Building a Cannabis Business That Survives the Down Cycles

By Obie Strickler

Cannabis is behaving like a real emerging market.

In Oregon, the Oregon Liquor and Cannabis Commission (OLCC) reported that the 2024 harvest was the largest to date and that estimated demand was only 57% of annual supply. The same report shows the median retail price per gram for usable marijuana fell to $3.75 in 2024, which the OLCC describes as the lowest point since legalization and ties directly to oversupply. This glut of supply translated into a particularly challenging market for producers throughout 2025.

Michigan tells the same story from another angle: more volume, less value. In December 2025 alone, Michigan adult-use retailers recorded $269.3 million in total sales while the average retail flower price sat at $58.22 per ounce. That’s not a demand problem. That’s a price problem, and it’s exactly why “growth” can feel like quicksand in mature markets. 

The uncomfortable truth is that down cycles aren’t an exception in cannabis. They’re inevitable. And they’re the audit. The biggest risk isn’t volatility; it’s building a business that only works when prices are high. So what does “discipline” actually mean when you’re staring at an almost-daily margin squeeze?

It means building repeatable systems around the few things you can control and measuring them obsessively. Four controllables – cost, yield, quality, and people, which matter more than any narrative. The systems only work if the people running them have the pride and passion in the craft to improve every single day. Sell-through is the scoreboard that proves whether the first three are working in the real world.

Cost is not a project; it’s a culture.
Cost isn’t a project; it’s how you operate. Some costs like compliance, testing, and security are fixed. The rest of the structure has to be built to work at trough pricing, not peak conditions.

Cost reduction also isn’t a one-time reset. Renegotiating inputs or cutting labor might help in the short term, but it doesn’t hold in a down cycle. Durable operators build systems that stay competitive when pricing is at its most compressed.

In markets facing pricing pressure, our production cost of indoor dry-weight cannabis biomass remained below $225 per pound in 2025, driven by incremental improvements in SOPs and infrastructure. The takeaway is the system and people behind it, which includes consistent labor planning, tight processes, continuous iteration, and a passion for being the best.

Yield and quality are not opposites.
When prices compress, yield becomes more important to cost control, but pushing yield at the expense of quality tends to show up elsewhere in discounting, returns, or slower sell-through.

The more durable approach is to improve efficiency without introducing variability. In practice, that often means tighter environmental control, consistent dry and cure protocols, and treating each room as a repeatable unit. Incremental improvements tend to compound more reliably than step changes.

Operators that have maintained sub-$225 per pound production costs in recent periods have generally done so through steady process improvement rather than single-step changes.

In a down cycle, consistency matters more than effort. However, consistency alone isn’t enough.  From how it smells, how it tastes, to how it hits, it has to show up in the product. The teams that take pride in the flower while continuing to refine execution and introduce new genetics are the ones that hold demand. When output varies batch to batch, it creates friction both operationally and commercially.

Sell-through is the scoreboard that doesn’t lie.
Retail buyers operate under limited shelf space, too many SKUs, and pressure to manage inventory risk. Products with high velocity tend to keep their place; those that don’t get replaced.

That’s why sell-through tends to be a more useful signal than sell-in. It reflects actual consumer demand, not just initial placement. Consistent sell-through is what drives reorders and longer-term shelf presence, especially when buyers are reducing assortment.

In newer markets, operators have reported full sell-through of packaged products in early operating periods, reinforcing how quickly shelf space ties to actual demand, not initial distribution. Shelf space follows sell-through. Especially when buyers are cutting SKUs.

People drive consistency.
Down cycles tend to expose operational gaps quickly. When margins tighten, small inefficiencies like training gaps, inconsistent processes, and unclear ownership all become harder to absorb.

Teams that perform well in these environments thrive on autonomy and simple systems: clear priorities, defined processes, and consistent feedback loops. The goal is repeatability. Over time, consistency at the team level shows up in the output. Variability tends to be operational before it’s market-facing.

Growth still matters, but it amplifies whatever is already working or not working inside the business. Expanding without consistent execution can scale problems as quickly as it scales results.

Right now, operators are being tested on fundamentals like cost structures that hold at lower pricing, production that balances yield and quality, and products that consistently sell through.

Volatility isn’t new. What changes is which operators are built to handle it.

Obie Strickler has been growing cannabis longer than he’s willing to admit and is the co-founder and chief executive officer of Grown Rogue International Inc. (CSE: GRIN) (OTC: GRUSF), a flower-forward cannabis company combining craft values with disciplined execution and a focus on cost-efficient indoor cultivation. He brings an operator’s mindset to scaling consistent, high-quality production, emphasizing yield, team, and systems as the foundation for long-term success in volatile markets.