I never knew in my entire life. I noticed something really fucking weird about this industry. There are way more weed farms than there are labs that can actually test the weed. In California alone, there's roughly 135 farms for every single lab. Think about that. 135 farms, all needing a test, all fighting over one lab. So the farm isn't the hard part to find, the farms are everywhere. The lab is the rare thing. And when you guys think about it, it kind of makes sense, a weed farm is one thing. You need land, plants, equipment, workers, whatever. A testing lab is basically a tiny science factory.
You don’t just rent a room, buy a microscope and say, “Okay boys, we test weed now.” 🤪 In the US, the lab has to be properly licensed, prove that its testing methods actually work, follow written procedures, and regularly prove that it can still produce accurate results. And it has to test completely different things like pesticides, mold, heavy metals, chemicals, and how strong the weed is, basically all the shit that tells you whether the weed is safe, good, and what’s actually inside it. And all of this costs millions of dollars, requires real skill (and it’s such a weird skill by the way) and very few people can actually do it.
So here, the lab is the rare thing, which means, it flips everything, because whoever is holding the rare thing has the power.
So now I’m thinking: okay, if I’m a weed farm, (hypothetically of course 🤪), and I legally need one of these labs before I can sell my product, and there are barely any of them compared to the amount of farms… then getting access to a good lab is actually worth a lot to me.
I will happily pay somebody thousands of dollars to get me one, because without that lab, I literally cannot do anything and I cannot even run my business.
And that is where pricing starts you guys. I don’t start with: “What do other people charge?”
I start with four things. How bad is this problem? How badly do they need it gone? How hard is it for them to get the thing I’m bringing them? And the most crucial one:
Applying it here.