Whether you are a small batch cannabis farmer or a large commercial grower, one of your main goals is likely the same — to produce high-quality cannabis while increasing your profit margin. And with cannabis prices decreasing, that can be tricky, if you aren’t scrupulous about costs.
The cannabis medical and recreational market has experienced a significant decline in prices over the past few years. In the January 2017 issue of Forbes magazine, CannaSaver CEO, Brian Shapiro, said, “Wholesale marijuana prices declined in 2016 from $2,500 to $1,000 per pound…” The article explained Shapiro attributed blame to indoor cultivation facilities increasing supply at below market value, driving all prices down.
Market numbers for 2017 are showing a leveling off from the bottoming out in 2016. Indoor flower has been catching the higher value, averaging just under $2,000 per pound. Outdoor, greenhouse and indoor flower combined average has been +/- $1,600 for most of 2017. 1
In addition to price balancing, the cannabis industry is seeing a division in flower quality into a top shelf, mid and low-quality pricing structure. Various factors contribute to the categorization of cannabis products, but cannabinoid percentages, flower or oil structure, flavor, and aroma are all considered.
Within indoor growing, some cultivators are increasing the quality of their product through ‘micro-climate’ grow rooms. These grow rooms allow growers to better customize the elements, such as temperature, circulation, humidity, nutrients and lighting to meet the needs of different strains. This customization results in less stressed, happier plants, which, combined with the right technology and genetics, can produce increased resins, margins, and yields.
Overall, the cannabis market will see more expansion and price leveling. “The regulated market in North America could triple to more than $20 billion in five years,” writes Kaskey. “From $6.7 billion last year, after California, Maine, Massachusetts and Nevada legalized adult recreational pot use in November.”
It is likely that cannabis producers will continue to search for the means to produce high-quality product with the best margins. Carter Laren, from the cannabis incubator group, Gateway, says in Forbes, that he believes growers will turn to agricultural technology to keep production costs low and support higher margins.
Increased efficiencies and margins with technology
A hydropic-aeroponic hybridized system can be such a money saving technology. Whole Plant Technologies’ Grow Tray System is over 30% more profitable than leading industry-standard growing technologies. In fact, the system pays for itself after the first harvest.
Costs are cut with the reduction of water consumption, nutrient consumption, and electrical costs, as well as grow medium costs. These decreases in expenses allow growers to put savings back into their operations.
The system also allows for faster harvests and higher yields, contributing to a higher profit margin. Farmers can go directly from clone to flowering in 10 weeks, eliminating the vegetative phase. The system produces 1.5 pounds of flower per tray and allows for six harvests of consumable flower every 54 weeks. For oil production, the Grow Tray System allows for up to seven harvests annually.