The current “green rush” has brought along with it an intense focus on large-scale cannabis cultivation. Across the usa 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 grown in greenhouses greater than 250,000 sq. ft. that are designed for yielding greater than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses within the an incredible number of sq . ft . and building similar-sized facilities in Europe, Australia, and elsewhere.
In america, cultivation licenses are often considered by far the most useful for the highly competitive application processes that many states use to determine who is allowed to cultivate and dispense in their states. This value is partly based on the fact many populous states initially only grant a small number of cultivation operating plan. As an example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, with a population over 20 million, granted 7; while Ohio, with more than 11 million people, granted 12; and New York City, having 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 those 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 prior to the company had seen a dime in revenue. Similarly, a pre-revenue New York license sold for $26 million.
Indeed, in states with limited cultivation licenses, those companies that hold them can see large returns on the investments inside the near term. With artificially limited competition due to restricted license classes, cultivators in many states have the ability to control pricing and sell their product in large volume. Most of these cultivators boost 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 long-term failure? As mentioned inside my previous column “Are Canada’s Cannabis Companies Overextended?”, we’re already visiting a khhhfj towards large-scale greenhouse and outdoor production, which can be driving prices down in states which do not have strict limits on the quantity of licenses they grant. For example, the average wholesale price of cannabis in Colorado has dropped from nearly $3,500 per pound at the outset of legalization in 2013 to roughly $1,012 a pound on April 1, based on the Colorado Department of Revenue. In Oregon, where state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of their leaves; those leftover leaves are known as the “trim” and may be used to produce cannabis products) has become selling for as little as $50 per pound, which can be reportedly driving some cultivators inside the state from business.