Cultivation businesses should consider specializing in just one stage of the cannabis cultivation process. The industry has focused heavily on vertical integration, and some regulating bodies require licensees to control the entire cannabis value chain from cultivation and processing to retail. This requirement is not always in the best interest of the consumer or the business, and will likely change as the industry evolves. Not only will companies specialize in each step of the value chain, but we’ll see even further segmentation among growers that choose to focus on just one step of the cultivation process. Cannabis businesses that want to position themselves for future success should identify their strengths in the crop production process and consider specializing in just one part.
Elsewhere in commercial horticulture, specialization is the norm. It is unlikely that the begonias you bought at your local garden shop spent their entire life inside that greenhouse. More likely, the plant spent time hopping between specialists in the production chain before landing on the retail shelf. One grower typically handles stock plant production and serves as a rooting station for vegetative cuttings. From there, rooted cuttings are shipped to a grower that cares for the plants during the vegetative stage. Once they’re an appropriate height for flowering, they’re shipped to the last grower to flower out and sell to retailers.
Cannabis businesses should consider imitating this model as a way to ensure competitiveness in the future. In the US, federal law does not yet allow for the interstate transport of plants containing THC, but the process can be segmented within states where vertical integration is not a requirement. As we look ahead to full federal legalization in the US, we should anticipate companies abandoning the vertical integration model in favor of specialization. In countries where cannabis cultivation is federally legal, entrepreneurs should consider specialization from the moment they begin planning their business.
Cultivators that specialize in breeding and genetics could sell seeds, rooted cuttings, and tissue culture services to commercial growers. Royalties could provide a recurring source of income after the initial sale of seeds or young plants. Contracting propagation activities to a specialist can result in consistently clean rooted cuttings that arrive certified disease-free at roughly ¼ the cost of producing them in-house. This not only frees up space at the recipient’s greenhouse and saves them money, but it eliminates the risks inherent in traditional mother plant and cloning processes. If a mother plant becomes infected, all future generations will exhibit that disease, and the time, money, energy, labor, and space required to maintain healthy stock plants is substantial. Growers that focus on large scale cultivation would do well to outsource this critical step.
Intermediary growers could specialize in growing out seeds and rooted cuttings into mature plants that are ready to flower. These growers would develop this starter material into healthy plants with a strong, vigorous root system. They would also treat the plants with beneficial insects and inoculate the crop with various biological agents to decrease the plant’s susceptibility to pest and disease infestations. Plants would stay with this grower until they are about six to 18 inches in height—the appropriate size to initiate flowering.
The final stage in the process would be the flower grower. Monetarily, this is the most valuable stage in the cultivation process, but it’s also the most expensive. This facility would have the proper lighting, plant support infrastructure, and environmental controls to ensure that critical grow parameters can be tightly maintained throughout the flowering cycle. The grower would be an expert in managing late-stage insect and disease outbreaks, and they would be cautious not to apply anything to the flower that would later show up on a certificate of analysis (COA), rendering the crop unsaleable. This last stage would also handle all harvest and post-harvest activities—since shipping a finished crop to another location is inefficient and could potentially damage the plants.
As the cannabis cultivation industry normalizes, so, too, will the process by which the product is produced. Entrepreneurs keen on carving out a future in the industry should focus on one stage of the cultivation process, and excel at it.
The drug war has harmed communities of color since its inception. For decades and decades, BIPOC (Black, Indigenous, and other People of Color) have been nearly six times more likely to be arrested for drug use than White Americans, despite similar rates of use.
Over the years that legalized cannabis has proliferated across the country, the same trends of market consolidation have emerged in every state that has legalized the plant. BIPOC communities already impacted by the drug war have less access to capital and therefore less access to the cannabis industry. Cannabis market consolidation has always led to white people taking a greater market share while BIPOC communities are left behind.
The legal cannabis industry currently lacks representation of BIPOC executives, business owners, and professionals. Ernest Toney, former global marketing and partnerships manager at Marijuana Business Daily, wants to change that. He founded the BIPOC Cannabis Business Network – a membership community that is working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners.
BIPOCANN is a place to meet cannabis industry leaders, a place to exchange goods, services and ideas that promote BIPOC economic growth in cannabis, an innovation hub for unique voices and perspectives, and it’s all BIPOC-owned and managed.
In this interview, we sit down with Ernest Toney to hear about BIPOCANN and ask him some questions about what the future of the cannabis industry could look like.
Cannabis Industry Journal: Tell me about your background- how did you get involved in the cannabis industry?
Ernest Toney: I grew up in Virginia and went to James Madison University where I studied kinesiology, and sports management in graduate school. That led me to pursue a career in sports administration, beginning as a sales and marketing director for a large YMCA in the southwest, followed by a stint as a sales consultant for the Arizona Diamondbacks in Major League Baseball. Immediately prior to joining the cannabis industry, I worked at USA Ultimate – the national governing body for the niche sport of ultimate (frisbee) in the United States. During that time, I managed and scaled adult programs and events across the country. A big part of my job required collaborating with national stakeholders and creating and enforcing policies to grow the sport by making it more accessible to diverse demographics. We also worked hard to increase the commercial visibility of the sport through mainstream media, including ESPN, with gender equity being a major focus area. It was cool because looking back, I learned a lot of things during that five-year period that is directly applicable to the work I’m doing to support the cannabis industry.
But my interest in the cannabis industry became strong when I moved to Denver in 2011, a year before Amendment 64 passed. When Colorado became the first adult use cannabis market in the USA, it was an exciting time. I have always been curious about economics and how policies can impact people’s lives. I was interested in what was going to happen when the new market opened.
Early on, I followed the industry trends very closely. Living in downtown Denver, I saw firsthand the effects the cannabis industry was having on day-to-day life, like increased tourism, a housing market boom, a lot of new start-ups, dispensaries opening everywhere. It was just something I knew I wanted to learn more about.
Around 2016, I started making industry connections, but didn’t pursue opportunities until a few years later. Eventually, I was hired in 2018 by MJBizDaily to focus on new business initiatives. Some of my past successes with scaling programs, national and international event management, and community-building aligned with what they were looking for.
