The current “green rush” has brought along with it an intense focus on large-scale cannabis cultivation. Across the United States and around the globe, we routinely hear stories of companies building bigger and bigger 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 a lot more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses in the an incredible number of square feet and building similar-sized facilities in Europe, Australia, and elsewhere.
In the usa, cultivation licenses are frequently considered probably the most useful for the highly competitive application processes that most states use to determine that is allowed to cultivate and dispense inside their states. This value is partly produced from the actual fact many populous states initially only grant a small variety of marijuana grow plan. As an example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, having a population over 20 million, granted 7; while Ohio, with over 11 million people, granted 12; and Ny, using 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 these limited permits is fierce, and people companies lucky enough to win one see sky-high values connected to these licenses before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million ahead of the company had seen a dime in revenue. Similarly, a pre-revenue Ny license sold for $26 million.
Indeed, in states with limited cultivation licenses, those companies that hold them are able to see large returns on their investments inside the near term. With artificially limited competition as a result of restricted license classes, cultivators in numerous states can control pricing and 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 a lot more than traditional commercial agriculture.
But is this trend sustainable? Or are these firms setting themselves up for long-term failure? As i have said within my previous column “Are Canada’s Cannabis Companies Overextended?”, we’re already seeing a khhhfj towards large-scale greenhouse and outdoor production, that is driving prices down in states that do not have strict limits on the quantity of licenses they grant. For instance, the normal wholesale expense 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, in which the state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of the leaves; those leftover leaves are referred to as the “trim” and can be used to produce cannabis products) has become selling for as low as $50 per pound, which is reportedly driving some cultivators inside the state from business.