PART 1: Oversupply Is Crippling the Cannabis Industry—Here’s How We Fix It
- Jhavid Mohseni
- May 7
- 3 min read
The cannabis industry is experiencing a historic oversupply crisis. Across mature markets like California, Oregon, and Washington, and in newer legal markets like Canada, producers are growing far more product than the market can absorb. As a result, prices are collapsing, inventories are overflowing, and businesses are burning capital just to stay afloat.
But this isn’t just a cannabis problem—it’s a pattern we’ve seen across many agricultural and natural resource industries during periods of rapid growth and poor differentiation.
Cannabis Isn’t Alone: Lessons from Coffee, Wine, and Diamonds
In the early days of global coffee production, farmers flooded the market with inconsistent beans. Without grading or traceability, buyers had little way to distinguish high-quality single-origin coffee from generic blends. It wasn’t until industry-wide grading standards were introduced—along with consumer education and third-party certifications—that premium brands could justify higher prices, and growers could be rewarded for quality.
The wine industry followed a similar arc. For centuries, wine was traded primarily on origin and brand. But as global production exploded, so did the need for appellations, tasting notes, and blind judging systems—all mechanisms that allowed products to stand apart based on quality, not just volume.
The diamond industry, too, learned to combat oversupply and fraud through the “4 Cs”—carat, cut, clarity, and color—providing a universal language for value and creating space for certification bodies like GIA.
And let’s not forget the beef industry, where grading systems such as USDA Prime, Choice, and Select helped buyers predict product quality and justify pricing.
Each of these industries confronted what cannabis is facing now: an abundance of undifferentiated product, uncertain quality, and inconsistent buyer expectations.
The Cannabis Supply Problem
Legal cannabis production scaled fast. Investors flooded in. Cultivators expanded aggressively. And for a while, the optimism felt justified.
But the cannabis supply chain is uniquely fragmented. Interstate trade remains limited. Export infrastructure is still immature. And labeling regulations vary widely from region to region.
The result? A race to the bottom—where high-quality flower competes with low-grade product, all priced similarly due to lack of verified differentiation.
We’re seeing:
Wholesalers rejecting product due to quality uncertainty—not lack of demand
Retailers overloaded with indistinct SKUs
Producers losing margin, even on premium flower, simply because they can’t prove it’s premium
This Is Where Cannafax Becomes Critical
In a saturated market, price alone can’t be the differentiator. Quality must speak for itself—but it needs a voice.
Enter Cannafax—an independent grading and labeling platform designed to solve the very problems holding cannabis back.
Built on over 500,000 pounds of graded cannabis and informed by +US$100 million in trade volume, Cannafax applies a trusted, third-party grading system to cannabis flower and pre-rolls. Using criteria like structure, aroma, color, and trichomes, each batch is evaluated and issued a Certificate of Grade (COG) —standardized, transparent, and backed by the International Cannabis & Hemp Standards (ICHS).
Here’s what this solves:
Buyers move faster, with verified product confidence
Sellers negotiate from strength, proving quality with documentation
Retail brands build trust, using QR-coded labels to show quality reports directly to consumers
Pricing finally reflects quality, not just availability
In cannabis, just like in coffee, wine, and beef, verified differentiation is the path to premium positioning and sustainable margins.
Looking Ahead
This oversupply won’t resolve itself. As international markets come online and indoor and outdoor grows scale further, the volume will only increase. What’s missing—and what will separate the commodity players from the enduring brands—is quality transparency and standardization.
In Part 2 of this series, we’ll look at how cannabis companies can differentiate themselves meaningfully in a saturated market—and why most strategies today aren’t working.
Because in a sea of sameness, clarity is king—and verification is your lifeline.
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Founder, Tamerlane | Cannafax
Member, International Cannabis & Hemp Standards (ICHS)