When Ethan Shaw was looking to launch a cannabis brand, tons of towns turned him down. He wasn’t yet 21 and so couldn’t hold the license that would allow him to grow, manufacture and sell his product, and they hesitated to approve a business he couldn’t legally operate. Famously pot-friendly Nederland stepped in and approved Shaw’s operation, and thus began The Flower Collective.
It wouldn’t be the last time Colorado’s regulatory framework worked against Shaw’s dream. The Flower Collective operates like an employee-owned business, but on paper, its ownership is more traditional.
“We wanted to start out with all of us holding ownership, but the way the state operates, the process of renewal requires all owners to be in agreement and in good standing,” Shaw explained. “This gives any one owner the power to leverage themselves more than their fair share or hold up the entire process, jeopardizing the renewal.
“It’s a little bit of idealism and reality, forcing our idealism to fit into the structure the MED [Marijuana Enforcement Division] sets up for us.”
But the roughly 27 members of the collective share decision-making, operational responsibilities and revenue, via a bonus program funded by a portion of sales commissions.
“All the money goes to us,” he said. “Any money left over is reinvested in the business.”
The Collective operates a grow in De Beque, a town on Colorado’s Western Slope that Shaw selected for its high UV index, low humidity, access to water rights and distance from commercial wine operations, which spray fungicides and herbicides that could contaminate the cannabis crop. The operation produces solvent-free concentrates (extracted without hydrocarbons like butane or propane), dab pens and pre-rolled joints and blunts they sell primarily wholesale to other businesses.
That business-to-business strategy has kept The Flower Collective somewhat under the radar. They are planning more direct-to-consumer sales, Shaw said.
“Our reputation has been built about us knowing the budtenders and doing a decent job. We’re figuring out marketing now, so you might see more of us.”
When asked where customers can find Flower Collective products, Shaw directs them to “local mom-and-pop retailers.” The company’s website has a “preferred partners” section featuring five small Colorado dispensaries. (Boulder’s Green Dot Labs is on the list, as are Louisville’s Ajoya and Social Dispensary.)
“They pay us more timely,” he said. “Try to avoid multi-state organizations.”
Shaw is a passionate critic of Colorado’s regulatory framework, which favors larger organizations.
A report from Indiana University professor Boyoung Seo found that Washington — with its limits on how many licenses a single business can have and a ban on vertical integration — is more favorable to independent operators. As a result, cannabis prices are actually slightly lower.
“Weed had to become big because of the way Colorado treated weed,” Shaw said. “It’s the only way to deal with the way they regulate. The way we’ve pulled it off is nonstop work.”
He believes the Collective’s focus on people over profit will ensure long-term sustainability in a landscape dominated by larger companies. The organization may not grow as fast or make as much money as other companies, Shaw admits, but that isn’t the point.
“There seems to be a model that everyone ignores because that model doesn’t make investors a bunch of money,” he said. “Me and my friends who founded this thing — we’re all still here.”