The present “green rush” has brought along with it an intense focus on large-scale cannabis cultivation. Across america and around the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis is being cultivated in greenhouses more than 250,000 sq. ft. that are capable of yielding more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses within the countless square feet and building similar-sized facilities in Europe, Australia, and elsewhere.
In the United States, cultivation licenses are frequently thought of as the most useful for the highly competitive application processes that many states use to find out who is permitted to cultivate and dispense inside their states. This value is partly produced from the actual fact many populous states initially only grant a limited number of marijuana cultivation operations plan. For instance, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, having a population over 20 million, granted 7; while Ohio, with more than 11 million people, granted 12; and Ny, 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 for any population of just 5.5 million people. Competition for these 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 before the company had seen any money in revenue. Similarly, a pre-revenue New York license sold for $26 million.
Indeed, in states with limited cultivation licenses, those firms that hold them can easily see large returns on their own investments in the near term. With artificially limited competition due to restricted license classes, cultivators in many states are able to control pricing and sell their product in large volume. A number 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 this trend sustainable? Or are these businesses setting themselves up for very long-term failure? As i have said inside my previous column “Are Canada’s Cannabis Companies Overextended?”, we’re already visiting a khhhfj towards large-scale greenhouse and outdoor production, that is driving prices down in states that do not have strict limits on the quantity of licenses they grant. For example, the normal wholesale cost of cannabis in Colorado has dropped from nearly $3,500 per pound at the beginning of legalization in 2013 to roughly $1,012 a pound on April 1, in accordance with 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 its leaves; those leftover leaves are called the “trim” and can be used to produce cannabis products) has become selling for as low as $50 per pound, which is reportedly driving some cultivators within the state from business.