Competition, Consistency & Scalability: How to Overcome Key Challenges Commercial Cannabis Growers Face in 2019

Navigating the complexities of the commercial cannabis market can be daunting. The industry has gained national attention over recent years, allowing for explosive growth and attracting the interest of mainstream industries. As the cannabis market continues to mature, it’s necessary to consider three key factors that can make or break your business; competition, scalability and consistency.

Competition

All states are not created equal when it comes to competition for cannabis cultivators. Prices are falling fast across the board, but drops are much steeper in many of the more mature markets. In Oregon, for example, there was previously no limit on the number of grow licenses the state issued, which in turn flooded the market with product causing a staggering price drop of 65% in 2018.

What does this mean for you?

If you’re new to the game, establishing your footprint in the newer markets where prices are more robust and there is less risk of overproduction (think Michigan and Utah) is one way to go. If you’re already set up in an established cannabis market, competition is likely unavoidable and your best bet is to focus on efficiency to remain profitable. Looking at labor and energy costs and how to mitigate them, will have the greatest impact on your bottom line.

Another way cannabis cultivators everywhere can curb the competition is to differentiate themselves in the market with a strong brand and by building a loyal customer base. You can rep product quality, growing methods (organic farming, sun grown, living soil) or other unique selling propositions like in-house genetics, remarkable terpene profiles or high THC content flower. These are all things that consumers get excited about and want to consider when buying cannabis products. An example from outside of the cannabis industry of consumer preference for quality over price can be seen in the U.S. beer industry. In 2017, U.S.-brewed beer experienced the largest percentage decrease in annual shipments since 1954, while sales of craft beer increased by 5.5%.

Scalability

As the market has grown, the overall scale of cannabis operations has increased proportionally. Cultivators are taking on more production space and as a result, have experienced growing pains (some pun intended). Larger cultivation operations can lead to larger problems. It’s much more time consuming to perform routine observations to ensure plant health when there are significantly more plants to observe. Increased operations also require larger teams and as teams grow, it becomes difficult to maintain efficient communication and individual accountability. Especially when operations are spread across multiple facilities or even states, making keeping everyone aligned with business objectives and informed of operational data a challenge.

What does this mean for you?

Simply put, your team is everything. Your operation is only as strong and efficient as your team. Take the time to make smart hiring decisions. Find skilled people with a passion for cannabis and train them well. Give them the resources they need to succeed – it will cost more, but it will be worth it! Consider using software that will align your team, keep them on track, and enable real-time data collection so management can track key performance indicators across facilities and teams.

Consistency

Providing a consistent experience for consumers remains one of the biggest challenges for cannabis cultivators, especially for medical producers. Patients need a predictable outcome every time they consume medicine, and historically when it comes to cannabis, no two ‘doses’ are identical. Additionally, with the rise in recreational sales, the industry has seen a meaningful increase in new consumers. As people explore the vast market of cannabis products, ensuring their experience is pleasant, measurable and repeatable is essential to retaining their business. Beyond customer experience, cannabis businesses need to be able to consistently predict yields, keep production costs down, and keep the team firing on all cylinders in order to be successful.

What does this mean for you?

There are numerous factors at play when growing cannabis and many areas that influence the outcome of a harvest, which can make consistency a beast! Having a controlled environment is a great step forward, but also ensuring employees perform tasks consistently, monitoring growth cycles, and tracking batch results is necessary to provide you with a complete view of your operation. Take advantage of available technology such as environmental controls, team management software, and software systems that allow you to track batches and yields in order to keep your operation consistent and performing optimally.

The best thing cannabis cultivators can do to establish themselves in the market and be competitive is: invest in their team, focus on efficiency, take advantage of available technology, and create a brand authentic to themselves. By doing all of this, and of course, producing a quality product, growers can bank on a prosperous future.

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