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Regardless of what party affiliation you claim, the 2016 Presidential and state-level elections have been a roller coaster ride that still hasn’t ended. The results have huge implications for the marijuana industry that will continue to develop for some time to come. It is an exciting time for the cannabis industry: As the original legal and medical markets show signs of maturity, new programs passed in the last year are set to come online and a whole wave of new programs will begin to take shape throughout the coming year. The only thing we can say with complete certainty is that the commercial cannabis landscape is changing very, very rapidly. These changes present multiple opportunities and challenges for the industry.
Nic Easley presents To Do or Die: Staying Relevant in the Maturing Cannabis Market at the Indo Expo in Denver, CO. This speech is a must for new and existing cannabis businesses looking to succeed in the industry long term. Nic discusses the relevance of branding as critical component of a successful cannabis business.
Products grown, manufactured and distributed with organic methods and practices are in high demand. The term “organic” provides consumer confidence in the safety and morality of the products they are purchasing. In turn, operations that comply with all state-mandated guidelines, while working to provide a product that is produced via standardized ecological principles, appeal to that consumer confidence, in addition to having resilient production that can absorb biological shocks and disturbances.
The National Organic Standards Board has defined the “organic agriculture” as: “an ecological production management system that promotes and enhances biodiversity, biological cycles and soil biological activity. It is based on minimal use of off-farm inputs and on management practices that restore, maintain and enhance ecological harmony.”
With the above definition, it is important to ask if cannabis can even be grown in an organic manner. Unfortunately, the term organic is often used as a greenwash to attract consumers. While many cannabis patients and consumers are under the impression that the organic label in the cannabis industry is governed by a set of rules and regulations, no guidelines or stipulations exist for cannabis to be produced organically. (There is no federally recognized organic certification for cannabis.) Many steps, however, can be taken to ensure you are using organic practices and methodologies to provide a safe product for consumers.
This case study shows how 3C evaluated a client’s existing systems to identify key areas for improvement. As a result, 3C’s expert guidance yielded powerful change that immediately impacted bottom line profits.
At the time 3C was retained, our clients were employing double-ended (DE), High Pressure Sodium (HPS) lamps in the production of flower, which was a fairly reliable technology at the time. However, the initial head grower had hung the lights in such a way that each lamp was spaced only four feet off center, rather than the optimal five feet. DE lamps will produce a productive footprint of 25 square feet, so our first recommendation was to re-space the lights accordingly. This required the use of two contractors billed at a rate of $40/hour, for a total of 64 hours, totaling $2,560 to address the lighting in the flower room. During that time, ballasts – which were previously inaccessible to the cultivation staff while plants were in the room – were re-positioned so that the wattages of the lamps could be easily adjusted throughout the flowering process.
New, adjustable ratchets were also required so that the light fixtures could be raised and lowered. This expense was $5 each for 120 pairs, and an additional $600 was required for basic supplies. The trellis frames also had to be altered to take advantage of each light’s full footprint, meaning additional PVC pipe was required along with additional labor from the cultivation staff. The PVC cost $500, and each room required 4 hours of labor at $20/hour, totalling $820 to adjust the trellis frames in all four rooms.
Supplies to construct automatic irrigation for all four flower rooms cost $2,000. Labor hours from the cultivation staff were not counted toward the construction of the irrigation systems; this is because their subsequent operation reduced time spent on irrigation and fertilization by over 75%. Considering this, total labor hours did not decrease but instead were able to be spent more productively on tasks like topping, thinning, and staking plants prior to flowering. This was done to ensure that they entered the final stage of cultivation prepared to produce optimally.
To realize this 75% decrease in required resources, the net total to re-space the light fixtures, reposition the ballasts, adjust the trellis frames, and install automatic irrigation accordingly was only $5,980.
One of 3C’s key service offerings is our Efficiency and Productivity Audit, which employs the trained eyes of our Subject Matter Experts to evaluate all aspects of an operation. This audit takes into consideration:
– Facility design
– Pest and contamination risks
– Regulatory compliance issues
– Business plans and projections
This case study exhibits 3C’s ability to conduct audits that maximize cannabis yields and increase shareholder value by bringing focus to critical areas of improvement. 3C was recently hired to advise a client running a vertically integrated, infused-products operation that was already seeing some success. The team at 3C was able to offer guidance related to all of the functional areas listed above, and made specific recommendations to modify light fixture spacing and positioning, cultivation methodologies, and SOP’s. This allowed our client to realize a 63% gain in cultivation productivity, all while more than doubling the production of cannabis concentrates being produced.