I started as the company’s first international marketing manager. In that role, I was responsible for driving marketing campaigns to increase the company’s global readership, event registrations, and business conference presence in foreign markets. After the first year, I transitioned to identify and manage marketing partnerships for the company – which included international and domestic media, event, and affiliate partnerships within and outside of cannabis.
I felt compelled to make a change amidst the social unrest this summer. I was doing my own protesting and volunteer advocacy in Denver, but started to see more broadly, in the cannabis industry, that cannabis executives and companies were bringing attention to the fact that the War On Drugs has been problematic for minorities and communities of color. There was greater talk about social equity programs and how they are not as effective as they should be. There was greater attention to the fact that over 40,000 people are still incarcerated for the plant that others are profiting from – and that the people behind bars are predominantly coming from communities of color. I was in a position that afforded me the opportunity to see what the composition of the global cannabis industry looked like, and I could see minority representation was lacking in business ownership, leadership positions, and more.
I thought – what is the best way for me to use my talents, insights, and knowledge to affect and change this narrative? Ultimately, I decided to start my own business. Not only was this an opportunity for me to “walk the walk,” being a black man starting a business in this industry where there is a lack of black ownership, but more importantly I was uniquely positioned to be able to educate and let people know about the opportunities to be a part of the booming industry. So, I did some brainstorming and came up with a company, which is called BIPOCANN and it stands for connecting BIPOC communities to the cannabis industry.
The work I have been doing for the last quarter includes directly recruiting people into the industry. If you are curious and want to learn more about the industry, then BIPOCANN can be the entry point. We figure out what your goals are and use the network and our resources to get you connected and figure out where you want to go. Likewise, if you are a service provider, like a graphic designer, accountant, marketer or business owner for example, that sees opportunities for your business to play a role and support it from an ancillary standpoint, BIPOCANN can be an entry point for you too.
The other component to it is working with existing businesses who are trying to make the industry more accessible. I work with existing companies and brands to create platforms that amplify voices and make BIPOC folks more visible, seen and heard within the cannabis industry. We are also helping businesses increase their profitability through diversification tactics and marketing tactics that contribute to their bottom line.
CIJ: Tell me about BIPOCANN- what is it, what are your goals with this project and how has it been received so far?
Ernest: The prohibition of cannabis has disproportionately impacted communities of color in the Americas. I alluded to this earlier, but there are more than 40,000 people behind bars in the U.S. for cannabis possession and use. There’s evidence suggesting that Black Americans are up to six times more likely to get arrested for cannabis use than White Americans despite use rates being the same. And when you look at the makeup of the professional industry, there is poor representation of business ownership by people of color. The Cannabis Impact Fund references that only 4.3% of dispensaries are Black or Latinx-owned. These problems intersect in a lot of ways.
BIPOCANN is a small business working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners. Now, I know that one company cannot change 100 years of cannabis prohibition and how policy works. But if you want to make this industry more accessible, inclusive, and profitable for those who do not have the access then there are a lot of levers to pull. Policy is one. But BIPOCANN is using more direct strategies. We actively recruit people to come in and be a part of this industry, through employment, entrepreneurship, consulting, and collaborations.
We have also created the BIPOC Cannabis Business Network, a community where members can exchange services, network, and collaborate. It’s all about creating more opportunities for BIPOC professionals and business owners, and it’s a safe space to share your experiences and to ideate. Similar to your Cannabis Quality Virtual Conference, where there was a dedicated space for BIPOC folks to be seen and heard and tell their story through your virtual panels, we use our resources and network to help advocates for equity and access be seen, heard, and find opportunities to thrive as a business owner or professional.
CIJ: How do you hope BIPOCANN will be embraced by the cannabis community?
Ernest: I think it has been received well in its first quarter of business. We have had opportunities to share our story across a lot of platforms, including multiple cannabis industry conferences, podcasts, and interviews with varied media outlets. We are in startup mode, so currently we are about building a brand, being seen, and helping people understand what we are trying to achieve. We are working towards that right now. We have had some success and folks are supporting our vision and goals.
I am hoping the cannabis industry will look at BIPOCANN as another important resource within the social equity, business development, and networking landscape. I don’t want to be seen as a competitor to the organizations and individuals who have been doing similar work in this space, for much longer, but as an ally. Some of our approaches to bring new people into the industry will include strategically aligning communities and markets where we have strong ties – such as state governments, national nonprofits, and global cannabis networks.
CIJ: Where do you see the cannabis industry making progress with respect to diversity and including people of color?
Ernest: When I look at the types of conversations and coverage the industry is having, even compared to last year, it seems like more conferences, media entities, brands, and individual leaders are tuned in and trying to figure out how they can contribute to making this industry better, more equitable and more accessible. I am seeing a lot of more attention, attempts to understand where the gaps are and what to do about it.
When I take a step back to think of all the virtual conferences that have made dedicated conference tracks or even entire programs – like the National Association of Cannabis Business’ Social Equity Conference, the Emerge Canna Conference, the Cannabis Sustainability Symposium, and the Cannabis Industry Journal’s post-election social justice panel – or weekly segments from Black leaders like Dasheeda Dawson (She Blaze) and Tahir Johnson (The Cannabis Diversity Report) — those are good signs. They are creating opportunities for voices representing underserved communities in cannabis to share their perspectives and be advocates for change.
But there is still much to do and that includes greater education about the realities, histories, and challenges BIPOC and other minority communities are facing. Going back to the NACB, they recently drafted a social equity standard for state legislatures to use as a baseline for crafting policies and provisions for social equity programs. That and resources from organizations like the Minority Cannabis Business Association, Supernova Women, Cannaclusive, Minorities for Medical Marijuana, and the Massachusetts Recreational Consumer Council, for example are some useful resources for the industry.
Wana Brands is also continuing to do good work, and it was exciting to see them become the first sponsor of the inaugural Black CannaConference by the Black CannaBusiness Magazine. That was a great example of an industry leader using their dollars, marketing resources, and company values to support an event specifically dedicated to creating, developing, and enhancing Black entrepreneurs and businesses in the cannabis industry.
