How to Increase the Size of Your Operation Without Losing Control: 9 Tips

In 2020, four states voted to legalize adult-use cannabis sales. As a result, existing medical cannabis suppliers in Arizona, Montana and New Jersey were tasked with protecting their existing medical patient base while expanding to meet the needs of this new market. (South Dakota’s program was later squashed by the state’s Supreme Court, arguing that the ballot measure violated South Dakota’s single-subject rule). But South Dakotans will get another chance in this year’s election, which could also usher in five other adult-use programs in Arkansas, Maryland, Missouri, North Dakota and Oklahoma.

Cultivation businesses that can seamlessly double, triple, or quadruple their production footprint will be rewarded with early market share and limited competition. But if a company doesn’t properly execute its expansion plan, new cultivation projects can become mired in construction delays, production problems and the need for more money.

To avoid these headaches, consider the following tips for launching or rapidly increasing your cultivation footprint without losing control of, well, everything.

Tip 1: Be realistic about your expectations.

Set yourself up for success by establishing realistic benchmarks for expansion. Unrealistic forecasts can leave investors angry, growers under pressure, and licensing entities wondering what happened. To please all stakeholders involved, be sure to set realistic expectations for your expansion project.

In general, it helps to be conservative. Construction usually takes longer than anticipated, costs can exceed the original budget, and initial crops often yield less than expected. Make sure to factor these inconveniences into your project so when hiccups do occur, these delays are already baked into the plan. Allot nine to 12 months to complete your construction project, and be prepared to spend up to $250 per square foot for new greenhouses and up to $400 per square foot for indoor sites. Anticipate that initial crops will yield about 35 grams of dry flower per square foot of flowering space. It’s much better to be conservative and delight stakeholders by hitting predetermined targets potentially earlier than to set unrealistic expectations and miss them by a mile.

Tip 2: Make sure that your cultivation method is scalable.

Not all facets of a small cultivation site are scalable. Many smaller operations are entirely manual, with everything from climate control to irrigation done by hand. Although craft cannabis growers enjoy the hands-on aspect of small-scale cultivation, expanding without any changes or automation to the program can prove both challenging and expensive.

Changes to the post-harvest department are sometimes an afterthought, but this critical area should be part of the expansion plan from the very beginning. Anticipate expanding the space that will be dedicated to post-harvest processes in lockstep with the new cultivation area. Unless you are going to automate trimming, plan on hiring a lot more people. Anticipate that each trimmer will manicure about 1-2 pounds of dry cannabis per eight-hour shift.

Besides automating cultivation procedures, make sure that you will be able to source raw inputs for your operation in much higher volumes. Organic cultivation is a perfect example. Can you guarantee that the raw materials you need to make your living soils, organic fertilizers and compost teas can be sourced consistently? If not, raw material shortages could bring production to a halt, and switching inputs midway through the crop could result in non-compliant finished products.

Tip 3: Anticipate that your cultivation team may need some help.

Your cultivators don’t know what they don’t know. If your company has been managing a few flower rooms with a regular staff of five, then scaling up to 100,000 square feet of production will be a giant leap. Even the most skilled and dedicated head grower is going to struggle under these circumstances.

Preserve your business, and your cultivation team’s sanity, by enlisting the help of an experienced cultivation consultant to assist your team lead. Consultants offer both moral support and critical training to one of the most important individuals on your cultivation team by helping your head grower to anticipate needs, avoid potential problems and stick to the production plan. A new facility can be overwhelming for the unprepared, and some outside expertise can help guarantee that your head grower doesn’t get burned out or quit before your new operation gets off the ground.

Tip 4: Promote from within, or give yourself time to hire new employees.

Promoting from within is more efficient than hiring new employees, but be sure that the candidate up for promotion has the skill set necessary to handle the increase in responsibility. Not every employee should be promoted. Entry-level positions do not require people management skills, but the next rung in the promotion ladder likely will.

