“Cannabis companies have to deal with some unique challenges, from the importance of humidity control to being in charge of a vertically integrated company,” says Sonny Moerenhout, Managing Partner at Cultivators. The Dutch company helps licensed cannabis and hydroponic lettuce companies from the moment of their first business idea up to the daily operations. “What many people are not aware of is that the hydroponic cannabis and lettuce industry share some interesting similarities.”
When it comes to cannabis cultivation, creating consistency is one of the top challenges the Cultivators team helps companies with. You need to produce the same amount of cannabinoids year-round in every batch, for example. Therefore, controlling your climate and having a consistent amount of light is of importance. With high amounts of light come high amounts of transpiration, so humidity control is essential to prevent diseases like botrytis. Such diseases are especially challenging for the cannabis crop. A tomato grower can look back six weeks to trace any climate changes that caused the botrytis. However, botrytis shows in the cannabis flower after just three to four days, so it’s necessary to keep a close eye on your crop.
Compared to other crops, cannabis growers are unique as the majority are vertically integrated companies. “Because of cannabis regulations, vertical integration is sometimes obligatory, and it allows for the required juridical oversight of the seed-to-sale process. As a result, one company will be doing everything: the breeding, mother stock, propagation, flowering, post-harvest, and packaging. That is what makes the cannabis industry so unique; companies need to be in charge of all the processes themselves. Essentially, it’s like running several businesses at one location.”
Yet the cannabis challenges may actually not be as unique as often thought. Moerenhout explains that the hydroponic lettuce companies they work with are quite similar. “Hydro lettuce growers are also vertically integrated companies; doing the germination and propagation, growing and post-harvest (including packaging) at the same location as well.” The second similarity is the relatively high initial investment (Capex) for a growing facility. “This can easily go above €600 per square meter for cannabis and lettuce, whereas the costs of the average tomato greenhouse are generally substantially lower. The advantage is that although the relatively high start-up costs, the returns can be substantial as well.
Many investors have entered the cannabis and hydro lettuce industries, making it a similar target audience. These investors focus on the financial returns of the business and outsource the choice and development of the greenhouse and growing systems to experienced companies such as Cultivators. The first focus is defining what you are exactly going to cultivate and what specific product requirements the customer has. Based on that knowledge, you can define the required facility.
European cultivation potential
Concerning their cannabis cultivation work in Europe, Cultivators is mostly still supporting the development and reviewing of business plans and facility design. “These last years, there have been facilities built unfortunately that do not actually meet the specifications to grow a high-quality product. The European cannabis market is still very much in its infancy, and there is much progress left to be made.” Consumer-wise, Germany, and France are seen as markets with high potential. Yet Cultivators focus on the countries where there is the most potential for cultivation. “At the moment, those countries are Switzerland, Portugal, and Denmark. Those countries are certainly the most advanced when it comes to high-quality facilities.”
Being a Dutch company, Cultivators is, of course, also active in The Netherlands. Recently, they have been helping the companies that are part of the government coffeeshop experiment, which has not come without its challenges. “The experiment is progressing slowly, but we know that all the companies involved are eager to make it a success! One of the biggest challenges is the complex regulatory landscape and delays in the start of cultivation and sales. For the participating companies and their investors, it is therefore a challenge to fully grasp the business opportunity. Cultivators is supporting in managing this landscape.
For a couple of years, Moerenhout has been supporting GreenTech Amsterdam with their medicinal cannabis knowledge platform. “I am responsible for creating the themes and inviting speakers for the presentations. We managed to create a high-quality program with a focus on cultivation. At most other cannabis conferences, the presentations concentrate on compliance and market potential. We want to spread knowledge that benefits cannabis cultivation, the aspect on which the success of companies is dependent.” The program of the presentations that will be held during the three days of the GreenTech (June 14-16) can be found here. The Cultivators team will also be very happy to meet you at their stand: 05.581CA.
At the event, the company will be sharing more exciting news. “We have started a consortium of companies with World Horti Center and Vertify. For four years, we will be doing cannabis research together. Moreover, we will have a pavilion at the World Horti Center to diminish the cannabis stigma and inform visitors of the uses and benefits. We are excited to start sharing more about this new project soon. Many well-known companies will play a role, and we are aiming to help the industry through knowledge and education.”
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