“It is hard to know what even a year from now will look like.”On the policy front, we just saw on election day cannabis having a ton of success at the polls, passing in every single state where there was a ballot measure.
Arizona did a good job with having social equity provisions directly included in the language on their ballot measure. I think for the states that have yet to draft a social equity program, they can look at what has worked well in some other states and also look at what has not worked well, like loopholes that invite predatory behaviors.
I’m excited to see that Governor Ralph Northam and the Virginia Marijuana Legalization Working Group are already identifying the best ways to make a recreational market a beneficial and sustainable one, and tackling how to incorporate social equity, racial equity, and economic equity into a future legalization bill. I am looking forward to learning more after an upcoming meeting with a Working Group member. Eventually, I hope to contribute towards any social equity efforts that will benefit my home state and hometown (a high poverty community that has been at the crossroads of America’s major civil rights movements, with a correctional facility that houses an inmate population equivalent to nearly 10% of the town population).
CIJ: Where do you see the industry moving in the next five years?
Ernest: Ha-ha! It is hard to know what even a year from now will look like.
Just this week the United Nations rescheduled cannabis, which is a big deal! We also saw the U.S. House of Representatives pass the MORE Act. We are inching closer towards federal legalization in the US and I think it will happen within that five-year timeframe, and it will be contentious. There will be compromises on things some folks don’t want compromises on, there will be more big money influencing the outcomes of the industry, and there will be unforeseen or unintended consequences to whatever the federal legislation looks like. I recently moderated a panel of social equity license holders, who felt that federal legalization would harm the disproportionately impacted areas (by the War on Drugs) even more! Their preference was to see cannabis de-scheduled and remain under state control.
I think federal legalization will bring another wave of major mergers and acquisitions, similar to what the Canadian market experienced in 2019, benefiting big business over small business.“We need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance.”
CIJ: Do you think we can change that?
Ernest: There are so many things at play. The legislators need to have diverse perspectives and representation from the folks in the industry, especially people of color who can speak to the impact that a century of prohibition policies have had on their communities. Those voices and stories need to be heard, but that type of representation is grossly lacking on Capitol Hill…which is all the more reason we need leaders from the aforementioned communities to have a seat at the table when decisions are made.
I say that because a lot of time there are unforeseen consequences when policies are created, so decision makers at the federal level can learn from those of us already doing the work on the local level. I recently had a conversation with a former journalist and colleague who is currently in a cannabis regulatory role. We were talking about how policy and operations intersect with social equity. He made the points that “many markets implement license caps, which are intended to prevent oversaturation of cannabis business (the idea being that density of outlets impacts use rates, and particularly youth use rates); in theory, that’s a good policy – but it comes with very real consequences for social equity applicants (because those licenses often go to the wealthiest applicants). License caps also artificially inflate the cost of those licenses (for a transfer of ownership), which also harms social equity applicants. Lotteries are also generally the result of policy and usually have disastrous results for the social equity applicant.”
So yeah – the rare opportunity to define a new industry that doesn’t just do business as usual, that can right its historical wrongs, and that will reward the communities that have been most harmed by cannabis enforcement, is now. And we need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance. The optimist in me says “we can do it!” The pessimist in me reminds me that it is 2020 and people still believe the Earth is flat. I’ll keep pushing for change, but I also won’t be surprised if this perfect opportunity to get it right goes wrong.
CIJ: How can people get involved in BIPOCANN?
Ernest: The best way to get involved is to visit www.bipocann.com and support our efforts by becoming an individual member or business member. Not only does that give you the opportunity to connect directly with other members in our business network, but it gives you the chance to be the first to be notified about the latest projects, events, and opportunities we’re working on to change the industry, how we can. By joining, you also directly support BIPOCANN’s goals, contribute to the operating budget of a black-owned business in cannabis, and support the nonprofit partners who we allocate a percentage of monthly sales towards.
You can also get involved by subscribing to our monthly newsletter through the website or by following our social media accounts @bipocann. We are also available for speaking, media, or consulting projects that support social equity, diversity, and inclusion in cannabis. For those types of inquiries, please contact email@example.com.
The hemp industry is rapidly growing, but it’s no secret that it suffers from a major legitimacy problem. When manufacturers choose to certify their products and processes under a third-party agency, such as the USDA, it is a way for those companies to gain credibility with new customers.
The USDA’s organic certification program is a great way to increase transparency and trust with both ingredients and processes used within the hemp industry. Organic certification is a rigorous audit program to review both manufacturing facility design and production process plans with the ultimate goal of increasing supply chain sustainability.
Investing in organic certification is a smart business decision – especially in today’s competitive CBD market. A recent Bloomberg report has shown that COVID-19 has actually accelerated organic food sales in the US due to increased demand for health-conscious foods and drinks. “Sales of organic food and drinks surged 25% during the 17-week period ended June 27,” according to Nielsen Data.
Organic certification is one way to differentiate between the thousands of seemingly identical CBD products being sold in the marketplace today. From a consumer perspective, organic certification provides both supply chain transparency and increases confidence with brands and products they already love. It also provides a form of quality assurance to skeptical consumers, especially those who avidly read product labels prior to making a purchasing decision. Members of this “label reader” demographic will consistently choose organic products for the quality and transparency it provides with pure and natural ingredients.
Not only does certification support ethical practices, it’s also good for business. According to the USDA, “Food labeling can be confusing and misleading, which is why certified organic is an important choice for consumers. Consumers are willing to pay a premium for food that carries the USDA organic seal, or that contains organic ingredients.”
Organic farming and production processes significantly contribute to increasing sustainability within the CBD industry. In general, organic farming is a growing practice for farmers across the US. According to the Pew Research Center, “There were more than 14,000 certified organic farms in the United States in 2016, according to the latest available data from the U.S. Department of Agriculture’s National Agricultural Statistics Service. This represents a 56% increase from 2011, the earliest comparable year.” The USDA has found that organic production practices can improve water quality, conserve energy, increase biodiversity and contribute to soil health. In terms of organic farming, soil ecology and water quality are both protected by farmers committing to working within regulated guidelines.