The primary issues our client was experiencing included poor initial facility design and equipment installation. These factors contributed to systemic productivity inefficiencies throughout the entire cultivation operation. Another major problem involved lights being spaced improperly, an issue affecting the vegetative stage through to the flowering rooms (the full footprint of reflectors was not being utilized). In addition to these findings, 3C learned that light fixtures could not be raised or lowered, resulting in wattages not being able to be controlled effectively. This presented various issues for plants at all stages of development.
For the purposes of this case study, we will focus specifically on flowering plants and the adjustments made to the spacing and manner in which light fixtures were hung, as well as complimentary adjustments to the trellises and trellising procedures employed by the staff in an attempt to maximize the production of each plant. Additionally, automatic irrigation systems were constructed and installed in flower rooms, which allowed plants to receive irrigation and fertigation more consistently, contributing further to higher yields.
One distinguishing feature of this client was that they were growing product specifically for extraction, and their license limited them to 500 plants total. This made optimal efficiency and productivity all the more essential. Prior to 3C’s recommendations being implemented, the operation was producing roughly 1.9 pounds of untrimmed plant material per light fixture, while employing an 8-week flower cycle that allowed for six harvests per year. The facility consisted of four flower rooms containing 30 lights each, totalling 120 lights. Based on these metrics, the facility was producing roughly 1,368 pounds of un-trimmed flower and plant material per year.
Safe, responsible, effective pest management is one of the highest priorities for cannabis cultivation operators in both medical and adult-use markets. 2015 saw numerous, frightening revelations showing that the use of chemical pesticides was widespread, even despite some states having laws that specifically ban such products.
While operators have been able to skirt such rules due to the lack of regular, targeted testing, states are increasingly moving to tighten regulations and to ensure that product tainted with chemical pesticides cannot be marketed. This means that cultivators who are using these pesticides may see their harvest batches destroyed, their revenue lost, tarnishing of their reputation and brand, and exposure to liability claims leading to the possible revocation of cultivation licensure altogether.
Fortunately, 3C has extensive experience in developing and implementing Integrated Pest Management (IPM) strategies that eliminate the need for chemical pesticides and are compliant with all state laws and regulations. Remember that IPM strategies are all-inclusive approaches that include evaluation and best practices related to:
– Cleanliness protocols
– Workflow recommendations
– Facility design guidance (when applicable)
– Pest inspection and discovery protocols
– Instruction in required recordkeeping and documentation
– Training in best practices regarding pest management
– Schedules for the application of natural, low-toxicity pesticidal materials
This case study considers a medium-sized facility that contained 5,000-10,000 square feet of canopy. To facilitate an IPM package that was sufficient for an operation of this size, 3C’s retention fee was $25,000. Additional costs came in the form of state-mandated training and certifications for staff, supplies and materials needed to execute the IPM program. Ultimately, the program cost $28,975 to implement, with ongoing annual expenses totalling $3,125.
By initiating an effective, compliant IPM, our client avoided having to destroy non-compliant product, thus protecting themselves against lost revenue. In this case, $250,000 was the estimated value of just one of ten flowering rooms located in the client’s facility at the time. This did not take into account the fact that our IPM guidance helped to prevent the business from having to endure a product recall, a process rife with costs, detrimental impact to their reputation and soiling of their brand.
When a client partners with 3C to enact an IPM program, peace of mind is achieved by eliminating the risks described above. Also, ensuring that pest management is being done correctly means our clients are doing the right thing by their workers, patients, and customers by providing safe, high-quality cannabis that is responsibly produced.
When cultivating indoors, the light that plants receive is one of the most important aspects of the growing environment.
3C has consulted with businesses running well-designed, efficient operations that somehow hit a ceiling; despite their strong performance, they can not increase their yields and the quality of their product beyond a certain point. While their current yields and quality may be respectable, these operations realize that greater efficiency and the ability to differentiate one’s product is essential as increasing amounts of cultivators continue to come online. In some of these cases, 3C’s Efficiency and Productivity Audits reveal that a lighting upgrade is in order to help the operation get over the hurdle they are facing.
