As the demand for cannabis continues to expand Internationally, consistent cultivation outcomes and profitable growth are increasingly inhibited by inefficiencies of scale, a lack of whole-systems approaches to integrated cultivation strategies and the need for standardized, data-driven processes and analytics tools.
Emerging and aspirational global entrants into the cannabis space often lack trusted pathways to proven, replicable data-driven cultivation strategies to offset the risks from limited talent availability, professional cannabis experience, domain expertise and cannabis-specific cultivation resources. These bottlenecks are hampering success in new markets. Simultaneously, stringent regulatory compliance standards and a fractured international marketplace add complexity and uncertainty to the creation of a clear business model and muddy the waters for investors seeking to anticipate the fundamentals influencing the return of capital.
Fortunately, the brief history of North American cannabis teaches some very valuable lessons that, if understood and applied correctly, will help mitigate these risks and save both time and money for new cannabis companies entering the market.
Regulatory and price pressures are currently driving a new wave of efficiency innovations across the entire North American cannabis value chain and demanding the implementation of data-driven cultivation strategies to ensure profitability in difficult and variable conditions. Businesses that have successfully and profitably adapted to the current conditions have done so in ways that can be measured, evaluated, and understood. This process offers strong guidance for any new businesses navigating an entry into the world of cannabis.
Here are four areas of focus that any international cultivation company should prioritize when launching their cannabis business:
Start with simple, proven cultivation SOPs and use data analysis to drive continuous improvement:
Our job as cultivators is primarily to eliminate plant stress by providing a balanced, homogenous and consistent environment in which our selected genetics always reach the maximum of their potential. At every point along the cultivation value chain, simplicity and predictability is always the goal. Determining the specific conditions required for healthy, productive and disease-resistant plants is a major point of debate between cultivators with differing backgrounds and practices. For an international cannabis cultivator seeking to develop a sound and reliable strategy, this can become noise. The solution is three-fold:
- Choose a simple base strategy based on low risk, proven ‘set points’ and automate their parameters through a comprehensive CMS (Cultivation Management System) that plots real-time data from a variety of sensors on a user-friendly, interactive dashboard to maintain properly scheduled atmospheric, lighting and assimilate conditions throughout the facility.
- Once this ‘as simple as possible’ strategy produces results and the cultivation team is functioning like a well-oiled machine, the harvested cultivation data can be programmatically used as a guideline to begin implementing careful, iterative improvements to push the plants a little harder and improve production profiles.
- One of the most important and often overlooked elements to the maintenance of a homogenous environment is a priority focus on envelope integrity. Even in greenhouse cultivation, a sealed-envelope design is extremely critical.
Strategic Partnerships and Trusted Relationships:
Export contracts and international offtake agreements are the primary hedge against local and regional sales variability in countries where both sales channels exist. There is still more demand for high-quality flower than supply in many countries, providing first mover advantages with second mover levels of risk to quality cultivators.
Academic and medical research parentships can create additional revenue streams while providing direct benefits to the field of cannabis-based medicine. Cannabis remains a fractured and siloed culture with much less collaboration than most mature industries. These conditions slow the growth of critical research partnerships and the development of lifesaving and life-changing medicines, delaying their availability to the public. This will not last. The value of cannabis as medicine is only beginning to be understood and accepted by the global community and will accelerated by open-minded and collaborative partnerships.
Plan for a Changing Future:
Some international businesses are wisely planning a Hemp to THC transition when anticipated, pending regulations allow it. The transition can be smooth and non-disruptive if the right long-range strategies are in place. First, plan on a modular cultivation model. This can be very simple in concept and implies that you design your facility ‘fractally’, in that you always repeat the dimensions of your cultivation rooms and their corresponding hardware/software packages regardless of scale. Approaching anticipated future scale in this way allows for the seamless integration of practices and the continuous application of previously gathered data, while delivering a more consistent and predictable vendor and supply chain management process for future project development.
Learn from experienced legacy cannabis growers AND from traditional crop agriculture:
North American cannabis has a rich history of legacy cultivation that is responsible for many incredibly innovative and successful cultivation practices. As the regulated cannabis market matures and consolidates, many of these tried-and-true methods have been forced through the bottlenecks of compliance, efficiency and the ability to scale. Not all practices and practitioners have made it through this shale-out period. Naturally, technologies and cultivation methods from traditional crop agriculture are increasingly integrating with legacy cultivation strategies as market conditions drive the need for innovation and margin protection. To understand best practices and develop a well-rounded strategy, it is important to have multiple perspectives available to the leadership team. A blend of legacy cannabis, modern-era cannabis and traditional agriculture insights should be considered and encouraged as part of any company culture.
The future of cannabis is global, its continued growth and acceptance across the world inevitable and its many benefits to society have just begun to be realized. Our industry is both exhilaratingly collaborative and fast-paced while somehow simultaneously being maddeningly slow and fractured. Industry innovators are combining exciting new tools with proven methods to deliver increasingly dynamic solutions to efficient cultivation that maintains profitability in fluctuating market conditions. These lessons have been hard-won in North American cannabis and offer a strong foundation from which to build the future.
Founder & CEO
Ash Ganley is on a mission to increase the quality and quantity of cannabisproduction while reducing both the environmental impact and the operationalexpense of cultivation as CEO of Ganley Consulting Group, former CEO of GrowRayTechnologies, and co-founder and former CTO of multi-state operator NOBO Inc.