Organic certification ensures transparency and trust with a consumer-friendly approach to ingredient products. This comes on the heels of research showing that the CBD market lacks credibility. Organic CBD should be the next step all brands should take to ensure they’re adapting to changing consumer preferences.
Despite the limitations and privations caused by the COVID-19 pandemic, Germany’s market is “up” in terms of sales and overall insurance approvals. For all the victories however, there are still many kinks along the way. That is of course, not just on the medical front (where flower is yet again in short supply this summer), but also in the CBD space.
There is also clearly a drumbeat for more reform afoot in a country which has bested the COVID-19 pandemic like few others in the world. And like France as well as other countries in Europe, the conversation across the region has turned to including cannabis in recovery efforts, and in multiple ways. That includes not only relying on a new crop and industry for economic revitalization, but also of course, on the topic of further reform.
A Brief Overview Of The “Modern” German Cannabis Market Germany kicked off the entire cannabis discussion in a big way in Europe in the first quarter of 2017. The government got sued by patients and changed the law mandating that public insurers had to reimburse the drug. They also kicked off a cultivation tender bid which promptly became mired in several rounds of lawsuits and squabbles. The first German grown cannabis will hit pharmacies this fall, but it is not clear when, and the unofficial rumour is that the pandemic will delay distribution. The German distribution tender has been delayed three times so far this year.
In the meantime, the German market has developed into the world’s most lucrative target for global exporters, particularly (but not limited) to GMP and other certifiable high-grade cannabis (and in all its forms).
Other Issues, Problems and Wrinkles
Nothing about cannabis legalization is ever going to be easy, and Germany has been no exception.
The first problem on the ground is that the supply chain here has had several major hits, from the beginning. This is even though the supply has come from ostensibly otherwise reliable sources. Companies in Canada and in Holland have all had different kinds of problems with delivery (for different reasons) throughout this period.
Right now, there is a major reorganization afoot in Holland which may also be affecting the recent decision on the Dutch side to reorganize how the government picks (private) German narcotics distributors. Aurora also had product pulled last fall because of labelling and processing issues. But these, no matter how momentous momentarily, are also just waves in a cannabis ocean that is still choppy. Domestic sales continue to expand and foreign producers can still find a foothold in a still fairly open market.
As a result, even with a new dronabinol competitor, Israel, Australia and South Africa as well as multiple European countries now in advanced export schemes, the supply problem is still a thorny one, but not quite as thorny as it used to be.
However, On The CBD Front…
Things have gotten even more complicated since the repeated decisions on Novel Food at the EU level. Namely, last year’s decision that the only CBD extract that is not “Novel” is extracted from seeds, has thrown the entire industry into a major fluff. Especially when such decisions begin to filter down via a federal and regional approach. This has begun to happen. Indeed, the city of Cologne, in Germany’s most populous state just banned all CBD that is not labelled per an EU (although admittedly) non-binding resolution on the issue.
This in turn is leading to a renewed push for the obvious: recreational cannabis.
Where Is the Recreational Discussion Auf Deutschland? The recreational movement, generally, has been handed several black eyes for the last three years. Namely, that greater reform was not preserved in the first cannabis legalization that passed, albeit unanimously, in the German Parliament in 2017. However, as many recognized, the first, most important hurdle had just been broached. And indeed, that cautious strategy has created a steadily increasing, high quality (at least for the most part) medical market that is unmatched anywhere in the world except perhaps Israel.
Now, however, there are other issues in the room. The CBD discussion is mired in endless hypocrisy and meddling at both the state country level and the EU. There are many Germans who are keen to try cannabis beyond any idea of cannabis as therapy. Remember that Germany has largely managed to contain the outbreak, despite the emergence of several recent but isolated hotspots of late. In Frankfurt, for example, with the exception of more people on kurzarbeit (which is not visible), most street traffic proceeds apace these days with masks on, but with that exception or two, feels pretty much back to “normal.” And of course, economic development in the form of exports is one of Germany’s favorite pastimes.
Beyond that, the needle has absolutely moved across Europe. Several countries, including Greece and Portugal as well as the UK’s Channel Islands, have already jumped on the cannabis economic development bandwagon, and this is only going to encourage the Germans as well as other similar conversations across the region. It has even showed up in France.
And of course, it is not like the implications of Luxembourg and Switzerland as well as recent efforts in Holland to better regulate the recreational industry there, have not been blatantly obvious to those in Europe’s largest medical market.
Look for new shoots and leaves, in other words of the next stage of cannabis reform to take hold auf Deutschland. And soon. It is inevitable.
The Brand Marketing Byte showcases highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies.
Here is a data-led, shallow dive on GrowHealthy:
GrowHealthy – Basking in Sunshine
Although Florida may only have a medical market and a relatively restrictive regulatory framework, a handful of companies are leading the pack in dominating the new market. Even though the medical cannabis market is fairly young and the state has not adopted adult use yet, the market’s growth trajectory is very encouraging.
GrowHealthy (GH) is one of those companies capitalizing on market growth with a number of expansion plans. They already have 16 dispensaries open for business throughout Florida and have plans to add to that considerably.
In the past few months, GH has taken a number of steps to enhance their web presence. Perhaps as a reaction to the COVID-19 crisis, GH, along with many other companies in the cannabis space, have started aggressively improving their websites.
With the pandemic wreaking havoc on the national economy, cannabis companies are not immune. However, in the early days of the health crisis, Florida deemed the medical cannabis market ‘essential.’ That proved to be a boon for cannabis companies in the state like GH, who pivoted to curbside pickup and delivery quickly.
In order to capitalize on curbside pickup and delivery, a strong web presence is very important. GH saw a solid rise in web traffic in the past few months, thanks in part to their continuing expansion of brick-and-mortar dispensaries. Adding to their boost in web traffic, GH saw increased strength in their backlinks profile, indicating further increases in future web traffic.
