Cannabis cultivation businesses can buffer themselves against fluctuating wholesale flower prices by producing and selling young plants.
Seedlings, tissue-culture plantlets and rooted cuttings (clones) are all considered young plants.
There is an increasing need for trusted suppliers of vegetative plant material in the cannabis industry, but few companies have seized the opportunity to meet this demand.
Crop contamination and production bottlenecks
Cultivators that outsource their propagation free up more space for flowering plants, and they eliminate the two most significant risks of in-house propagation programs: crop contamination and production bottlenecks.
Young-plant suppliers can also be a source of trusted starter plants for companies launching new cultivation programs.
The longer a plant stays in production, the more likely it is to get attacked by something.
Stock plants – or moms – can become infected with plant-damaging insects, diseases or viruses.
Once this happens, growers unwittingly duplicate infected plants and fill their grow rooms with compromised plant material, resulting in reduced yields, increased production costs and an elevated risk of infection to the entire facility.
Not all cultivation teams are adept at propagating plants.
A 50% rooting success rate forces cultivators to run their flower rooms half full, which indirectly increases the cost of production.
If they retake more cuttings to meet their required numbers, they’ll delay production by several weeks, which will have ripple effects on crop scheduling.
Young-plant suppliers can also help startups with one of their most pressing needs: identifying a trusted source of clean, desirable genetics.
For entrepreneurs new to cannabis without inside connections, this is a challenging task that directly affects their ability to come to market quickly.
No need for a crystal ball
Young-plant production will play a vital role in the future of the regulated cannabis industry.
Don’t believe me? Look around.
Very few commercial growers of conventional crops are vertically integrated. Stock plant production, propagation, vegetative growth and flowering production rarely occur under the same roof.
Instead, plant material moves between several players in the plant supply chain, where each grower specializes in only one stage of production.
The best part? Each player in that supply chain makes money.
There isn’t much profit in a pound of hydroponic tomatoes or a tray of flowering poinsettias.
But growers of these low-margin crops have found a way to make money by breaking up the plant supply chain.
If it works for ornamental plants – where profits are sometimes calculated in pennies per plant – it can certainly work for cannabis.
Running the numbers
Simple arithmetic will demonstrate how young-plant production has the potential to be a lucrative supplement to cannabis flower cultivation, or a profitable replacement for it altogether.
Most growers propagate on 2-feet by 4-feet wire racks.
Since cuttings are short, they don’t require much head space, so these racks typically hold four to five shelves of cuttings.
Most growers stick cuttings into 10-inch by 20-inch propagation trays that hold an average of 50 plants per tray.
A single shelf on a wire rack will hold four trays – or 200 cuttings – so five shelves will hold 1,000.
That’s 1,000 cuttings on an 8-square-foot wire rack.
The going rate for rooted cannabis cuttings ranges from $10 to $25 per plant. This includes traditional clonal propagation from stock plants and micropropagation performed inside tissue-culture labs.
The production cycle for rooted cuttings is about three weeks. At just $10 per cutting, that’s $10,000 from 8 square feet of space in only three weeks.
If a propagator can land enough clients to fill this rack 10 times throughout the year – only 30 of a possible 52 weeks – that’s $100,000 from an 8-square-f00t wire rack.
If a company makes a concerted effort to market itself as the premier supplier of young cannabis plants, this business model becomes quite exciting.
A propagation room filled with multiple racks turned over several times a year could generate millions of dollars in annual revenue without selling 1 gram of cannabis flower.
Cannabis flower versus young plants
A look at young-plant requirements helps to reemphasize the potential of this opportunity.
Because cuttings don’t have roots for most of their life, they don’t require intense grow lights or the HVAC equipment to cool such lights.
Rooting works best in humid environments, so growers can also skip the industrial dehumidifiers.
All the other expenses associated with flowering cannabis production – fertilizer, water, labor and pest control – are minimized or eliminated during the rooting of cuttings.
This low-input, three-week process consumes far less energy and resources than the typical eight-week, energy-intensive production period for flowering cannabis.
On a square-foot basis, this opportunity gets even more appealing.
Every square foot of single-level flower canopy should yield $500-$1,000 in gross revenue annually.
That’s based on a per-harvest yield of 50 grams of dry flower per square foot, with five harvests per year, at a wholesale value of $1,000 to $2,000 per pound.
A cloning rack with five shelves, utilized only 30 weeks of the year, would yield $12,500 in gross revenue per square foot per year – more than 10 times that of a square foot of flower canopy.
Do I have your attention yet?
Shipping
Rooted cuttings can be shipped by truck or courier.
When shipping by mail, growers use boxes with strategically positioned cardboard tabs to prevent trays from jostling around during transit.
As an extra measure, netting can be placed around each tray to help secure plants.
Shipping by truck makes sense within a certain radius of your business. Beyond that, shipping boxes work best for both the supplier and the customer.
If you’re interested in pursuing this ancillary business, start practicing now.
Try rooting plant species that aren’t cannabis, and practice shipping cases of rooted cuttings across the country.
Devise a way to ensure plants won’t melt when shipped in the heat of the summer and won’t freeze when shipped in the dead of winter.
Iron out shipping logistics now while you ramp up your selection of genetic offerings and perfect your propagation techniques.
To sum up, the fluctuating price of wholesale cannabis flower is causing many commercial growers to lose sleep.
Operators can drive down their costs only to a certain point, and the going rate for wholesale flower seems to change daily.
Through young-plant production, licensed cannabis growers might find that their best defense against fluctuating flower prices is not to play the flower game at all.
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Ryan Douglas is a Florida-based cannabis cultivation consultant. He can be reached at ryan@douglascultivation.com.