If the employee does not have good people or project management skills, and you don’t believe they can quickly acquire them through training, it’s best to not promote these individuals. Hire new people instead. Look for job candidates who have experience managing small teams and a track record of learning new skills quickly. Make sure to give yourself three to four months to recruit the right individuals for key positions.

Tip 5: Avoid radical changes that have not been trialed.

Expansion projects are the perfect opportunity to increase your operational efficiency. Lessons learned (even from other crops) at the original site can now be applied on a much larger scale to your benefit. However, resist the temptation to equip the new site with too much “new stuff” that hasn’t been trialed on a small scale first.

Because the key to a rapid scale-up is to repeat what is already working, radical new additions can complicate the expansion process. Transitioning from soil cultivation to rockwool, or high-pressure sodium (HPS) to light-emitting diode (LED) lights without first trialing them at the original site, can dramatically delay production at the new facility. Upgrading is good; just make sure you trial any change first and that you’re not unintentionally creating a foreign growing environment for your cultivation team.

Tip 6: Confirm the availability of additional power and water.

What is the quality of the existing electrical infrastructure? Is the power supply stable? If substantial improvements need to occur before the power grid can support a massive expansion project, be clear about work timelines. A new facility full of grow equipment that can’t be plugged in won’t be very productive.

Also, verify the capacity of your water supply. Can it handle a substantial increase in demand? If your new facility will not be reusing fertilizer leachate, become aware of any regulations governing the discharge of wastewater into the municipal sewer system. Installing desalination equipment to treat your wastewater once cultivation has begun is sure to slow down production.

Tip 7: Use contractors with previous cannabis experience.

New cannabis buildouts and expansion projects can benefit greatly from contractors that have previously worked on cultivation facilities. Firms that service commercial and residential projects can be caught off guard by the requirements of an indoor plant facility. Because plants transpire more than 90% of the water they receive, HVAC engineers new to cannabis will be shocked at the volume of water they need to capture and remove from an enclosed growing environment. Ensure against costly retrofits and production delays by vetting experienced contractors long before you need them.

Tip 8: Generate enough cuttings to instantly populate your new production site.

There is nothing more frustrating than watching a brand new cultivation facility sit idle for months because you don’t have any plants to fill it. Avoid this nail-biting scenario by propagating enough plants to fill your new facility once construction is complete. If your license isn’t limited by plant count, start sizing up your mother plants early and take plenty of cuttings.

Tissue culture labs can be incredibly helpful in this situation. A small lab can house tens of thousands of cuttings, and the micropropagation process eliminates any plant pathogens that the original mother stock may have been harboring. If done correctly, a new cultivation facility can have thousands of certified disease-free cuttings ready to populate a new grow site the day construction is complete. Although the cost-per-plant is nearly identical to traditional cloning methods, the process takes much longer. Provide your tissue culture lab with plant material at least four months before you’ll need to populate the facility.

Tip 9: If expanding from indoor to greenhouse, hire a greenhouse grower.

Cultivating indoors in a completely controlled environment is much different than growing in a greenhouse. Indoor growers tightly control temperature, humidity, CO₂ and light levels to provide optimal growing conditions for their plants. Greenhouse growers have much less control, and they use different tools to create acceptable growing conditions for their crops.

Learning how to manage temperature, humidity, and light levels in a greenhouse takes time. This can be especially challenging for greenhouses that are situated where there are seasonal fluctuations or dramatic changes in climate. To ensure a smooth transition to greenhouse cultivation, hire an experienced greenhouse grower. Even a short-term contract of one year would be sufficient time to help ensure a seamless transition and train your existing head grower to take the reins.

Expansion projects should be a dream come true, not a nightmare. Avoid sleepless nights by planning well ahead of time, using experienced people, and asking for help.

Editor’s Note: This article first appeared in the December 2020 issue of Cannabis Business Times and has been updated from its original version with current cost and construction estimates.

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.