How to Control Cannabis Cultivation Costs

Columns - Hort How-To

19 tips to offset pre-harvest expenses in your commercial indoor grow

Subscribe
November 3, 2021

PAUL | Adobe Stock

Growing cannabis indoors is an energy-intensive process, and costs can add up quickly. To stay financially sustainable in an indoor grow, you must pay close attention to spending.

Cultivation expenses are usually divided into the growing part of the operation, and post-harvest activities, such as drying, trimming, packaging and delivery. Each side of the operation can strategize ways to offset costs.

Here are some tips and suggestions to help keep your cultivation costs under control until harvest.

Scale, Train, and Retain Your Labor Force

Start with a small labor force and scale up, but don’t leave yourself scrambling when the workload spikes. Labor demands can ebb and flow with plant cycles—increasing as crops mature and peaking at harvest when rooms need to be cleaned and replanted. Gather data on individual tasks and extrapolate how many workers you will need as you scale to full capacity, keeping in mind that you should always prepare for unexpected setbacks such as sick days and machine failures.

There are many hurdles involved in the process of finding good workers, and this has been exacerbated by the current pandemic- related nationwide job climate. Proper planning is even more critical now to assure that you’ll have an adequate workforce to produce your crops. Some states have lengthy labor approval processes that can tie up potential employees for months prior to clearance, so factor that window into your hiring timeline.

Vetting candidates for a strong employment record with longevity at past jobs and a progressive path of accomplishment can cut down on employee turnover. Bringing staff with previous horticultural knowledge or training can pre-position employees for success in your operation. Consider partnering with a cannabis training program or horticulture school to find qualified candidates who are eager to break into the industry. Galenas, for example, has partnered with the Cleveland School of Cannabis (CSC) and, currently, over a third of our staff is from CSC.

While you’re staffing up, focus on retaining good employees and utilizing their labor efficiently. Retaining good workers saves time and money, so create a workplace culture of collaboration, recognition, and respect; optimize benefits; and keep wages competitive. Employer transparency websites like Glassdoor can offer a glimpse at what companies in your market are offering their team members, and market research reports like the “Q2 2021 Cannabis Industry Salary Guide” by CannabizTeam can give you a better understanding of salaries in the broader cannabis market.

Start-up companies often use their first wave of employees in various capacities as general laborers until they can afford to hire more employees to specialize in specific areas. Cross-training can be the key to fluid workflows, allowing you to maintain flexibility in your workforce throughout the season. For example, trimming and packaging workers can be valuable in cultivation capacities with the proper training. Take advantage of slower times during the cultivation process to train post-harvest workers on tedious, time-consuming tasks like cloning, transplanting, trellising, pruning, and harvesting.

Plan your “all-hands-on-deck” days well up to a year in advance and make it clear that these days require mandatory attendance. Building out your cultivation calendar for a full year can help employees schedule events and vacations around critical times. When it comes to labor-intensive projects like flipping a room, for example, have stations and tasks planned out well in advance to avoid any wasted effort.

openrangestock | Adobe Stock

Manage Daily Tasks With Software

Enterprise Resource Planning (ERP) software manages real-time business processes in a single integrated system. ERPs can collect and consolidate data across multiple platforms so it can be organized and accessed in one streamlined interface. Although the expense and build-out timeline of an advanced ERP may be cost-prohibitive for start-ups, the investment can save money in the long-term. There also are plenty of entry-level, low- or no-cost platforms that can help businesses of any size manage workflow efficiency.

At Galenas, we use a free platform that has made us much more organized and efficient when assigning and scheduling tasks for our 25 employees. Workplace management software programs can track when tasks are started and finished, display work schedules, gather metrics about task timelines, and set up repeating tasks. These programs enable growers to archive information about pest population patterns, flag items that need service, track inventory, and log preventative maintenance for machinery.

When used correctly, business workflow software can accelerate employee productivity, safety, and engagement. Standard operating procedures (SOPs) can be linked directly in task cards with photos, videos, or other training materials to save time while reducing operator error. The software can also assign tasks to individual workers well in advance so there is less time and energy spent delivering directions. Workers often feel a sense of ownership and pride when they’re included in team-based collaboration, as software provides an open avenue for communication.

Build in Automation

The level of automation in your operation will determine how often your workers must adjust environmental control points and plant management systems. Many cultivation facilities require workers to be present seven days a week, but that could be reduced with adequate automation and general remote surveillance.

Staggering shifts can help offset labor costs, but investing in automated irrigation, HVAC control, and light management can reduce the number of hours that employees need to be on-site. Automated systems allow cultivation workers to monitor and adjust setpoints remotely. Advanced environmental control systems provide precision climate management, and irrigation and nutrient control, as well as comprehensive data collection.

