A growing trend among California cannabis retailers to charge brands for shelf space – and, thus, access to customers – has some in the industry decrying the practice as “pay-to-play” that threatens to crowd out smaller companies from the market.
According to several industry sources, the practice first cropped up in early 2018 and quickly caught on among California retailers, many of whom are desperate for any income stream because the illicit market is undercutting legal shops.
Some retailers in San Diego and Los Angeles, according to several sources, are asking anywhere from $1,000 to $50,000 a month from brands, depending on how much shelf space they want and in how many stores.
“We first encountered it last summer,” said Karli Warner, co-founder of Garden Society, a boutique edibles and pre-roll brand based in Sonoma County. “Over the last year, it’s really taken off.”The most common fee request identified by sources was an average of $5,000-$10,000 a month for prime real estate inside shops, with the highest fees reserved for space in retail chains with multiple storefronts.
Warner said her company can’t afford to pay thousands of dollars a month to get their product into Southern California shops, where such fees are more common than in Northern California.
Published: June 28, 2019
Founder & Interim Editor of L.A. Cannabis News