RE:RE:RE:Let’s Use Our Main Advantage Much of Valens processing is now used for in-house products and R&D. They have vape supply deals but many are with craft growers. Valens strength is it's developing product lines and having a multitude of small to mid-range customers.
Medipharms is attempting to be Valens but started way later and were coasting on large guaranteed contracts which have since left the space, replaced by "non-exclusive supply deals".
Neither company ever came close to running at full capacity for any stretch of time. Both suffer the same vulnerability currently. Whatever's in their inventory, if they don't blow it out before the current harvest is processed they will have to write it down. [Hypothetical example] You don't have a $3M inventory of discount $50 vape pen if vape pens are going for $40 now.
You have to disregard the gluts, which seems counter intuitive but it makes sense when you look at it. The flower glut is only a processors issue if they're holding large inventories of completed products[LABS, lesser degree VLNS] or engaging in inflexible supply pricing deal. The 2.0 glut is mostly in vape cartriges >$60.
Processing
Comeptition can only really hang around on smaller orders. The larger the orders, the more staff, machinery, and space required for the processing equipment. Processing time is also key, especially in large 10+ Ton order volumes Nextleaf is pursuing.
Half this wall had a meltdown about Adastra a month ago because they scored a 6000kg "supply deal" (Reality: purchasing agreement). Adastra gave themselves 6months to work through it. By the time they're finished, the price collapse on their purchase will put them exactly where LABS is except Adastra is spending millions on expanding machinery as they do it.
Nextleaf's scalability is not just the ability to run full steam, but to actually remain profitable during slower ebs and flows.
Business
Nextleaf's demand-side setup buffers them from many of these issues. Revenue sharing only after sales are completed and payments are made protects them from writedowns and the various no-payment lawsuits going around now. Their processing speed allows them quick turnaround from orders requested to orders fulfilled.
As the other players recoil from their already unprofitable toll processing, Nextleaf will eventually stand as the primary extractor via attrition. Even if competition can eek out small profits on toll processing, the investment, expenses, and overall time required for large quantities of toll processing via CO2 is non-competitive at scale and financially risky.
Buying flower and processing it into 2.0 products assuming someone will buy it is equally foolish as growing large amounts of flower assuming someone will buy it.
Nextleaf's demand-side setup should allow them to be successful while avoiding writedown pitfalls.They're setup not unlike a wheat mill. They'll process whatever demand is. Whether the supply side is in a glut or shortage, it makes no difference to the processing fee the mill charges for service. Nextleaf is tethered to the demand-side, they will grow as the industry does. Even if their capabilites were 1:1 the same as CO2, this would win-out on business strategy.