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Last week Pure Greens, the most prominent wholesale marijuana grow operation in Chaffee County, had its first reduction in force in the history of the company. Company officials confirmed a reduction in workforce, trimming the staff from 77 to 60 full-time employees.

“Yes we’ve gone through some transition,” said SVP Production and Manufacturing Georgeann Craig. “We are taking care of the business and we have gone back to a five-day work week. We were doing harvesting seven-days-a-week, but now we are at a traditional work week.”

Craig explained they aren’t calling this a layoff because “This is part of reducing capacity. It’s not a layoff because each position is not being held.”  She took a deep, painful breath and her voice got shaky for a minute. “We stress the importance of community so much, and when you impact a workforce community, it hurts. A lot. This is the hardest thing I’ve ever had to do. We’ll continue to persevere but I can’t tell you it is easy. This group is close.”

Ark Valley Voice sat down to talk about the shift with Craig and CEO Andrew Davison this week. As reported in April, 2021, Pure Greens and sister company CGH shared the same investors and were merged into a vertically-integrated unit. The parent company Long Play is the brand umbrella and holding company, with CGH providing the retail branding and Pure Greens as the wholesale producer, as well as a separate division, focus on hemp production and patented beverage business of coffees and teas.

In fact, says Davison, “we’re about to launch a new hemp water product with Tivoli Brewery, which happens to be the oldest brewery west of the Mississippi. It’s on the grounds of Metropolitan State University in Denver. We’re changing and making adjustments. This industry is still merging. We are $33 billion in a market that could be a $100 billion market size.”

But to reach that size, change has to happen.

Pure Greens operated from state-of-the-art indoor greenhouses in Smeltertown. Courtesy Photo.

A short history of the Cannabis industry

In 2014 when Colorado legalized the wholesale production and retail sale of marijuana, it was still a novelty available legally in only a few states, and the early years were a bonanza for the states that had legalized it. But as more and more states have passed laws legalizing the sale and distribution, the marijuana category as an industry is consolidating and vertically integrating.

This means the plethora of growers and brands, and marketing efforts are being bought up and merged into bigger and (hopefully) stronger companies able to weather the challenges of the industry.

As in any new industry, explains Davison, “We’ve got vexing challenges on financing, taxation, and interstate commerce. Those three elements prevent scale. Each state is its own entity. It’s not set up right at this moment to create a healthy, vibrant industry.  You can’t leverage a brand on uncertainty. Also, capital is hard to do in a [industry] space that is state-by-state.”

He describes the current climate as “dynamic.” There is some semblance of rules but not a lot, and each of the states is different.

“As the industry normalizes you’d hope things would be stabilized, but the West is an open market model,” he explained. Consumers want brands, choices and safe products and governments want taxation and revenue.” Sooner or later, he says, government is going to have to allow us to thrive at scale. But, he adds, “Colorado and the West is really the ‘Wild West’ when it comes to licensing. It’s not like the East Coast, where there is some semblance of rules and consistency.”

“In general, cannabis in Colorado is a very free market … out east, they limit the licenses,” explained Craig.

The Future for Long Play

The parent company brand name appears to capture the company’s goals. “We have good capital partners and great operating teams and
that makes the difference. I’m about teamwork when you face challenging environments, says Davison. “We’re in it for the long play, not the short run.”

Asked if the cannabis industry isn’t recession-proof, both Craig and Davison say that the industry has been in recession for the past several months. Colorado retail sales are down.

“All the past years, pre-COVID they were up, but in the second half of last year the market for the first time grew negative,” said Craig. “This is state data, and tax revenue suffered as well. The market was down 18 to 25 percent. There has been lots of pricing pressure, coming on the heels of the COVID pandemic.”

“We are a young industry, still struggling to build our infrastructure … .in 2021, the cannabis industry moved up 1.4 percent, and even a $1.8 billion industry is big for this state,” said Davison. “Now the overall market is down, so we’re being prudent, to manage our capacity so as not to overproduce for the wholesale market, retail stores, and our brands. We had to cut back on production – and it meant parting from valued staff.”

Asked about the company’s commitment in Chaffee County, Davison responded instantly. “We are very committed to the valley — we’re in here hook, line and sinker. This is the trunk of our business. This is our core operating base. It’s an important asset with future growth potential and human assets, but we have to be mindful of market conditions.”

It is significant to note that Pure Greens as a marijuana producer as ordered by Resolution 2017-46 funds some important community grants to nonprofits in this county through the Marijuana Excise Tax Advisory Board (METAB), so any shifts in revenue could have longer impacts on its importance within the county.

In 2021 Pure Greens reported 75 fully-benefited, high-wage jobs. In August, 2020, $150,000  in community grants were awarded from the excise tax contributions overseen by Chaffee County Marijuana Excise Tax Advisory Board ( METAB). Earlier, Stoudenmire had said that he expected that in 2021, the number could be closer to a quarter-million dollars or more.

Craig, who has poured heart and soul into growing this business is still sad and unsettled by the action required to protect the business, but expresses confidence in their ability to meet the challenges, adding, “We are still 60 people strong.”