Marijuana Business Daily recently released the 2017 edition of their Marijuana Business Factbook, a complimentary excerpt containing exclusive financial details about the cannabis industry in 2017. Here are a few details we find especially relevant to cannabis growers this year.
Here’s What You Need to Know About the Marijuana Business in 2017
Wholesale Cannabis Growers Must Become More Competitive
As with many industrial farming businesses before us, the cannabis industry has reached a level of market maturity in which supply has surpassed demand. Despite rising sales nationwide, wholesale growers have been entering the market at an even faster rate. Legalization in several states has lead existing growing operations to expand, and new growers to enter the market. As a result cannabis prices have been plummeting. In order to combat falling prices, growers must push to become more efficient, producing higher quality products on a more consistent basis.
Cannabis Businesses Must Become More Profitable
As a hot new commodity in a hot new market, it used to be fairly easy for cannabis companies to turn a profit. So long as you sold marijuana, the customers would come. Now it seems as though everyone wants in on the action. With new cannabis businesses opening everyday it’s becoming increasingly more competitive, and thus increasingly more difficult to turn a profit. In larger markets such as Denver, Seattle, and Portland, recreational users now have several retail options to choose from. Not to mention, startup costs are rising.
Though profit margins average between 18-19%, it’s becoming increasingly difficult to reach profitability in the first place. According to the 2016 Factbook, 70% of retailers said they reached profitability within their first year of business. In 2017, only 55% of retailers said they reached profitability within their first year. In order for businesses to succeed in this rapidly growing industry, retailers will have to push to be more competitive and to come out with more competitive products.
Growing Methods Must Become More Efficient
Taking into consideration what products will be made from cannabis crops can also help growers to become more efficient. Edible products and infused products are currently the fastest growing category and are expected to overtake flower products within the coming years. In order to maximize profitability growers must produce a specialized product for a specific portion of the market.
To compete in a saturated marketplace, today’s cannabis growers must work to refine their processes and produce more efficiently grown products. Evaluating growing methods, the Factbook discusses the pros and cons of several growing methods. Indoor growing methods, for example, have the highest start-up cost compared with greenhouse, outdoor, or combination methods costing $75 per square foot to start. Of indoor growers, 32% use soil, 30% use coco coir, 16% use rockwool, 10% use water, and 3% use perlite.
Whole Plant Technologies’ medium-less Grow Tray System helps cannabis growers become 30% more profitable compared to the above growing technologies. By eliminating the vegetative phase, our Grow Tray System can produce higher yields in less time. Cloning to flowering takes just 10 weeks, producing 6 harvests in 54 weeks. Faster, higher, yields combined with savings from labor, water usage, nutrient consumption, and lighting demands allows increased profitability to remain competitive in a market with decreasing crop prices. Contact us to learn more about how our patented growing system can help you stay competitive in 2017 and beyond.