In May, GH shot up to the 20th hottest brand in the United States, up from the 38th slot in April, according to the Pioneer Index. We can attribute this jump to the brand’s performance in web-related activities. The trend continued into the first week of June, as GH’s web activities were the 2nd best nationwide, with the company becoming the 4th hottest brand in the Pioneer Index.
Communication is key for efficient interaction between cultivation and business functions at any cannabis operator. So, what are the top four things cultivation directors should be discussing with their operations manager right now, as we face an uncertain Summer 2020 and unique COVID-related challenges (product demand uncertainty, reduced workforce, and immediate response to problems and issues):
Operators should be discussing “Who, and what, do I need to operate this facility and how do I make operations more streamlined without diminishing quality, consistency, and yield?”
Efficient operations should focus on labor workflow and circulation and document a clear understanding of how employees will move through the spaces while doing their jobs.
Having a “less labor” philosophy and understanding—a ‘first in and first out’ mentality—drives down cost of production.
By limiting employees’ need to cross paths and segregating processes (e.g. harvest, distro, packaging) in a facility, you can maintain biosecurity and limit the risks of cross-contamination
When working with fewer staff members, everyone should be trained to:
Operate all necessary equipment
Perform keys tasks like nutrient deliver or preventative maintenance
What sort of products do I use to cultivate, process, distribute and how will potential shortages affect my use/cost related to these?
Consider products and supplies that you can order in bulk
Examine and update your chemical regime to focus on products that are cheaper to freight ship, and located within the US or even your state
Mitigate the risk of availability by using products that are have no shelf-life or expiration issues, and those where the supply chain has not yet had disruptions
Automation and technology
What’s the availability to allow for remote monitoring and controls?
Cultivators can take some of the load off the reduced staff by automating critical tasks
Remote monitoring solutions will also allow for faster notification of crop issues
Integrating preventative maintenance tasks like equipment schedules and maintenance can increase efficiency
Ensure that conversations on yield expectations are as transparent as possible and set realistic and achievable goals
Build business models based on the correct numbers that take into account productions numbers on ‘high yield’ genetics versus lower-yielding plants (yield versus price)
Ensure you have a detailed plan that combines both plant density and production goals
The COVID-19 crisis is plunging the global economy into recession, changing consumer behavior and the world of business. Cannabis businesses are no stranger to operating in a challenging landscape. The constantly evolving legal status, regulatory hurdles and social stigma has forced founders in this space to be nimble and more financially wise with their capital.
While the market has experienced a seismic shift that has already attracted investors to inject capital into the cannabis industry and seen neighboring industries, including tobacco, alcohol and pharma, come into the fray, COVID-19 will change key industry structures and operations. To succeed and cultivate value, cannabis companies must adapt to the new realities of the marketplace to be well positioned for continued growth after the pandemic subsides.
With social distancing guidelines suddenly forcing brick-and-mortar retailers to move their businesses and customer experiences online and disruptions to the supply chain due to international travel and business directions, some businesses will struggle to stay afloat.
As consumer behaviour and online shopping patterns adjust to a new way of living (affecting B2B sales, online ordering, deliveries and manufacturing), leadership and strategic thinking will be paramount.
By understanding where the challenges and opportunities lie, cannabis businesses can thrive. Here are some focus areas and tactics to consider:
Targeted consumer segmentation through social media
When starting a cannabis business, it is key to understand who your core consumers are and what they want from their products. This has become even more acute because of the pandemic with consumers flocking to all sorts of health-focused products including CBD.
With everybody spending more time online, social media use is on the rise. Executing a social media plan to include influencer outreach can increase brand visibility, build a solid consumer base and create brand advocates.
Instagram is essential to a cannabis business building an online presence but it’s important that it doesn’t become a “hard sell, please buy me” channel. Plan and make Insta-worthy content that educates and entertains followers to increase engagement, click-through rates and leads. Brands may want to pair with an influencer on either a gifting or paid-for basis which will mean the brand appears in a potential customer’s feed as they interact with their favourite accounts.
The art is finding key influencers whose audience is one that you would like to interact with. This type of positioning will allow cannabis businesses to reach a new audience or group of people.
Marketing and PR
In times like these, many companies choose to pull back on communication activities and expenditures for fear of spending too much for what they perceive as little return, however, marketing and PR, when executed well, can be the lifeline of any business.
With so much noise in the market about the “next best thing in cannabis”, effective marketing and PR can distinguish brands that are credible and offer a strong value proposition to those that are all smoke and mirrors.
The current needs of businesses and consumers are much different than they were just a few short months ago, so it’s important to understand these needs and spending habits while combatting negative perceptions of cannabis.
As cannabis companies are not able to advertise like mainstream companies, a strong public relations and marketing strategy will enable firms to communicate their identity, build trust, shift perceptions through media coverage, enhance reputations and reach customers, partners and investors.
Businesses in every sector are cutting costs to keep their businesses afloat. This needs to be done strategically and requires senior leadership teams to explore cost reduction strategies and streamline non-essential costs.
This may mean further consolidation of cannabis companies and supply chains to manage cash flow and maximise resources. Companies may even look to create strategic partnerships with complementary businesses in the industry or push some firms towards mergers and acquisitions.
Business models will evolve as cannabis companies identify inefficiencies and reconfigure their operations and messaging. This could range from assessing their R&D capabilities, agricultural assets, manufacturing chains or route to market.
The postponement of countless CBD Expos, trade shows and cannabis conferences are creating new demand and opportunities for businesses. To reach prospective wholesale clients, investors and connect to their customer base, firms are entering the digital marketplace. Digital events, Zoom investor pitch panels and email marketing and sampling is on the rise and expected to grow over the coming months.
CBD brands should work in parallel with their retail partners to influence product samples in digital offers and create a touchless transaction. Buying products online is going to become a permanently entrenched habit, even when restrictions are fully lifted so it’s worth looking at how technology can support and enhance sales while offering a smooth customer experience.