3C has extensive experience helping customers with lighting upgrades. Upgrading the lighting in an entire facility can be an expensive and intimidating prospect, and it is one that is not to be undertaken lightly. For some clients, it’s a shock to learn that much of the new lighting technology on the market has not yet demonstrated trustworthiness or exceptional performance. In one case, 3C was able to guide their client in the replacement of 100 lights devoted to flowering plants; the upgrade replaced their traditional, single-ended HPS lamps in vented hoods to Gavita Pro 1000e DE fixtures.
The capital costs required to take down the old hoods and install the new fixtures, along with associated AC upgrades, came to $64,500. Increased operating expenses from the additional AC resulted in $9,110.40 during the first year, for a total investment of $73,610.40. The facility improved from previously generating 1.4 pounds of cannabis flower per light, a situation that was yielding five annual harvests and $1.4 million in revenue from flower (assuming $2,000 per pound as the wholesale going rate).
After the lighting upgrade, the yield was increased to 2.1 pounds per light. Based on the improved yield figures, the facility was able to generate $2.1 million in revenue, netting a return of $700,000 in the first year. That’s ten times the amount invested, just from sale of flower. Additionally, ongoing maintenance and replacement costs were lowered, as were employee risk and liability, all while the quality of the product improved and the amount of trim able to be processed into infused products increased.
Contact us today for an Efficiency and Productivity Audit of your facility, greenhouse, or outdoor site. Our team of experienced cannabis professionals will examine your operation and be able to offer concrete proposals on how to maximize your production at minimal cost to you.
The marijuana industry continues to evolve at a staggering rate. Regardless of what changes may come, successful marijuana businesses and their employees will need to focus on a few key business fundamentals in order to thrive in this new, ever-changing marketplace.
For every way that a business can succeed, there are hundreds of ways that it can fail. This is just as true in the growing marijuana market, which while being an ever-expanding economic Colossus, some investors are viewing with a skeptical eye. Those who feel bold enough to start new marijuana businesses without acquiring the requisite knowledge may soon find themselves joining the ranks of the disenfranchised and disappointed, as more and more “hot” marijuana-based businesses fail to leave the nest after hatching.
In the effort to mitigate risk, adhering to a few common sense, proven approaches will create a greater chance of success. The fact that so much money is now being made with marijuana is just one reason entrepreneurs should consider entering the market. There is research to be done, rules to abide by, regulations to conform to, and ways of transacting business that are unique to the industry. To help both newcomers and industry veterans, here are a few crucial keys to being successful in the cannabis industry:
Cannabis cultivation involves many levels of decision-making and fundamental production choices that ultimately determine the quality and efficiency of product output. While there are myriad factors to be considered around cultivation style and methods, choosing the specific medium that cannabis will be grown in is a broad, but important topic of debate within the cannabis industry. Ultimately, the decision boils down to choosing between hydroponic or soil cultivation methods.
Many arguments can be made in favor of, or against, both methods, and it is up to informed producers to determine the best growing choice for them. Soil mixes specific to the needs and demands of cannabis are based in generations of agricultural know-how to best mimic naturally occurring ecosystems utilizing natural resources. Hydroponic growing has unique advantages and disadvantages, and can be a valuable growing technique.
The best strategy for cultivators in deciding which growing media to utilize is to consider site-appropriate technology, specific fertilization programs, the yields and consumer base, and, finally, the overall effect on the company’s bottom line with regards to economics and business values. Deciding what type of growing media is best to use and how to make informed decisions about what cultivation methodologies your company will implement can set your company on the path to success.
The harvest — something agriculture has experienced since the beginning of time — is the culmination of all of your work in planning, zoning, buying land, obtaining financing, constructing facilities, training staff, acquiring genetics, cloning, vegetative and flowering growth, and countless other activities.
Reaping the fruits (or flowers) of your labor is not an easy process, but rather one fraught with risk, potentially causing high levels of stress if not thoughtfully designed. Poor harvesting techniques may lower the harvest’s quality, which ultimately impacts your financial bottom line and can create potential brand and even industry damage with distribution of low-quality products.
Building efficiency into the physical and logistical details of harvesting plants, manicuring buds, handling raw plant material and storing the final dried and cured product will help you streamline your operation and reduce costs of goods sold. This is essential, since the very nature of a competitive business environment like cannabis shrinks the margin of error for product quality, price and presentation. As the industry scales into a standardized and commercialized agricultural sector, this becomes even more important.
Below are tips to guide you through a successful harvest. These can be used with any form of production, whether outdoor, full-term seasonal greenhouses, hybridized year-round greenhouses, or indoor models. The goal is to help you develop standardized methods for harvesting that result in quality products and a strong bottom line.