Keeping Pace with the Industrialization of Cannabis

Cannabis Industry |

Legalization is long past here. The full industrialization of cannabis is upon us. The days of “waiting for the man” are gone— or else troubleshooting your “tomato garden” with the folks at the local hydroponic shop. If you and your black-market tomato garden made the leap into legality and commercialization, you know things have changed since the times when an ounce fetched $300. In the new world of legal cannabis cultivation, the struggle of competition is real.

The growth of the cannabis market is a good thing. We’re all on the same page with that. The number of people benefiting from cannabis has multiplied, and consumers can more safely access their medicine and/or party supplies. It’s like we’re living in the happy ending of a Cheech and Chong movie: the liabilities of toting an illegal substance in your backpack are gone, testing assures we’re consuming clean cannabis, concentrate products are making consumption healthier, and the drug cartels are faltering. This list could go on—  the legalization and proliferation of pot is a good thing.

What’s more, investment analysts at the Cowen Group predict that the legal cannabis experiment will be a 50 billion dollar industry come 2026. Attorney General Jefferson Beauregard Sessions notwithstanding, the cannabis market’s growth only accelerates from here. We’ll all grow tons of pot and get rich, right?

You commercial growers are probably laughing at those dreamy-eyed notions of easy riches. The opportunity for profit is real, but the growth in demand has put a major squeeze on cultivators. Supply has increased while profit margins have fallen. And even with the glut of quantity, product quality expectations have risen too. Marijuana Business Daily reports that, in Colorado, wholesale prices of cannabis dropped 33% in the first half of 2016. And it’s not a fluke or a trend— they expect it to be a permanent reality nationwide. Prices are tumbling quicker than even the fastest of bud trimmers!

And what’s most disturbing is that the little guys are being squeezed out of the game. The 500-square foot grows are under the table because the 50,000 square foot facilities can do it cheaper and 100 times as fast. Some of those little guys, however, are expanding into those bigger facilities and even bigger profits. But how?

It’s not just economies of scale that are affecting the profitability of the bigger grows. Bigger grows are more likely to be investing in more efficient technology too. These new technologies provide cost savings, easier operation, security improvements, better assurance of the plants’ health and increases in yield. The question becomes which technology investments are the most logical and beneficial next step for your operation.

We here at Triminator strive to provide the best marijuana trimmers to help you keep up with the speed of business, but the industrial revolution of cannabis goes deeper than just bud trimmers. In this post, we explore what the new, more efficient cultivation technologies can do for you—or to you—as the scale of the market increases and prices drop. In essence, to stay competitive you have to keep costs down, keep quality up and avoid risk. Read on.

Cost Savings Through Automation

 

Everybody appreciates ease, and when the easy way comes with a financial payoff, it’s only a matter of time before widespread adoption. Automation offers both of these benefits. By definition, “auto-mation” is anything that makes a process automatic, and all these technologies reduce work.  In general, they fall into the categories of environmental control, lighting control, irrigation and processing/packaging. The new technologies improve the bottom line by (1) reducing labor,  (2) reducing risk, or (3) improving yield and consistency. Machines can be more vigilantly watchful for risks, sometimes they improve product quality and consistency— and they don’t ask for a paycheck on Friday. As another grower put it, “automate or stay late.” As it turns out, staying late is expensive too.

Environmental controllers

 

  •       Better balancing of environmental parameters
  •       Data recording
  •       Electronic alerts for problems
  •       Better control of the growing environment

 

An environmental controller system aids in the balance of temperature, humidity, CO2 levels, air circulation and sometimes lighting. As you may know, the growing environment is a balancing act. Interdependent factors either work in harmony or else cascade into trouble. Software-based “controlled environment agriculture” systems cover all the bases at once, and good ones do it in dynamic fashion. That means the controller adjusts one grow room parameter in response to another— like kicking on a dehumidifier in response to rising temperatures. They’re useful in monitoring the diurnal temperature swings and the changes in humidity and temperature that come with them. Machines can help keep those stomata open and plants happy!

Controllers provide labor savings by eliminating some of the need to monitor the growing environment, and they safeguard against crop loss too. Some systems will send a text if there’s an issue or system failure. Nobody wants a text about a failed air conditioner at 3:00 am – unless it saves tens of thousands of dollars in scorched marijuana plants. Score one for industrialization!