Advanced hardware and monthly software fees can come with hefty price tags, but the investment can translate to massive savings on energy and labor. There are low-cost systems and gadgets that work well in smaller setups and offer remote monitoring for a fraction of the cost, but the machine interface is much more limited. Ultimately, your cultivation automation needs—and budget— will determine your equipment selection.

openrangestock | Adobe Stock

Reduce Energy Consumption

Warehouse grows often incur substantial energy costs for HVAC, lighting, and irrigation systems. Utilizing LED lighting systems is one way to offset these significant electricity costs. LEDs can produce impressive flower in terms of both quality and yield, with dramatically lower energy costs than traditional lighting systems—which can rack up huge savings over time.

LED rebate programs that can further offset the upfront cost of LEDs may be offered in your area. Although the process for qualifying for rebates can be complex and time-consuming, you can apply them to new buildouts or when switching out lights in existing facilities to garner enormous savings. In its 2020 “State of the Cannabis Lighting Market” report, CBT reported that despite the dramatic explosion of cannabis growers using LEDs, only 37% of cultivators explored LED energy rebates, and only 24% completed their rebate applications. Consider running your lighting schedule during off-peak hours when possible to lock in lower electricity rates. In areas with cold winters, running your lights at night can also warm grow rooms. Alternatively, turning lights off during the hottest time of day can help save on air-conditioning costs, but may require adjusted employee work schedules (i.e., night shifts).

Preventative maintenance of all your HVAC equipment can help avoid big repair costs, so invest in a skilled maintenance person either as an employee or dedicated contractor.

To reduce energy consumption, consider energy-efficient HVAC equipment in your buildout. Two-stage HVAC equipment, with high and low settings, is superior to single- stage units in terms of efficiency. Variable speed equipment translates to greater energy savings, as these machines can adjust accordingly to use only the power needed to maintain setpoints. Variable Frequency Drives (VFDs) can ramp motors up or down during start and stop, adjust operating speeds, and extend the life of the machines. Growing vertically can cut energy costs by maximizing growing space in a climate-controlled room. HVAC units will need to be sized for increased loads, but a well-insulated room with stacked tiers can translate to an overall lower energy bill. At Galenas, from year one of production to year two, we saw a 32% increase in the amount of grams produced per KWH (kilowatt-hour) and attribute this reduction in energy use per gram to dialing in production methods and especially moving from two vertical tiers of production to three in the flower rooms.

Cooling rooms and decreasing light intensity during the last two weeks of flower can decrease chlorophyll biosynthesis, which may bring out the beautiful colors of anthocyanins in some cultivars. Cool temperatures can also preserve precious terpenes, many of which are volatilized at warmer temperatures, and cool and dry conditions can prevent mold growth. Consider offsetting the added energy costs by dialing down light intensity or reducing the amount of time that lights are on during this finishing period. Some growers shave an hour or two off of the light cycle in the final two weeks and report faster finish times and enhanced bag appeal resulting from the deep, beautiful color expression. As always, collect cultivar-specific data with shortened light cycles to analyze for yield before trying at scale.

Establish a Solid Supply Chain

Smaller cannabis supply stores, especially in medical-only states, are often designed to serve the home grower. Maintain good relationships with your local grow stores, for they can be important partners, but also reach out to large agricultural suppliers. Big ag companies are making great strides to cater to commercial cannabis cultivators, and many will build in discounts, match or beat prices, ship quickly, and provide excellent customer service. Buy in bulk from your suppliers when possible, but consider storage space before making big purchases.

Research which consumables you can buy locally. At Galenas, we pride ourselves on the fact that we purchase our soil, organic nutrients and amendments, agricultural supplies, cleaning products, and packaging from local Northeast Ohio companies. Buying local can drastically reduce shipping costs, especially for heavier items that you can pick up directly from nearby suppliers. Meanwhile, you can establish close relationships with neighboring companies that may offer to provide you with free R&D items. Plus, by buying local, you’re supporting the communities that you serve.

Commit to Integrated Pest Management

Integrated pest management (IPM) focuses on the prevention of pests through multiple strategies including exclusion, ecofriendly cultural practices, as well as biological and chemical controls. A good IPM scout can monitor beneficial insect populations and detect pest problems before they become widespread and affect yield and/or potency.

Accurate pest identification is critical to guiding your IPM strategy, but it requires advanced training. Many university extensions offer free and low-cost IPM training for general agriculture, which can be beneficial to your cultivation team.

Track pest- and/or disease-affected plants either manually or through a software application. When possible, cull disease-infected plants to control spread. Keep journals, analyze trends, and use collected data to prevent a pest outbreak before it happens.

With accurate identification and monitoring, along with smart mitigation strategies, you can save labor, time and money, while avoiding catastrophic crop loss.

Cultivating cannabis indoors is fast-paced, energy-intensive, and a relatively new commercial production model, so costs can quickly skyrocket. Well-laid plans with SOPs that detail every step and useful cost-data analysis, combined with insightful modifications, can keep costs under control and allow your indoor grow to maintain its financial sustainability.

Christine DeJesus is the director of cultivation at Galenas in Akron, Ohio.