The present “green rush” has brought with it an intense focus on large-scale cannabis cultivation. Across the usa and around the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis is being grown in greenhouses in excess of 250,000 sq. ft. that are capable of yielding more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses within the an incredible number of sq . ft . and building similar-sized facilities in Europe, Australia, and elsewhere.
In the usa, cultivation licenses tend to be thought of as the most valuable in the highly competitive application processes that a lot of states use to find out that is allowed to cultivate and dispense within their states. This value is partly derived from the actual fact many populous states initially only grant a limited quantity of cultivation operating plan. For example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, using a population over 20 million, granted 7; while Ohio, with over 11 million people, granted 12; and New York, having a population of nearly 20 million people, granted only 5 before recently expanding to 10. For context, Colorado has roughly 1,400 licensed cultivators for a population of just 5.5 million people. Competition for such limited permits is fierce, and the ones companies fortunate enough to win one see sky-high values mounted on these licenses before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million prior to the company had seen any money in revenue. Similarly, a pre-revenue New York City license sold for $26 million.
Indeed, in states with limited cultivation licenses, those businesses that hold them can easily see large returns on their investments in the near term. With artificially limited competition due to restricted license classes, cultivators in many states have the ability to control pricing and then sell their product in large volume. Most of these cultivators grow their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities more than traditional commercial agriculture.
But is that this trend sustainable? Or are these businesses setting themselves up for long-term failure? As stated inside my previous column “Are Canada’s Cannabis Companies Overextended?”, we’re already going to a khhhfj towards large-scale greenhouse and outdoor production, that is driving prices down in states which do not have strict limits on the quantity of licenses they grant. As an example, the typical wholesale price of cannabis in Colorado has dropped from nearly $3,500 per pound at the beginning of legalization in 2013 to roughly $1,012 a pound on April 1, in accordance with the Colorado Department of Revenue. In Oregon, where state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of its leaves; those leftover leaves are known as the “trim” and can be used to produce cannabis products) has become selling for only $50 per pound, that is reportedly driving some cultivators within the state out of business.