Opinion: 3 likely causes of distressed marijuana cultivation businesses

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Image of a cannabis cultivation facility
Image of Ryan Douglas
Ryan Douglas

As the marijuana industry evolves, so too will the occurrence of distressed cultivation businesses.

These companies might find themselves in court-appointed receiverships in an attempt to save the business.

Or they may be forced to liquidate the assets and shut down altogether.

A cannabis business can be considered distressed for a variety of reasons, and it often has nothing to do with cultivation.

But if a cannabis business is struggling because of production woes in the cultivation department, this can be remedied.

And getting to the root of the problem is vital to improving the situation.

In my experience, 100% of underperforming cultivation businesses stem from problems with either the genetics, the grower or the greenhouse.

I call this concept the Three Gs.

If your grow operation is floundering, take a close look at all three; they’re usually why a cultivation business gets into trouble.

1. The genetics

The cannabis varieties – or “cultivars” – that a company grows are the foundation of its success.

Even a world-class grower in a state-of-the-art facility is only as good as the cultivars it is growing.

Short of an extensive breeding program, no amount of money can be thrown at mediocre genetics to turn them into remarkable genetics.

If you’re having difficulty selling your final product, take a hard look at the varieties that you are growing.

It’s probably time to make a change.

For example, in recreational marijuana markets, make sure you’re offering varieties high in THC with a rich, unique mix of terpenes.

The production efficiency of cannabis cultivars is another factor that can directly affect a company’s bottom line.

Low-yielding or long-flowering cultivars are more expensive to grow, and operators seldom make up these extra production costs at retail.

Cultivation businesses should expect to harvest about 50 grams of dry cannabis per square foot of canopy, with a flowering cycle of about 8-9 weeks.

Cultivars that yield less or take longer to grow can weigh heavily on a company’s profitability.

If your harvests are consistently underwhelming, it might be time to switch out your genetics for higher-yielding, faster-flowering cultivars that better lend themselves to a commercial production program.

Growing too many cultivars is another source of strife for cultivation businesses, especially startups.

Juggling too many varieties can result in more expensive production costs and less efficient grow rooms.

If your cultivation program is struggling to stay above water, review the varieties in production.

If there are more than 10, it’s likely time to scale back and focus on the consistent winners.

2. The grower

Inexperience at the helm of a cannabis production site is a common reason that cultivation programs fail.

Cultivator skill goes beyond just the ability to “grow great weed.”

The leap from home to commercial growing catches many cannabis cultivators off guard.

Although it’s the same plant, learning to grow at scale can be challenging.

Seemingly small details can have massive ramifications.

If fertilizer is improperly mixed at home, it might damage a few plants.

If improperly mixed in a commercial setting, it can have devastating consequences.

Also, marijuana experts with a primarily theoretical or academic understanding of the plant don’t always make the best growers.

This is often the case with recent college graduates.

On the surface, hiring a graduate from a prestigious agricultural school makes sense.

But the reality of commercial production seldom resembles their work at the university greenhouse.

Both home growers and academics learn at the cost of the cultivation business, and it’s a primary reason new companies find themselves in trouble.

Furthermore, only half a grower’s job involves horticultural expertise.

The other half consists of everything else under the sun, such as people management, facility management and production planning.

Hiring a head grower that’s a plant expert but not a people person or great production scheduler will hamper a company’s ability to execute a quality crop.

Often, it’s easier to hire for commercial plant production experience and teach the nuances of cannabis growing rather than teach a home grower how to manage a commercial production facility.

3. The greenhouse

The last of the Three Gs is the greenhouse – or any indoor or hybrid production facility – but sticking with the “G” theme makes it easy to remember.

Many cultivation businesses find themselves in distress because the production facility was not built correctly in the first place.

A poorly designed or inadequately equipped facility will not hold the ideal parameters for plant growth.

The longer a crop spends outside of these parameters, the more likely it will suffer from pest or disease issues or subpar yields.

Facilities that run too dry, humid, cold or hot will dramatically affect crop quality.

Insufficient light levels will result in weak plants that become magnets for crop-damaging insects.

Inadequate airflow will encourage fungal diseases; excessive airflow will strip too much water from the crop.

If a facility doesn’t function properly, it will inevitably result in a distressed cultivation business.

Hire experts with a proven track record of diagnosing and prescribing appropriate retrofits for struggling grow operations.

There are many moving parts to a commercial cultivation business, but when things go wrong, keep it simple.

Examine the Three Gs. Therein lies the source of your problems.

Ryan Douglas is a Florida-based cannabis cultivation consultant. He can be reached at ryan@douglascultivation.com.

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