The current “green rush” has brought along with it an intense focus on large-scale cannabis cultivation. Across the United States and round the globe, we routinely hear stories of companies building bigger and bigger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis is being cultivated 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 within the millions of sq . ft . and building similar-sized facilities in Europe, Australia, and elsewhere.
In america, cultivation licenses are frequently viewed as by far the most useful for the highly competitive application processes that most states use to figure out who may be allowed to cultivate and dispense in their states. This value is partly derived from the actual fact many populous states initially only grant a restricted number 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, using more than 11 million people, granted 12; and New York, 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 to get a population of just 5.5 million people. Competition for such limited permits is fierce, and people companies lucky enough to win one see sky-high values connected to these licenses even before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million ahead of the company had seen any money in revenue. Similarly, a pre-revenue Ny license sold for $26 million.
Indeed, in states with limited cultivation licenses, those businesses that hold them are able to see large returns on their own investments in the near term. With artificially limited competition because of restricted license classes, cultivators in lots of states have the ability to control pricing and sell their product in large volume. A number 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 firms setting themselves up for very long-term failure? As i have said within 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 that do not have strict limits on the variety of licenses they grant. For instance, the normal wholesale expense of cannabis in Colorado has dropped from nearly $3,500 per pound at the start of legalization in 2013 to roughly $1,012 a pound on April 1, based on 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 their leaves; those leftover leaves are called the “trim” and may be used to produce cannabis products) is now selling for as little as $50 per pound, which is reportedly driving some cultivators inside the state away from business.