Everyone in the cannabis industry will be affected by COVID-19 so maintaining positive relationships is vital in these tough times. Calling investors or partners to tell them what is going on with your business or checking in on others in your ecosystem means information can be shared to iron out any issues and help generate ideas to future proof the business. “A problem shared is a problem halved!”
COVID-19 is creating incredible business challenges. As we navigate the new normal, it’s important to adapt and grow. As more products come to market and brands/services develop distinguished offerings, expectations will change so cannabis businesses need to be ready for greener pastures.
It’s a different world growing cannabis in California- in fact, it’s a completely different experience than it was even four years ago. It can be overwhelming to begin the process, which is where an experienced cultivation consultant can help. This article will highlight 5 factors to keep in mind before you begin growing in California’s regulated recreational market.
Start Up – Costs, needs & endless variables
So you’ve decided to begin a recreational grow, here are the factors to consider before you get started.
Permitting, the necessary pre-cursor to cultivation, can be time- consuming, extremely expensive, and overwhelming. General experience dictates that any grow will take longer than planned and cost way more money than you ever expected or anticipated. Always account for more money and time than you think you need. Working with an experienced consultant can help you plan and account for all the costs and variables you may not have considered, prior to beginning cultivation, in order to ensure your success.
Equipment. When choosing what equipment to use, stick to reputable equipment manufacturers. Don’t just go with the latest high-tech gear because you see it on Instagram being advertised by a big, fancy grow operation. Stick to what you know best. Do your homework and research the equipment as much as possible, prior to purchase. Use equipment that has been tested and well documented with success. Some questions to ask yourself: is this necessary? Is it cost effective? Will it help me reach my goals?
Grow your business slowly and naturally. Getting too big too quick will most likely expose inefficiencies in your operating plan, which will be further compounded when production increases. Don’t sink before you can swim and start out on a massive scale before you have perfected your process.
Cultivation – It pays to design it right the first time
Success begins in the grow room. Never forget that. A properly engineered cultivation plan can be the difference between 3 and 6 harvests per year. Again, it is imperative here to do your homework. A well-thought-out plan can make or break you, and that is where an experienced cultivation consultant can help.
Set realistic expectations. Understand that growing boutique style cannabis is very difficult on a large scale, consistently. Don’t expect to grow perfect cannabis every time – it is unrealistic and can ultimately lead to failure if your financial model depends on it. Growing a plant, while mostly in your control, involves too many variables to rely on a perfect outcome round after round. You can do everything in your power, yet something unexpected can still happen and be detrimental to your yield, and therefore your profit. You must expect and plan for this.
Automating as much of your grow as possible is always a good idea. This will greatly reduce labor costs and more importantly, minimize human error. In some instances, it will even allow you to review data and information remotely, in real time, allowing you to ensure your cultivation site is always running as efficiently as possible, even when you aren’t there.
Processing – Don’t skimp on the process
If you are going to be harvesting cannabis for flower, it is imperative to have a properly built facility for drying, curing and storing your product. You must consider that this building will need to be large enough to house and properly store all of your harvest at once. This can make or break your crop at harvest time. If you don’t have the capacity to handle your harvest properly, it can lead to disastrous issues such as mold or too quick of a cure – conditions which make your cannabis unsellable in the regulated market.
Although costly, if done correctly, you can also design this area to serve as your propagation, trimming, and breeding areas, which will ultimately save on costs in the long run.
Also keep in mind, hand trimmed cannabis will always look more appealing to the consumer than machine trimmed cannabis. However, hand trimming can be time-consuming, labor-intensive, and therefore far more costly than machine trimming. These are factors you will need to consider and budget for when deciding how to proceed. If you use a machine, you may save money up front, but will you be able to sell your cannabis at full price?
Distribution – Have a plan
It is a good idea to have a plan for distribution, prior to start up. If you have an agreement with a retail outlet (or contract with a distributor) in writing, you will protect yourself from financial failure. Cannabis will never grow more valuable over time, therefore, you want to have a plan in place for distribution, as soon as the cannabis is harvested and processed. Just as was the case in the black-market days, you never want to hold on to your cannabis for long periods of time.
Do not distribute without agreements in writing! While some oral agreements may be enforceable, it will be extremely costly to litigate. Therefore, you should plan to hire a lawyer beforehand to create fail-proof agreements that will hold up in court, should a distributor not pay you for your product.
Sales – Build your brand, but be realistic
Building your brand is important. And if you don’t produce your own high-quality flower you cannot expect to have a product up to your standards. Your brand will not be successful if you cannot consistently provide consumers with high quality cannabis. Relying on other growers to produce your cannabis for you is risky to your brand. Even if you are a manufacturer, you may not be able to rely on other suppliers to maintain the quality volume you need in order to manufacture your products consistently.
The regulated market in California is new. Therefore you must necessarily account for a great degree of price fluctuations in the market. When creating your budget at the outset, you must account for fluctuations in profit. Knowing when prices are going to be at their lowest can help you avoid having an oversupply of inventory. It can also help you avoid such situations by planning your cultivation/harvest accordingly.
There are both consumer and government influenced market trends that can affect your bottom line. These must be accounted for at the outset.
On the consumer level, you must know what people are buying and how they are consuming. And these factors can change quickly with the introduction of new technology, methods or new devices intended for cannabis consumption. You must stay on top of these trends.
The government regulations can also affect these trends. Products used for cultivation can become banned, i.e. products you once relied on in your cultivation can be found to have contaminants known to cause test failures, even in “approved products.”
Ultimately, all of these factors can make or break your success, and therefore, must be considered, researched and accounted for prior to beginning your cultivation in the regulated market. Working with a consultant with over 20 years of grow experience, and more importantly, extensive experience in large scale cultivation in the regulated market, can help you achieve the success you desire. Cultivation in the regulated market is costly, but working with a consultant can help you cut costs at the outset, and save you from unexpected expenses in the long run.
Hiring an experienced cultivation consultant is yet another cost, amongst the laundry list of never-ending expenses in the setup of a regulated, recreational grow. However, in the big picture it can actually save you a significant amount of time and money by providing you with the information you need to formulate a realistic budget, profitable cultivation site and a well-trained workforce. This article will explore just some of the many benefits a cultivation consultant can provide to your company.
