In the usa, cultivation licenses are often viewed as by far the most useful for the highly competitive application processes that many states use to find out who is allowed to cultivate and dispense in their states. This value is partly produced from the fact many populous states initially only grant a small number of cultivation licenses. As an example, 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 New York, with 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 a population of just 5.5 million people. Competition for these limited permits is fierce, and those companies fortunate enough to win one see sky-high values attached to these licenses before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million before the company had seen a dime in revenue. Similarly, a pre-revenue New York City license sold for $26 million.
Indeed, in states with click to read more at cannabiscultivationconsulting.com, those businesses that hold them are able to see large returns on their investments in the near term. With artificially limited competition as a result of restricted license classes, cultivators in many states have the ability to control pricing then sell their product in large volume. Many of these cultivators grow their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities a lot more than traditional commercial agriculture.
The current green rush has brought with it an intense concentrate on large-scale cannabis cultivation. Across the usa and around the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis will be cultivated in greenhouses in excess of 250,000 sq. ft. that are capable of yielding greater than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses in the countless sq ft and building similar-sized facilities in Europe, Australia, and elsewhere.
But is it trend sustainable? Or are these businesses setting themselves up for too long-term failure? As stated inside my previous column Are Canada’s Cannabis Companies Overextended?, were already going to a trend towards large-scale greenhouse and outdoor production, which can be driving prices down in states which do not have strict limits on the number of licenses they grant. For example, the typical 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, according to 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 the leaves; those leftover leaves are called the trim and may be used to produce cannabis products) has become selling for as low as $50 per pound, that is reportedly driving some cultivators in the state away from business.
This trend is only going to continue when the federal government`s 80-year experiment with cannabis prohibition finally involves an end. Today the cannabis market is defined by individual state markets, where no product can cross state lines because of laws prohibiting interstate commerce of any federally illegal product. However when prohibition eventually ends, then interstate commerce will open and businesses is going to be allowed to import their cannabis from the state in the country. At this point, we could expect aprknj large-scale outdoor and greenhouse production will dominate the market as cannabis commodifies. Many of the same environmental issues that make northern California perfect for producing grapes for wine will even allow it to be perfect for large-scale commercial cannabis production. The greatest greenhouse complex in the country, estimated at approximately 300 acres (approximately 13 million sq. ft.) of greenhouse space, is located in Wilcox, Ariz., as the desert conditions allow it to be ideal to manage humidity in a greenhouse setting, a thing that adds an enormous additional cost to greenhouse operators on the East Coast. The same conditions will apply to cannabis.