2020 Cannabis Research: Industry Optimism, Expansion Continues

Special Report - State of the Cannabis Cultivation Industry

In the five years that Cannabis Business Times has published the “State of the Cannabis Cultivation Industry Report,” the vast majority of research participants noted they plan to expand their cultivation operations, with a slight shift in the types of expansion they have planned.

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June 8, 2020

In the five years that Cannabis Business Times has published the “State of the Cannabis Cultivation Industry Report,” the vast majority of research participants noted they plan to expand their cultivation operations, with a slight shift in the types of expansion they have planned. The number of participants who noted greenhouse expansion plans has hovered around 45%, while the number of cultivators who plan to add indoor/warehouse space has decreased slightly since 2016 (36% in 2020 vs. 43% in 2016). Each year, about a fifth of cultivators noted plans to add outdoor cultivation space (22% this year).

The square footage that cultivators plan to add has shifted more significantly over previous years. Since 2016, the number of participants who said they plan to add 25,000 sq. ft. or more of cultivation space has increased from 20% in 2016 vs. 42% in 2020, while the number of cultivators planning to add less than 25,000 sq. ft. has decreased from 51% in 2016 to 39% in 2020. In 2016, a quarter (25%) of cultivators said they had no plans to add square footage; that number has decreased to 17% in this year’s study.

Note: Percentages may not add up to 100% due to rounding and no responses. Changes are percentage points.




*The 2016 report showed that a total of 12% of research participants planned to add less than 5,000 sq. ft.; smaller square footages were not provided as answer options, as they were in all other surveys. **Compared to 2017.












More Continue to Invest in Cannabis

The growing cannabis industry continues to attract interest, as indicated by the intentions of an additional 53 research participants who do not currently own or work for a cannabis cultivation operation but plan to in the next 18 months.

*Base: an additional 53 research participants who do not currently own or work for an operation that grows cannabis. Note: Totals exceed 100% because participants could select multiple answers.



More Efficient Operations

Whether growing in a greenhouse, indoors or outside, cultivators are running more efficient operations, as evidenced by the continuous decline in production costs seen during the years. For example, when growers were asked to provide their average production cost per pound of dried flower in 2019, the number that fell in the middle of all responses (the median) when growing in a warehouse, greenhouse or outdoors was $400, $261 and $130, respectively. This year, those figures have declined to $396, $233 and $100, respectively. When compared to 2018 data, as the chart below illustrates, the decreases are even more dramatic. Cultivators are continuing to utilize automation technology when cultivating, which could be increasing efficiency and lowering production costs. As noted later in the study, competition and declining prices have been cultivators’ top challenges for multiple years, so decreasing the cost to produce a pound of flower may be a top priority.

Note: Percentages may not add up to 100% due to rounding and no responses. Changes are percentage points.







*Note: This chart shows the median average cost, or the number that fell in the middle of all responses



*Note: Total exceeds 100% because respondents could select multiple answers.

 

Read the rest of the 2020 State of the Cannabis Cultivation Industry Report

Report Cover Page

Letter: Five Years Inside the State of the Industry

Introduction:  Tracking Data Reveals Industry Shifts, Sustained Growth

2020 Cannabis Research: Revenue and Profits Plateaued, But Solid

2020 Cannabis Research: Where Cultivators Grow

2020 Cannabis Research: Industry Optimism, Expansion Continues

2020 Cannabis Research: Challenges Are One Constant in a Dynamic Industry