Controllers should not supplant people altogether, and some generic recipe for environmental conditions throughout the lifecycle of the plant won’t be replacing attentive horticulturalists anytime soon. They’re a tool. And sophisticated ones act like a journal diary too. Data tracking from a multitude of sensor types within the canopy and the soil becomes easy. Nobody loves a spreadsheet, but when it contains detailed data on temperature, relative humidity, vapor pressure deficit, CO2, light levels, and soil conditions, it’s a good thing. Looking back on a grow improves future processes— and widens the profit margin going forward.

Implementation costs and the learning curve will be dependent on the equipment systems already in place at your grow site. Simpler units costing in the realm of $1,000 offer control of equipment related to temperature and humidity (read: fans, air conditioners, vents). Controllers costing ten times as much or more include irrigation, lighting, light deprivation system controls, soil condition monitoring and control of multiple rooms and zones. The most significant hurdles to implementing these systems is the setup time and learning curve. There’s liability in trying a new growing paradigm— especially when it will serve as the maestro for everything else.

Lighting and lighting controllers

 

  •       Safety from overheating
  •       LEDs provide electricity savings
  •       Compliance with time-variant electricity pricing

On a long enough timeframe, LED technology will likely eclipse high-intensity discharge (HID) lighting. It’s a case of the rich getting richer: the growers that can afford LED lights will reap the dividends of a 50% reduction in energy use while those that can’t become less competitive. Couple that energy reduction with all the money saved on bulb replacements and the arguments against LEDs seem weak. Opponents point to the product quality benchmark of traditional HID lights, but LEDs can recreate the HPS spectrum if that’s what you desire. And the best lighting spectrum may be yet to come. Ongoing LED-based spectrum experiments, particularly within the UV wavebands, may change yields for the better.

Sophisticated lighting control systems have safety shutoff features similar to environmental controllers. This reduces the risk of disastrous overheating from HID lights. When temperature exceeds a set point, controllers may dim the lights to reduce heat. Dimming doesn’t disrupt the photoperiod as much as turning the lights off entirely, but they’ll do that too if the temperatures keep climbing. Again, this is a safeguard more so than an ongoing benefit to the bottom line.

You’re probably already running lighting controllers to ensure your schedule works with time-variant electricity pricing. Can you imagine the times before control systems? Running lights at the wrong times can cost hundreds or thousands of dollars a month. Utility companies jack up their prices during peak use hours to discourage strain on the electrical grid and, of course, to make more money.

Irrigation and nutrients

 

  •       Efficient nutrient use
  •       Reduced staffing costs
  •       Happier plants

 

Automated irrigation is a cost saver both in terms of labor and materials. The labor savings of an irrigation system cannot be overstated. No large grows are currently hand watering. At least one grower has reported that automated watering saved his marriage. No joke! But now inline fertilizer mixers have taken nutrient delivery to the next level (and reduced even more labor). Dosing is precise, and the mixing process is automatic, whether you’re using hydroponic techniques or growing in soil. Implementing an inline dosing system is simple and creates a quick ROI. Changes in irrigation methods may require infrastructure changes and some significant labor setting up new drip lines or whatnot. Downtime is always a factor too.

Benefits of industrial marijuana trimmers and packaging systems

 

  •       Reduced staffing costs
  •       Reduced risk of theft
  •       Quality control
  •       Easiest to implement

 

We’re big fans of industrial marijuana trimmers— obviously. But many growers are too. Industrial trimmers are an add-on subsystem that’s unrelated to central growing operations and a chance to get big cost savings without making changes to your overall grow.

The best industrial marijuana trimmers outpace traditional human trimmers, and they come with some fringe benefits. In addition to paying for themselves in as little as two days, bud trimmers solve the feast-and-famine staffing issue created by sporadic, labor-intensive trimming. And vulnerability comes with allowing strangers into your grow operation. It may seem cynical, but an industrial trimmer protects you against theft. The more unknown, temporary workers you let into your operation, the more your company risks stolen bud—or worse—stolen cash. With a quality, industrial marijuana trimmer, one person can do the work of many. And the best trimmer designs (like Triminator’s industrial bud trimmers) provide a high-quality trim. Often, if human trimmers are on the learning curve, the quality of their work is lacking. So part ways with the folks who are causing problems! You only need to keep your best, trusted human trimmers on staff to take care of the “crow’s feet” that no machine can snip, and clean up any missed leaves.