An experienced consultant will have a vast array of knowledge to ensure the success of your company. One important area they can advise you on is budgeting. With years of experience cultivating, in both medical and recreational markets, an experienced consultant will have knowledge of not only start-up costs, but also hidden costs you must prepare for in advance. They will also be able to advise you on strategies to avoid future costs and problems. There may also be expenses in the build-out of your cultivation site you have not considered. For example, you may need a waste water treatment plan if you have any fertilizer run off that will flow to a sewage drain. It is important to know all possible costs when securing your investment or planning out your budget for the year.
Setting up a large-scale cultivation site in a regulated market can be extremely costly. Gone are the days of putting up a few lights in a closet; growing in a regulated market requires a larger scale, and therefore, larger costs and more complications. A consultant experienced in design and implementation of such large-scale, intricate cultivation plans will provide you with the knowledge you need to properly set-up and maintain your facility in order to ensure your company’s success. They will also know the tips and tricks to save you money along the way.
A good consultant will be able to advise you on the design of your facility to ensure that the layout supports productivity, and that there is a proper workflow. It is important to hire a consultant before you get started with the build out of your facility, as it will be much more costly to have to correct mistakes in your design later on down the road. An experienced consultant will implement superior facilities layout and design to avoid future problems at the outset. Something as simple as a centralized irrigation distribution zone can save you a lot of time and money.
Once you have created the proper space, cultivation planning is important to avoid unnecessary problems from arising, which will ultimately delay profit. A well thought out cultivation plan will help you plan for success. A consultant will know what does and doesn’t work. For example, some equipment will run off an app on your phone; while convenient, there are some that don’t perform well which could end up costing the entire crop. These are things you want to know and work around, before you spend money unnecessarily.
An experienced consultant will have previously worked in various types and scales of cultivation sites, and from that experience will be able to teach you which processes and techniques work, and which ones don’t. Someone with less experience may believe that watering plants by hand would be an easy method to keep your garden irrigated, but it is actually the most time-consuming labor task (and therefore extremely costly), while an automated watering system can be very simple and cost-effective to install.
A skilled consultant can provide necessary training for your employees. Let’s face it, this is an entirely new industry, and therefore, most people applying for entry-level jobs at a cultivation site are unskilled. However, the best path to success when dealing with large-scale cannabis cultivation is to have skilled, happy employees. Educating and properly training your employees is essential. It helps to teach employees not only how to complete a task, but to help them understand why they are doing a given task. This will give your staff the skills and confidence they need to complete the task properly. Unskilled hands in your garden can jeopardize the success of your cultivation.
Don’t make the same mistakes others have made. Hiring a cultivation consultant can help you to avoiding problems before they occur. A professional consultant has the knowledge required to predict issues and problems before they occur, or implement a solution when corrective measures are necessary. Oftentimes issues can be avoided just by knowing the cause and effect of decisions and the potential outcomes they will have.
A cultivation consultant should also have a wide network of professional contacts to help you address any issues or problems that arise. Having a network of professionals to employ when necessary is critical for ensuring the success of every project. For example, wholesale contacts for cultivation equipment can help you not only to get the best price, but also ensure you are using the best equipment possible for your situation.
If you are still unsure about whether or not you need a cultivation consultant to help plan out your grow, or fix your grow if you’ve encountered problems, feel free to contact me to discuss your needs. I assure you there are ways I can save you money, improve your yields, and help your company be more successful in this ever-changing market.
Before you begin any large-scale cultivation project, you must necessarily consider the four factors highlighted below, among many others, to ensure your cultivation is successful. Failure to do so will cost you greatly in both time and money, and ultimately could lead to failure. While the four areas highlighted below may be the most important considerations to address, you should hire a cultivation advisor to determine the numerous other considerations you must deal with before you begin.
Genetics will play a huge role in your cultivation plan, as they can ultimately make or break the success of your business. Access to quality, verified genetics will greatly affect your profits. All cannabis genetics grow differently and may require different conditions and nutrients. Further, consumers in today’s regulated market have greater awareness; they are much more knowledgeable about genetics and able to discern between quality cannabis versus commercially produced cannabis.
Market trends will dictate whether or not you’ll ultimately be able to sell your harvest at market rate. You need to project out at least one year in advance the genetics you will be growing. But often it is impossible to predict what consumers will be purchasing a year in advance so this part of your cultivation plan should be well thought out. Further compounding this difficulty is the fact that it may take six months to ramp up production of any given variety.
Genetics that are popular now may still be popular next year, but that also means there will be more competition for shelf space, as more competitors will also likely be growing these same genetics. Therefore, don’t rely on only one trendy variety as the bulk of your selection for the year, no matter how popular it is at the moment. Producing a single variety as the bulk of your crop is always risky, unless you have a contract with a sales outlet, in advance, for a set quantity of that one particular variety. Diversity in your genetics is beneficial, when chosen correctly.
Making proprietary genetics from your own seed collection can give you a big advantage in today’s competitive market. Having a variety with a distinct, unique and desirable smell, taste, effect or cannabinoid profile will allow you to distinguish your brand amongst others. Entire brands have been built off of a single variety: Cookies and Lemontree are two examples of companies that have done this. All it takes is one really good variety to attract a lot of attention to your brand. Having your own breeding project on site will allow you to look for and identify varieties that work for you and your business model, and ultimately will help to distinguish your brand apart from others.
Only buy seeds from reputable breeders! Any new varieties that you are going to be cultivating should be tested out at least three times, on a small scale, before being moved into a full production model. If you are growing from seed there is always the potential for your crop to get pollinated by male plants or hermaphrodites that went unnoticed, and therefore, they could be a potential risk to your entire harvest. Treat them accordingly, i.e. by cultivating them on a small scale in a separate, enclosed area.
