Recently stock prizes of cannabis producing companies have dropped significantly. This because of internal and external factors. Some factors are controllable, while others not. “Initially, the feeling of the market was too positive” Robert Heikens with AAB explains. “A lot of the companies started their business with too much confidence resulting in over promising and under delivering to their clients. Companies regularly overestimated the profitability of their proposed business plans, and underestimated the significant complexities associated with growing cannabis and operating a large-scale cannabis facility. Many producers believed that the profit per dried kg of product was high enough to offset the loss of production experienced from disease. It’s important to acknowledge that cannabis is highly susceptible to certain fungal diseases, this has resulted in considerable crop loss for some producers who are growing in poorly designed facilities that can’t maintain dry enough conditions to avoid mold development and prevent crop loss. Most companies have struggled to achieve even 70% of their projected yield potential.
Infrastructure decisions
“Growing plants generally in a greenhouse is a competitive market place and the product must be seen as commodity. If you can grow it, your competitor can grow it too. The approach to growing cannabis is two-fold in the sense that the grower should strive to reduce the cost of production but also strive to achieve top-end consistent quality. This potential trade-off between quality and cost reduction introduce some very challenging infrastructure decisions that are highly complex to navigate and for the most part have been considerably overlooked by the majority of participants in the cannabis industry to date. A thoughtful design to accommodate both low cost and premium quality production requires extensive custom design infrastructure planning. These are subjects in which AAB has 35 years of experience. With more than 40 specialists, they are able to solve the most complex challenges.”
An industry at its inception
The cannabis industry is a rather young industry, which implies that all investors and actors in this industry are new to this, and do not have extensive experience in cultivation and processing of cannabis.
Marc Vijverberg and Robert Heikens of AAB
Producers have prioritized being first to market by retrofitting pre-existing facilities designed for other purposes or by constructing new facilities that mimic designs used in other common greenhouse crop applications rather than allocating appropriate time and financial resources to designing and building an efficient project tailored specifically for cannabis. We’re now starting to witness the results in the “rushed” approach because cannabis is such a complex infrastructure driven business. Sometimes it is possible to convert existing greenhouses, but then you have to understand all the systems well, more important you need to understand when to stop when it is simply not possible, the consultant can point this out, the owner will often just continue against all knowledge” Robert says.
The challenges of growing cannabis in a greenhouse
“The challenge of growing cannabis is even greater than growing vegetables and flowers in a greenhouse. First of all, there is little knowledge about growing cannabis in a large scale production facility, and the experience that does exist is not openly exchanged among existing producers. Cannabis plants are propagated from mothers, grown from cuttings through a vegetative stage until being forced into generative growth by shortening the photoperiod to promote the production of flowers. Once the crop is fully ripened and ready for harvest, the grower must make appropriate design considerations for harvesting logistics, drying, processing and packaging of the finished product, all of which are equally as important in contributing to final product quality as the decisions made for cultivation. This requires a highly sophisticated facility that can accommodate optimal environmental conditions for all facets of the plant and product life cycle. This has impacts on grow lights, screens, dehumidification, cooling, heating, and plant layouts, etc.. It is a big disappointment to lose a percentage of your crop at the final stage of growth. At this stage you have invested all your resources in your plant like water, nutrients, electricity, heat and CO2, but unfortunately this is when the plants are most vulnerable to diseases like grey mold and mildew because of the weakened immune systems they experience towards the end of their life cycle.”
Robert’s colleague at AAB, Marc Vijverberg, states: ”Greenhouses of this type are very complicated because there is a lot of interaction and influence between the equipment installed. This is the reason why we started designing in 3D. Last but not least, the grower also needs to be able to operate all the equipment and manage labor during the different stages of the growing process.”
Differentiating oneself
Marc further explains, "Because it is difficult to differentiate your product you need to find a unique selling point. This could be differentiating based on quality, location, position in the market or cost of production which is often heavily influenced by how efficient you are at managing your energy resources. It is crucial to understand how your energy inputs influence your project, this is a key for long-term sustainability of any horticultural business. The cannabis industry is still very immature and will take far longer to mature and develop than what most people originally thought it would. Because cannabis is very challenging to grow successfully on scale, it presents an excellent opportunity for new businesses to develop their projects methodically and take advantage of the lessons learned in the past in order to optimize profits and take a significant share, which is left by the current players on the market."
The devil always lies in the details, so it is crucial to your future business to have somebody on your side that understand these matters. A party that helps you choose between options and suppliers based on the best solution at the best conditions. AAB is a leading consultancy company with over 35 years experience in horticulture. AAB is an independent firm that works with all type of construction companies and suppliers internationally. AAB is supports their clients with 2D and 3D design, engineering, budgeting, tendering, project management, valuation of property, conversion of existing greenhouses and energy consultancy. AAB validates the feasibility of solutions to ensure your project meets your needs and is sustainable and ready for the future.
For more information:
AABINT
+31 (0) 174 637637
info@aabnl.nl
www.AABINT.com