Large outdoor grows know the practical issues that naturally come with a large staff of human trimmers. For remote operations with massive quantities of flower to trim, accommodations and conflict resolution are problems. If ten or twenty people are staying on your property, they need somewhere to sleep and something to eat. Arranging food and accommodations for a crowd of “trimmigrants” is a task unto itself – one requiring significant incidental resources of time and money. And let’s not forget the inevitable bickering among clashing personalities forced to spend long days together. Cherry picking the best buds causes conflict amongst trimmers looking to keep their production wages up, and the simple awkwardness of being crammed into a “family” of strangers leads to some reality-TV-worthy drama. In worst case scenarios, strangers who wash up off Interstate 5 could be violent.

Then, there’s the problem with reliability and consistency. It’s not uncommon for farmers to have to deal with trimmers who don’t arrive for their shifts on time, who finish early or even pull a no-show after a few days. Some of your trim crew will be experienced and offer perfectly trimmed buds; others will trim buds like Edward Scissorhands after a few too many drinks. Inconsistency might not be a big issue on the black market, but the legal market expects trim quality.

We’re not against hand trimmers. There’s room for everybody in the cannabis space. But be safe and know who they are. This article isn’t about eliminating jobs for hand trimmers, it’s about the industrialization of the industry and the benefits of automation. Like all industries, there is room for big or small, boutique or commercial. An industrial cannabis trimmer eliminates expense and risk beyond just the obvious payroll outlay. With all these benefits, industrial bud trimmers are a “must” for staying competitive as the normalization of cannabis continues.

On a dispensary level, automated packaging systems are an innovation similar to industrial bud trimmers. Labor savings are primary, and the ROI is quick. Other industries used automatic portioning machines that quickly package food and medicinal products based on weight. It’s only a matter of time before the cannabis industry will too. One machine replaces multiple employees using tweezers and digital scales by employing one of various systems that weighs product as it’s added to the final retail packaging. These devices make sense for very large growing operations and dispensaries.

So what’s holding automation back?

 

Initial costs of new technology are always a hang-up when what you have is working well enough. The trouble is that many companies don’t see that the legacy technology isn’t working well enough. There’s a natural hesitation when it comes to new technology. But what many in the cannabis industry don’t realize is automation and controlled environment agriculture have been around for awhile. It’s a sure bet that what made sense for tomatoes and ornamentals will work for cannabis too. The Dutch pioneered automation technology in the 1990’s that’s just now being adopted by the cannabis industry. The Netherlands exports more food than almost all other countries—second only to the United States—despite its small land mass. By using greenhouses and vertical farming, the Dutch rival the US production (though the US is 270 times the size). How are they doing this? Efficiency. The Netherlands has enough square footage of high-tech greenhouses to cover the area of Manhattan. And automation ensures it runs like clockwork.

Some might say the biggest benefit of automation and the industrialization of cannabis is a greater quantity of cannabis— and they’re right. But as you can see, the biggest payoff for growers is a drastically reduced operating cost relative to yield. Yet automation is a liability too. If other cultivators are achieving lower costs, adopting industrialized practices becomes a must. A more efficient operation will keep your Triminator industrial trimmer spinning, and that means more green in the form of cash.

Some large (think 10,000 pounds a year) greenhouse growers are reportedly achieving production and packaging costs of $400 per pound. For a smaller indoor facility reliant on electric light and lots of labor, the overall costs of goods sold per pound is likely to be more than $1,000. The smaller facilities can only hold out for so long against that kind of competition.

The trouble for smaller growers attempting to make the leap into an automated greenhouse is—you guessed it—financial. A 50,000-square-foot facility runs north of 5 million dollars, and most of us don’t have that kind of money lying around. Access to financing is the answer, but it’s a complicated one. The federal illegality of cannabis bars many traditional routes to “other people’s money.” The FDIC perceives cannabis loans as an unnecessary risk for the banks they’re insuring, so those banks steer clear. Venture capitalists and private investment firms are more lenient and eager to make the right investment in the new industry.

So, the path to a larger, more industrialized operation comes down to access to funding from private lenders. And winning their vote of confidence will take a strong balance sheet. The jump into larger facilities (and other people’s money) takes quicker cash flow and incrementally more efficient production methods. Smaller equipment investments that lower ongoing costs can boost your balance sheet and make your company more attractive to outside money. Packaging systems, industrial cannabis trimmers and inexpensive safeguards against risks can create larger wins.

For more information on finding the best marijuana trimmer for your needs give us a call when your next harvest rolls around!