Buying clones from a commercial nursery can be risky. Genetics are passed from one grower to another haphazardly, and names are changed far too easily. This can create a lot of confusion as to what variety you are actually purchasing and whether you are getting the best version of the genetics. Just because a clone is called “sour diesel” doesn’t mean you’re actually getting the real, authentic sour diesel. And to further complicate things, the same clone grown in different environments can produce a noticeable difference in flavor, smell and effect depending on your cultivation method. Always try your best to verify the authenticity of the genetics you purchase. Ask about the history and origin of the particular genetics you are purchasing. Better yet, ask for pictures, physical samples, and most importantly, certificates of analysis from a laboratory, indicating the potency. In many states anything under 20% THC is going to be hard to sell, while anything over 30% will easily sell and command the highest price. It’s a good idea to have a laboratory test the terpene profile in order to verify a variety is actually what the seller purports it to be.
Knowing the source of your genetics is imperative. It will help ensure that you actually have the variety that you were intending to grow, and therefore, allow you to achieve your intended results. Knowing what varieties you are going to cultivate, before you grow them, will also give you a better idea of the ideal growing conditions for that specific variety, as well as what nutrients will be required to achieve optimum output.
2. Automated Watering Systems
Installing an automated watering system, during build out, will by far be the most cost-effective use of your money, and will save you the most amount of time in labor. An automated watering system, commonly referred to as a “drip system” or “drip irrigation,” is necessary regardless of whether you are cultivating indoors or outdoors; it will allow you to water multiple different areas at once, or only water a few specific areas of the garden at one time. Hand watering a 22,000 square-foot cultivation site will take one person eight hours every single day, on average, to maintain. However, a properly designed drip system can water an entire large-scale garden in a couple of hours, without any employees, record all the relevant data and notify you if there is a problem. This enables you more time to spend closely inspecting the plants to ensure there are no bugs or other problems present, and that your plants are healthy and thriving. This attention to detail is necessary if you want to have consistent success.
Automated watering systems not only save a great deal of time but also eliminate the possibility of human error, like over watering, which can kill an entire crop quickly. There aresoil moisture sensors that can be placed in the soil to regulate the supply of water to the plants in a precise manner. Without an extremely skilled, experienced work force, damage to plants due to over watering is very common. A drip system will reduce the threat of human error by ensuring delivery of precisely the correct amount of water and nutrients to each plant every single time they are watered.
Not all drip systems are created equally. There are different types of automated watering systems. Designing the right drip system for your cultivation site(s) can be complicated. Make sure you do your research, or better yet, work with a cultivation advisor who has experience with automated irrigation systems in conjunction with a licensed plumber, to ensure you are installing the best system for your particular set up.
Adding a fertilizer injector to your drip system can further increase the efficiency of your operation and save you money on nutrients by using only what you need and ensuring correct application. Again, automating this process will save you time and money, and reduce the threat of human error.
The types of nutrients you use and the amount of nutrients you use, are going to directly affect the quality of your cannabis flower. Conventional agriculture and Dutch hydroponic cannabis cultivation have always used salt-based fertilizers. However, they can be toxic for the plant in high amounts. While cheap and easy to use, salt- based nutrients are made in big factories using chemical processes to manufacture. They are not good for the environment, and overall, they produce an inferior product. The highest quality cannabis, is grown with organic living soil. Although seemingly contrary to popular knowledge, when done properly, cultivating in organic living soil is more cost effective than using powdered or liquid salt-based fertilizers.
Yield and quality depend on the skills of the cultivator, more than the method they are using. Having healthy plants from the start, will always yield better results, no matter what way they were grown. In my 20 years of experience I have seen plants grown in balanced living soil yield just as much as plants grown with synthetic nutrients. Further, the quality is not comparable.
Always remember, it is the quality of your flower that will determine the price it is sold for, not the yield. Even if you produce more overall weight of chemically grown cannabis, if nobody wants to purchase that product, then you are going to yield far less profit than another company growing in the same amount of space using organic practices that yield a higher quality product.
The difference in quality between plants grown in balanced living soil versus any other method of cultivation is undeniable. It is really easy to post a pretty picture of a flower on Instagram but that picture doesn’t tell you anything about what went into producing it. When flower is produced using chemical nutrients, it is likely going to be harsh and not enjoyable to smoke. Lesson learned: don’t judge a bud by an Instagram photo! There is a stark difference between cannabis grown using synthetic nutrients versus cannabis grown in living soil. Once you’ve experienced the difference you will never want to consume cannabis that is grown any other way.
4. Plant Propagation
Having the ability to propagate your own clones, from mother plants that you have cultivated, can save you a staggering amount of money. In some states, having a cultivation license allows you to produce your own clones for your cultivation, while having a nursery permit will allow you to sell clones for commercial sales to other companies. The average price of a wholesale clone is around eight dollars. If you require 5000 plants for every harvest, that’s a $40,000 expense you must bear, every grow cycle. This can obviously add up quickly. And as previously mentioned there’s the risk of purchasing inferior genetics or unhealthy plants, both of which greatly affect your profit margins.
On the other hand, the cost of materials and labor to produce a healthy clone can be as low as one dollar when using advanced cloning techniques. Controlling your clone supply can ensure they are healthy and allow you to know exactly what you are growing each time. Further, it doesn’t take a lot of space to propagate your own cuttings. In a 400 square-foot space one could produce between 5,000 to 10,000 clones per month, all of which could be maintained by one person depending on your situation.
And last but definitely not least, the most important thing you can do to ensure the success of your cultivation, is hire an experienced knowledgeable grower who is passionate about cannabis. The success of your company depends on it. You need someone with the knowledge, experience, and skills to make your cultivation dreams a reality. You need someone who can plan your build-out and cultivation to ensure success from the start. And you need someone with the skills to handle the multitude of inevitable problems that will arise in a cost effective and efficient way.
These are just some of the many considerations you must account for when planning a large scale grow in the regulated market. An experienced cultivation advisor can help you with these, and many other considerations you will need to contend with before you begin your grow. Creating a well thought out plan at the outset can end up saving you thousands, if not hundreds of thousands of dollars down the road.
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