Marijuana Business Magazine July 2019

Marijuana Business Magazine | July 2019 44 W e hear a lot about craft can- nabis and how the industry will eventually be segmented into lower-quality, mass-produced marijuana on the one hand, and supe- rior-grade flower that appeals to the discerning connoisseur on the other. The debate between indoor ver- sus outdoor cannabis mirrors this discussion: It’s commonly believed that much of the top-shelf flower you find in retail stores is grown indoors, under lights—whereas the cheaper, mass-produced cannabis that’s sold at bargain prices is grown outside or in large greenhouses. However, I’m sure the sun growers out there would take issue with that framing and contend that top-notch marijuana flower can be grown outdoors. And as consumer tastes increasingly shift toward sustainabil- ity and organically grown plants, per- haps the cannabis that commands the highest price point will be grown with the least manipulation by artifi- cial inputs, such as lighting. The more natural approach is certainly the cheaper way to grow. In order to ensure a long-term future in this industry, cost of production should be at the top of every cannabis grower’s mind. Watching what’s happened in the relatively mature rec- reational markets—Colorado, Oregon andWashington state, in particular— it’s clear the cultivators who ruthlessly focus on honing efficiencies stand the best chance of surviving the price declines that result from a supply glut. That raises the question: What role will indoor growing—with high input costs by way of electricity, lights, HVAC, building and real estate—play as cannabis becomes increasingly commoditized and consumer behavior shifts? Consistent Results While indoor growers have some of the steepest upfront costs, they’re also able to tightly control variables in the grow room—such as temperature and moisture—leading to consistent results and costs as well as some of the best quality flower out there. As an example of how indoor grow- ers might have an advantage, once a medical marijuana patient finds a strain that works to treat a specific ailment—say a certain strain offers the right blend of cannabinoids and terpenes to alleviate undesirable symptoms—they’ll want to keep using that exact flower. It will be easier to re-create that product in an environment where everything is tightly controlled. “It’s the ability to produce a consist- ent product,” said Av Singh, a cannabis cultivation adviser based in Canada. “The medicines that we’re really going to rely on—that are targeting cancers or targeting a very specific ailment— those are the ones that are going to be produced in indoor facilities.” Singh gave the example of a patient in chronic pain who had to search to find the strain that worked best. “We know that aspirin is going to deliver that pain relief, and we want that cannabis to do the same,” he said. “You can’t have a terpene profile that shifts. If it screws me up, then I’m going to be frustrated.” With that in mind, Singh envisions the market developing to where a neighborhood indoor craft cannabis grower will have roughly 200 patients, and the grower can provide medicine that doesn’t deviate from harvest to harvest. “You’re signed up, and they’re producing the medicine you want,” he added. “That, to me, is the real strength of the indoor operation. They can really hone in.” ‘Dumb Money’ That particular strength of indoor grows makes sense in certain scenar- ios. But that position is more difficult to defend in established recreational markets, where growers are trying to survive falling wholesale prices and a slow shift in consumer-buying patterns away from flower in favor of concentrates, infused products and vape cartridges. “Spending a lot of money on indoor grows is dumb money,” said Van McConnon, a senior managing partner with Session Consulting in Boulder, Colorado. “As fast as What Is the Future for Indoor Cannabis Grows? Trends & Hot Topics | Bart Schaneman