Business
Strategies for growing cannabis across different state markets
Companies that cultivate cannabis in multiple states must use different strategies depending on a market’s maturity, the climate and what consumers will pay for the products.
By way of comparison, the California market is among the most mature in the United States, with a highly competitive flower scene where growers can sell only top-quality cannabis.
The California climate – with long stretches of daylight and minimal rainfall – allows growers to produce very large plants and therefore focus on selling “A buds,” the best part of the plant.
In Massachusetts, by contrast, recreational marijuana sales are relatively new – having started in November 2018 – and most cannabis is grown indoors because of the state’s rainy, humid climate.
Profitable indoor cultivation techniques include using hydroponics, crop steering and inert growing mediums, such as rockwool, for cleanliness and ease of use, said Matthew Stevens, cultivation director for 4Front Ventures, a vertically integrated multistate operator with offices in Massachusetts and Arizona.
“Companies and their cultivators must align with the direction of the market they are in to maximize profits while maintaining the integrity of the plants they are growing,” he added.
So, how do the approaches differ for a company looking to operate in both states?
Quality or quantity
Successful grows will focus on good genetics, nutrients, great plant-care techniques and crop steering, when appropriate, said David Catanzano, head of cannabis operations for Tilt Holdings, a multistate operator headquartered in Phoenix.
Crop steering involves precisely monitoring how plants are performing and adjusting controls accordingly.
According to Catanzano, the key to successful production of high-grade flower is to know how to truly read the plant, regulate your environment and control the specific inputs to steer crop growth.
In a market with more discerning customers, Catanzano would lean more on hand-trimming techniques to ensure a more boutique or craft-style finished flower.
“Of course, we would not waste the rest of the plant,” he said. “We would move this product on to other parts of our production, such as creating distillate for concentrates as well as supplying our edible program to maximize our returns.”
Ryan Douglas, a Florida-based cannabis cultivation consultant, would take a similar approach. He recommends harvesting in two phases.
“The first harvest would be the cream of the crop, just the mature top flowers that typically have the most cannabinoids,” he said.
This product should be hung to dry, hand-trimmed and cured.
The second harvest would remove everything else and be sold or processed for fresh-frozen extract, Douglas added.
If the market is looking for any and all flower because of high demand, he would recommend growers avoid any huge changes to the cultivation program that might disrupt the flow of production.
“The goal in these situations is to obtain desirable genetics, grow them well and repeat,” Douglas said.
“Hot markets don’t always stay hot, so the objective should be to seize the moment with quality flower and avoid unnecessarily overcomplicating production.”
Market comparison
“The question across markets really becomes, ‘How do you industrialize, scale and produce consistent high-quality product?’” said Andreas Neumann, chief creative director of Jushi Holdings, a multistate cannabis company based in Boca Raton, Florida.
“The bar has been raised, and nowadays, consumer demand is really much more constant – this is a definite challenge for everyone,”
For one, consumer appetites in California are broader, according to Neumann.
Outdoor-grown cannabis was long thought of as the ultimate product in that state, he said.
However, consistent indoor- and greenhouse-grown flower puts “California ahead of the game.”
“The state is entering the industrialization era of cannabis, and while the indoor-grown flower is necessary and still considered great due to its “’perfection,’ there is also a big future for greenhouse and outdoor grows there,” Neumann added.
In Massachusetts, by contrast, the market is predominately indoor-grown flower.
“Perfectly curated indoor flower is often considered ‘prime pot,’ grown under the perfect conditions,” Neumann said.
“Consumer appetites default to expecting perfection.”
In newer markets such as Massachusetts, cultivators tend to sell everything they grow because there are few providers and retailers need product, Douglas said.
“Competition is much more fierce in mature markets, and cultivators are forced to differentiate themselves through quality and unique product offerings,” he added.
California is a very saturated market with products and brands established in all categories and many large cannabis companies, Stevens said.
“Which means the consumer can find flower of all realms of quality, from inexpensive and basic to high-quality craft cannabis,” he added.
But the quality of the cannabis in Massachusetts is catching up, Stevens said, as the market there matures.
“Many companies are expanding their focus on cultivating strains with diverse terpene and cannabinoid profiles,” he added.
New versus mature
In new markets, Douglas recommends companies cultivate using tried-and-true hydroponic growing methods. That keeps the process simple, he added.
“A cultivation startup with the right genetics and a skilled grower can rapidly put together a good grow site and turn out quality flower,” Douglas said.
In established markets such as California, growers should consider differentiating themselves with small batches of organically grown, craft-quality cultivars “that you can’t find in every dispensary,” he added.
In a newer market with less competition, the focus is often on expanding canopy and producing as much product as possible, Stevens said.
In a mature market, companies will often either have massive footprints or create niches for themselves with unique products, he added.
Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.
Source: https://mjbizdaily.com/strategies-for-growing-cannabis-across-different-state-markets/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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