How cannabis companies can save money on packaging
(Editor’s note: This is the first installment in a three-part series on marijuana and hemp packaging solutions.)
Complying with regulations while sourcing and working with cost-effective, attractive marijuana or hemp packaging requires a deft touch, which can’t be done by simply throwing money at the problem.
Packaging is a major cost for any marijuana or hemp company that makes products, and a few considerations to cut expenses include:
- Buying in bulk to get better pricing.
- Keeping a close eye on the packaging manufacturer to ensure quality.
- Dialing in forecasting to accurately order the correct supply.
- Selecting affordable base materials and simplifying the process as much as possible.
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That’s just a brief summary of what marijuana and hemp industry stakeholders suggested for saving money on packaging.
Below are tips and advice from cannabis companies across the country. Their quotes have been edited for length and clarity:
Eric Leslie, chief marketing officer and co-owner, Cheeba Chews, Boulder, Colorado
The cheapest option isn’t always the most cost-effective.
Print errors, random defective units and inconsistencies of appearance are all variables that seem to pop up more often when we work with the cheapest providers available.
You really have to micromanage the orders to ensure they are consistently right.
Always have a backup option. Sometimes you can see price creep in your orders, as a supplier tries to earn your business with a low-ball offer.
They eventually need to gain those pennies back, and you’ll find that in small increments on your subsequent orders.
Keep them in check with a competing bid, if you think a price is getting to an uncomfortable place.
Jonathan Persofsky, co-founder and CEO, Green Gruff, Toronto
Forecast accurately so you can buy in larger quantities and avoid excess packaging that doesn’t bring value.
Customers today are far more environmentally conscious and don’t want to receive useless excess.
Shannon Reed, chief marketing officer, Omura, Santa Monica, California
No. 1 is usually package size and weight.
By maintaining the lowest possible footprint, you are then also able to reduce shipping costs, storage space, production time and, of course, be more eco-friendly.
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Limiting the number of colors printed and print methods reduces the amount of work for the producer and can make a big impact.
Selecting the correct base material is critical.
If an incorrect paper is chosen, it could lead to additional interventions, which cost money each time, and additional tertiary packaging.
Work with the manufacturer to ensure the packaging design is easily automatable to reduce the numbers of touches per assembly.
Samip Shah, chief operating officer, C3 Industries, Detroit
The most important consideration is the quality of the material and construction – protecting the product is paramount and the reason we’re looking for packaging in the first place.
Margin profiles differ state by state, product to product, so understanding how packaging costs fit into a product’s overall wholesale price is critical for brands to be competitive.
Optimize and reduce the number of overall packaging base stock-keeping units (SKUs) , even if the designs and labeling might differ product to product.
Before ordering packaging, predict how labor will fill the packaging and how that fits into the overall plan: High-design, complex packaging likely will result in increased labor costs and frustrated operations teams.
Trent Woloveck, chief commercial director, Jushi Holdings, Boca Raton, Florida
The best way to save on packaging costs is to find simple and attractive packaging solutions. The packaging should serve the product.
A lot of cannabis companies lose sight of this and get caught up in flashy or expensive packaging fads, many of which are environmentally wasteful.
The packaging should be durable and aesthetically pleasing to entice customers.
But don’t lose sight of the big picture – cannabis customers are looking for high-quality, affordable and effective products. They don’t want to incur extra costs because of expensive, unnecessary packaging.
Avoiding expensive packaging helps to keep prices reasonable for customers or patients while operating companies yield higher margins.
If the packaging is compliant in multiple states, that saves us from having to enter more partnerships and reduces our overall costs.
When considering and negotiating partnerships, it is wise to take advantage of data analytics and leverage your buying power by conveying current and projected volumes. For example, costs are lower with bulk purchases.
Additionally, utilize blanket or consignment orders when it is possible. This will accommodate limited storage capabilities while also taking advantage of bulk pricing.
Lauren Claire Smith, director of product and innovation strategy, Plus, Pacifica, California
Global supply-chain issues have increased costs for all cannabis companies, particularly in packaging.
You can lower your cost by seeking out domestic production – when possible.
Erin Mulkeran, product and special projects manager, High Life Farms, Chesaning, Michigan
While not always the most aesthetically pleasing, it helps if you do not fully customize the packaging – i.e., strain names, flavors, etc. – so the packaging can be used across multiple SKUs for that product line.
Austin Stevenson, chief innovation officer, Vertosa, Oakland, California
Proper management of the cost of goods sold is critical to success in cannabis packaging.
One immediate way to save costs is to utilize turnkey products rather than custom packaging. Less is more, quite literally.
Brands often use an excessive amount of packaging to remain compliant, which can then create a horrible customer “opening” experience as well as excessive waste.
To save costs, spend time upfront exploring all compliance solutions and don’t leave any stone unturned as you work to a simple and compliant solution that results in less waste.
Thomas Winstanley, vice president of marketing, Theory Wellness, Great Barrington, Massachusetts
Understand your burn rate, forecast your needs and align on lowering costs by increasing volume.
This is easier said than done given regulatory requirements and constantly evolving product lines.
The inherent risk is getting stuck with slow-moving packaging that takes up space based on a poor forecast.
Matt Jacobs, director of front of house operations, Veritas Fine Cannabis, Denver
Packaging vendors will typically offer price breaks at various quantities, but this requires a certain level of preparation and planning ahead to fully maximize value here.
Once Veritas identifies where price breaks exist, we will plan ahead and place bulk orders for packaging that might not be introduced immediately but will be used later down the line for future projects.
This can be challenging to take advantage of, however, without the ability to analyze future projects and plan ahead.
Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.
