High Yield & Low Production Costs: The Future of Commodified Cannabis
From guerilla grows to legalization, the cannabis industry has come a long way and Joe Ullman explains the key now is for big yields with the lowest possible production cost.
Pre-legalization, cannabis cultivation occurred incognito: in indoor growrooms, mature forests, remote hillsides, and disguised greenhouses to name but a few clandestine locales. Demand for illicit cannabis was high and supply was low, leading to often exorbitantly high prices. Illicit cannabis was so valuable — fetching as much as $5,000 a pound for outdoor-grown flower — in part because of outrageously expensive production costs.
Correspondingly, the industry evolved so that many expenses had a so-called cannabis tax built in to cushion the illegality of operations. This trickle-up covered costs like the electrician or other service providers being paid a little extra for their discretion, or for the (supposedly) highest-quality nutrients obtained from a grow shop marketed specifically for cultivators, etc. The consumer ultimately paid the price during this period — both in exorbitant cannabis costs, and also in receiving a product of questionable quality and origin.
Now, legalization enables cannabis cultivation to move into locations and systems of production that better suit the growing requirements of the crop, as well as ensure the quality and affordability for consumers and growers alike. The days of discretion are mostly over because many underground growers have since transitioned into a legal industry setting. Cannabis growers are searching for viable farms with Class I soils and converting them to cultivate cannabis outdoors. Other cultivators are finding old, underutilized greenhouse facilities and breathing new life into them for cannabis production. In particular, those greenhouse facilities with “good bones” that offer minimal starting expenses are highly prized.
Unfortunately, presently individual states and counties have drastically different entry barriers for the cannabis industry, so the cost of goods sold (COGS) varies according to the regulatory and tax burdens of the region. Based on what we’ve seen in Oklahoma, the easier it is to issue cultivating licenses, the more people will begin cultivating. As cannabis markets mature and adapt to state regulations, we begin to see the increasing commodification of quality cannabis products. Interestingly, commodification has been slowed by compliance costs, permitting processes, and taxes, which in most states works to keep the price of cannabis disconnected from the actual cost of production.
Meanwhile, many of the smaller growers mostly disappear due to the changing nature of cannabis markets following legalization. The small growers that do survive must specialize, find a niche, and be exceptionally good at what they do. The rest of the market shifts to medium- and large-scale growers, who will take lessons learned from the commodification of other agricultural crops — such as corn — and put them to use.
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Maximizing Yields and Lowering Costs
Money is pouring into the research and development of cannabis, the goal being to further increase crop production. As co-owner of an autoflower cannabis company, I’ve noticed that the intensified commodification of cannabis forces those in the industry to focus on maximizing yields while limiting costs. For instance, farmers are using a variety of approaches to address this problem, such as:
Increasing focus on appropriate genetics for field-scale production. When it comes to seedling vigor, you’ll want to utilize the best genetic makeup for your yield. Doing so helps fight against unwanted pests, nasty diseases, and sugar content (which is analogous to potency or terpene content).
Minimizing labor and maximizing post-harvest efficiency. Technology enables growers to automate systems and tasks rather than rely exclusively on manual labor in their facility. With fewer people working in a cultivation center, tech tools help bridge this gap to minimize labor costs and maximize output.
Growing in regions that are best-suited. Not all plants are created equally. Some strains are better suited for certain parts of the country. Now that growers are being welcomed into a few dozen legal marketplaces, they can choose which environments and regions best suit their specialty plants.
There are also up-and-coming techniques outside of what the corn industry and other cash-crop-production models have demonstrated. One of those recommendations is increasing the number of plantings in a year. This is known as succession planting.
Autoflowering or day-neutral genetics allow outdoor and greenhouse farmers, specifically those without light deprivation capacity, to move from a traditional one-crop-per-year model to anywhere from two to eight crops. This emergent approach and creative use of genetic development allows farmers to drastically increase yields per acre, spread out the workload, and minimize financial risk.
Additionally, consider how autoflower seeds can help your production make the most out of annual weather cycles. Using autoflower genetics alongside fast-finishing varieties (sub-autos) and traditional long-season varieties helps farmers access a wide range of genetics. This combination also gives farmers tons of options to tailor their planting and harvest schedules to their specific needs: seasonal weather patterns, labor, compliance, etc.
Always ensure your cannabis seeds are from a reputable seed producer. Though growing from clones has become common practice over the past few decades, growing from seed has far-reaching benefits and implications. Besides unparalleled vigor, seeds break pest and disease cycles, allowing farmers to escape the wrath of many viruses now plaguing the industry and giving farmers flexibility in ways too numerous to count.
No matter how large or small your growing operation is, there are plenty of innovative techniques to be inspired by given the transition from the underground to legal cannabis cultivation market. Keep your eyes peeled for innovation as cannabis rises from the legacy market and grows into a modern, commodified, consumer-accessible and farmer-affordable crop.