The news has been filled lately with stories about cannabis cultivation across the nation and in Canada, Europe, and South America, and competitors is rampant.
A 2019 study from Farm Journal located that even traditional farmers are eyeing the cannabis sector with practically one particular out of 3 surveyed farmers and ranchers saying they think farmers must develop recreational marijuana, practically one particular out of two saying they would contemplate developing cannabis in the future, and practically 3 out of 4 saying they think farmers must develop higher- CBD, low-THC healthcare cannabis.
It is not surprising that cannabis cultivation is such a hot subject. With a lot more than half the U.S. population now living in a state exactly where healthcare and/or recreational marijuana is legal and a lot more states thinking about legalization than ever, cultivation licenses are thought of the most beneficial across the provide chain.
As the sector continues to develop, it is a fantastic time to contemplate what’s new in cannabis cultivation. Following are 4 crucial points that are shaping cannabis cultivation currently and in the future:
1. Development, Mergers and Acquisitions
A shift is occurring in cannabis cultivation with mergers and acquisitions taking place generally. According to information from Viridian Capital Advisors, merger and acquisition (M&A) activity throughout the 1st two months of 2019 substantially outpaced the similar time final year (66 bargains in 2019 compared to just 44 bargains in 2018). Of the mergers and acquisitions that have closed so far this year, 30 of them have involved cultivators and retailers.
At the similar time, cannabis cultivation facilities are developing bigger. Providers like Harvest Wellness, MedMen Enterprises, Tilray, Inc., Aurora Cannabis Inc., and Canopy Development Corp. have all created strategic moves to expand their cannabis cultivation facilities via M&A or by creating their personal, bigger facilities.
Cultivation of industrial hemp is also developing quickly with the passing of the 2018 Farm Bill. VoteHemp reported that farmers cultivated a lot more than 78,000 acres of legal hemp in 2018, up from 26,000 acres in 2017 and just below 10,000 acres in 2016. These numbers must skyrocket in 2019, and with that development, it is probably that there will be a lot more mergers and acquisitions.
two. Cannabis Cultivation Technologies
Cannabis technologies is altering cultivation and enabling growers to scale swiftly and economically. With development comes a race to see which competitor can be the most lucrative, and technologies is assisting a lot of growers do specifically that.
Each form of technologies – from lighting to information tracking sensors – can make a distinction in yields, high quality, resource utilization, space, and charges. As mergers and acquisitions turn cannabis cultivation into a definitely commercialized company and cannabis into a commodity, technologies plays an integral portion in who will take the lead.
three. Sustainability and Sources
With huge scale commercialization comes the threat of losing the “art” of cannabis cultivation. Mergers, acquisitions, and technologies definitely favor huge companies with deep pockets, but craft cannabis cultivators – the cannabis artisans – are attempting to survive with a concentrate on high quality and uniqueness.
Just as craft breweries have been in a position to carve a productive niche out of an sector dominated by international powerhouses, craft cannabis cultivators are attempting to locate their personal spot in an sector poised to be led by a smaller quantity of huge firms.
1 way smaller sized cultivators are attempting to separate themselves from the commoditization of the cannabis plant is by focusing on sustainable developing and company practices. Even so, sustainability and resource conservation is a developing subject of concern for cannabis cultivators of all sizes.
Indoor cannabis developing makes use of 10 occasions a lot more power than a common workplace creating. To place that into viewpoint, contemplate this – practically four% of Denver’s power use comes straight from the cannabis sector. Technologies can support decrease water and electrical energy consumption, and committing to sustainability and resource conservation can be a beneficial competitive differentiator.
four. Battle of the Brands
As the marijuana marketplace grows, it is organic for brands that construct reputations for high quality and reliability to get a lot more and a lot more marketplace share. This is a battle we’ll see play out across the United States for the foreseeable future. Even so, in California, a battle of the cultivation brands is currently effectively underway.
In this case, the benefit could rely on licensing. At the finish of 2018, practically 7,000 short-term cultivation licenses had been awarded in California. Even though you could possibly count on that the majority had been awarded to cultivators operating in the Emerald Triangle (Humboldt, Mendocino, and Trinity), it was Santa Barbara County that had amassed the most cultivation licenses at the time.
Aspects that will influence which region of California will grow to be the dominant one particular in terms of cannabis cultivation involve profit margins and brand. Which cultivators can get the most effective profit margins the quickest? Which cultivators can establish brand recognition and trust more rapidly and on a wider scale? And of course, which cultivators will be productive in getting permanent licenses when they’re short-term licenses expire in 2019?
Bottom-line, brand competitors amongst cannabis cultivators will take place at the supply and item levels. Only time will inform which brands will be the most significant winners.
Important Takeaways about Cannabis Cultivation in 2019
There is no lack of competitors in cannabis cultivation in 2019, but cultivators who are in a position to leverage development possibilities (like M&A), technologies, sustainability, and brand creating will have substantial positive aspects in the future.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Inventive, Inc., a advertising communications business providing, copywriting, content material advertising, e-mail advertising, social media advertising, and strategic branding solutions. She spent the 1st half of her 25-year profession directing advertising applications for AT&T and HSBC. Currently, her customers involve household brands like Citigroup, Cox Communications, Intuit, and a lot more as effectively as smaller companies about the planet. Susan has written 11 advertising-associated books, like the very well-liked Content material Advertising for Dummies, 30-Minute Social Media Advertising, Kick-ass Copywriting in 10 Uncomplicated Actions, The Ultimate Guide to E-mail Advertising, and she is a well-liked advertising and branding keynote speaker. She is also a Certified Profession Coach and Founder and Editor in Chief of Females on Enterprise, an award-winning weblog for company ladies. Susan holds a B.S. in advertising and an M.B.A in management and method.