The present “green rush” has brought along with it a powerful focus on large-scale cannabis cultivation. Across the United States 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 in excess of 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 an incredible number of square feet and building similar-sized facilities in Europe, Australia, and elsewhere.
In america, cultivation licenses are often thought of as by far the most useful for the highly competitive application processes that a lot of states use to determine who is allowed to cultivate and dispense within their states. This value is partly based on the simple fact many populous states initially only grant a restricted number of cultivation operating 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 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 for any population of just 5.5 million people. Competition for these limited permits is fierce, and the ones companies fortunate 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 because of restricted license classes, cultivators in many states can control pricing and then sell their product in large volume. Many of these cultivators boost their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities greater than traditional commercial agriculture.
But is this trend sustainable? Or are these companies 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 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 quantity of licenses they grant. As an example, the normal wholesale cost 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 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 known as the “trim” and may be used to produce cannabis products) has become selling for only $50 per pound, that is reportedly driving some cultivators within the state from business.