How to Rapidly Expand in Recreational Cannabis Markets

Columns - Hort How-To

Four tips to get off to a strong start in new adult-use cannabis markets.

April 20, 2020

rabbitholephoto | Adobe Stock

Here is the typical scenario on the first day of adult-use cannabis sales: Dispensaries get swamped with customers, products fly off the shelf, and a few weeks later the dispensary is sold out. Given the lengthy lead time required to cultivate, harvest and prepare product for sale, shelves are not quickly replenished. Customers are elated that recreational cannabis is legal but frustrated that products are limited or unavailable. Sound familiar?

The next logical next step in this scenario is for cannabis businesses to expand their cultivation program to meet this new demand. But this can prove challenging because most first-movers in the recreational space are usually providers under an existing medical program, and the company must scale up without affecting its supply to medical patients.

If not done correctly, expanding a cultivation program can result in expensive delays, forfeiture of market share and angry customers. But if successfully executed, expansion projects can result in a thriving business and happy customers. Consider the following four tips to quickly and successfully expand your cultivation program.

1. Go fast with grow pods

Grow pods are an excellent option for rapidly expanding cultivation capacity while simultaneously undergoing a longer, larger facility build-out. Grow pods are ready-to-use, 40-foot-long shipping containers that have been retrofitted into self-contained growing units. They are true plug-and-play cultivation options because they are delivered fully equipped with grow lights, air handling units and drainage systems. The only requirement to begin cultivating is a nearby electrical source and plenty of water. Most suppliers offer a six-week lead time, which is less time than it would take to find and buy a container, retrofit the unit and iron out the challenges of converting an 8-foot-by-40-foot box into a perfect growing environment. Although doing it yourself may initially save money, the stress, forfeited market share and loss of revenue typically aren’t worth the trade-off.

Fortunately, several companies build and sell ready-to-use grow pods. Perform your due diligence on the companies, and see their pods in action at a grow site or trade show. Once your facility expansion is complete, consider keeping these pods as a dedicated space for activities like research and development, tissue culture or seed production. Isolating these activities from the rest of your cultivation is usually desirable, and the pods provide the perfect environment to do so. Alternatively, selling your grow pods secondhand can present an attractive option to growers in need because it’s ready to ship on demand.

When using grow pods, there is a risk of contamination from outside elements that could enter the grow space. Most grow pods don’t incorporate a buffered entryway that requires you to completely close one door before you open a second one that leads into the grow area. If the grow pod is placed outdoors or in a warehouse, every time you enter or leave the grow pod, a big gust of outside air can enter the grow space, which could increase insect and disease pressure.

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2. Buy an existing greenhouse

Acquisition of an existing operational asset is the quickest way to expand your cultivation program. Although acquiring an indoor grow site is unlikely in a new recreational market, finding an operational greenhouse is much more probable.

Both flower and vegetable growers have been under pressure for decades due to the consolidation in the greenhouse industry. Massive ornamental flower growers have put smaller greenhouses out of business because they can offer more competitively priced wholesale products to garden centers and big-box stores. Hydroponic vegetable growers also have felt the squeeze from lower-cost growing regions, such as Mexico and South America. This situation can create a buyer’s market when it comes to acquiring distressed greenhouse assets.

When hunting for a viable greenhouse option, search for a facility that was built within the past 20 years. Avoid wooden-frame structures at all costs, as well as former cut-flower greenhouses that utilized soil beds inside the greenhouse. The risk of contamination in these structures is too high, and the cost of replacing the wood or soil beds with something more appropriate for cannabis will be counterproductive.

Instead, look for greenhouses that grow photoperiodic plants like chrysanthemums or poinsettias, as these crops have similar needs to cannabis, and the facility should already have the equipment you need, including grow lights, blackout curtains and plant transportation systems. Hydroponic vegetable greenhouses can make for a seamless transition as well, especially sites that feature recirculating fertigation systems, carbon dioxide injection and glass glazing.

rabbitholephoto | Adobe Stock

3. Duplicate what already works

The goal is to expand rapidly, so now is not the appropriate time to introduce new factors into your grow operation. Radical changes in technology, grow equipment or cultivation methods may backfire by slowing your ability to expand. The objective should be to scale up by repeating what you are already doing successfully, not create an entirely new growing operation from scratch.

For example, if your cultivation program has been using a coco coir or peat-based substrate, now is not the best time to convert to deep-water culture. If your company has been growing hydroponically in containers, don’t switch to 100% organic soil beds. There is a prudent way to introduce changes into your cultivation program, but don’t let a massive new build-out be the excuse to implement radical changes.

Automation, however, is an appropriate upgrade when building new facilities, as it helps streamline activities that are already working for you. Start with automating labor-intensive daily activities like fertilizer preparation, irrigation and pesticide applications. Once you automate daily tasks, consider doing the same for less-frequent activities that still consume a lot of time, such as soil mixing, pot filling and plant transportation. The labor saved by automation can help free up valuable employee time to tackle the other challenges of expanding a successful grow operation, such as ensuring plant health in a new environment, adjusting standard operating procedures (SOPs) to reflect processes in the expanded grow space and “dialing in” the new grow environment.

djile | Adobe Stock

4. Promote from within

Having the right people on your cultivation team is the best way to ensure a rapid scale-up with minimal problems. One way to achieve this is by promoting from within, and the post-harvest department is a great place to start. For example, consider promoting your best trimmer to oversee trim activities in the newly expanded grow site. This individual knows how to trim, how to treat material of varying quality and how much a trimmer is expected to process during their shift. By promoting that individual to trim-room foreman or post-harvest manager, you may lose the productivity of an excellent trimmer, but you will save the training time and potential clash of hiring a new person to run this department. Some semblance of familiarity will help smooth the expansion process.

Also, look to your existing trim team to fill expected vacancies in cultivation. Identify a loyal employee who has been with the company for at least six months. If the employee has proven his or her dedication by showing up on time, working extra hours and tackling a monotonous job like trimming, this work ethic can be very beneficial in the grow room. Don’t worry about the employee’s lack of cultivation experience; his or her work ethic, ability to learn quickly and familiarity with the company culture is much more important. The head grower will handle training and knowledge transfer for all new recruits. Promoting from within is more efficient than hiring new, and it builds team morale across the entire company.

Ryan Douglas is the owner of Ryan Douglas Cultivation, LLC. He has worked in commercial horticulture for 20 years and specializes in legal cannabis start-ups.