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3 cannabis cultivation trends for 2023

With each passing year, the cannabis industry matures and continues to grow exponentially. Not only in market size but also production methods, technology, and cannabis consumer behavior.

In this article, Ella Alpina of Trym will review the cannabis industry trends that have emerged in 2022 and that will drive 2023 forward. And they will cover current industry statistics underlying these cannabis industry trends.

Economic downturn and operational efficiency 
In a recession, people tighten their wallets. The good news is that cannabis is a staple for households, whether used medically or recreationally. People may move across categories and price points, but their expenditures shouldn't cease. Coupled with expanding markets in new states all over the country, there's no doubt that there is still massive growth ahead for the cannabis industry. 

A recession presents opportunities to reconfigure business operations to become more efficient. Every dollar counts, and business owners are looking to cut extra fat wherever possible. Recessions will come and go with time, but commercial cannabis cultivators that want to stay in business will innovate and steer towards long-term growth.

Cannabis is a resource-intensive plant to grow, requiring a high amount of electricity, nutrients, startup costs, but most importantly, labor, which makes up more than half of all operational costs.

Race to the bottom
In more competitive, saturated markets like California, Colorado, Oregon, and Michigan, prices are in a race to the bottom. There are various reasons causing the decline, but any strategic cultivator will want to reexamine their operation and identify any areas for cost improvement. If you can't increase revenues, you can decrease costs.

Labor is the key
Not all cannabis businesses have huge financial backings that can weather an economic downturn. Self-funded, or smaller operations, have a much smaller margin of error for their revenues and expenses. Large-scale, multi-state operators must also seek cost savings and efficiencies. In all cases, labor is the greatest expense.

Labor is the largest expense in commercial cannabis cultivation, accounting for nearly 50% of production costs. Cannabis cultivation requires a skilled team to support the growing, maintenance, harvesting, and processing. 

As the industry has matured, many businesses have taken on more production space and larger teams, making it more challenging to manage daily activities and maintain accountability. Increasing team efficiency by improving communication methods and streamlining daily activities can have a huge impact on your bottom line.

Here are some tips to boost labor efficiency:

  • Set clearly defined goals and communicate them to the entire team. Employees need to know what they're working towards and how to get there
  • Develop standard operating procedures (SOPs) so tasks are understood clearly and performed consistently
  • Ensure all employees receive quality training
  • Use cannabis software to manage daily operations and schedule tasks. Software provides a lot of benefits, such as productivity tracking and performance analytics.

Finally and perhaps most importantly, create incentives for great work. Everyone needs to be recognized for working hard. When you track employee productivity, you can reward those who excel and find opportunities for additional training to those who need help to succeed.

Obsession with high THC 
Cannabis consumers across the country are making a statement at the register. Cannabis with high THC potency is the big seller. Cultivators keep pushing the boundaries higher than anyone thought was possible in the past. Some even surpassing the 30% mark. 

Perhaps it's a psychological calculation of getting the most 'bang for your buck' or simply a lack of education around terpenes and how the terpene profile is equally as important as THC levels. Either way, consumers are opting for the strongest weed they can get.

Discrepancy between labs
Cultivators have caught on that there are large discrepancies between testing labs when it comes to getting those high THC results. A higher % can sell for 60-80% more than cannabis with a lower THC content. 

Some states have performed audits on their labs and shown that this, in fact, does exist on a wide scale. Many operators are pushing for a state lab that can establish standardized procedures, like those found in soil or water testing. The issue lies with how each lab prepares the sample for testing, mixing it with different reagents or solvents before going into the testing equipment. (source)

What does that mean for commercial cultivators in 2023? And how can your operation respond to the market dynamics to take advantage of this trend? 

For one, cultivators need to adapt, and that means giving the consumers what they want. For one, you may consider trying out all the labs in your area and selecting the most reputable with the best results. But second, and more importantly, is our next trend of 2023: to develop genetics and a brand that can compete and sell.

Genetics and branding
The number of multi-state operators is increasing as brands that have developed a foothold in one market seek to expand their reach to new regions. And these aren't just the biggest players in the industry. Craft cultivator, DogHouse Cannabis, founded in Salem, Oregon, expanded operations to Michigan to capitalize on a fresh market with fewer developed brands in-state. We expect this trend to continue as new states pass legislation and begin cannabis sales. 

Cultivators have to play the game and stay on top of the preferred strains in the market. Or better yet, one step ahead. Tastes and preferences change very frequently in this market, partly fueled by breeders' constant production of new cannabis strains. 

Growers who have access to a breeder or employee who can start an in-house program would be wise to develop and name their own set of strains, when you're the only producer of a certain strain, your competitive edge skyrockets.

Couple a unique genetic portfolio with a distinct brand, and you've got a winning combo to take you through the year ahead and beyond. Take these winter months as an opportunity to invest time and energy into branding and marketing. Download Trym's Marketing Plan Template and either review what you already have to improve and update it or work with your internal team to develop a well-thought-out marketing strategy.

As a software provider to cannabis businesses, Trym regularly speaks with a diverse range of operators. From their first-hand conversations, the cannabis industry trends covered above are of great importance to cultivators across the US. 

This new year will be monumental for the widespread growth of the legal cannabis industry. Cannabis legalization across the country and beyond is increasingly the most important trend to watch, and it's only a matter of time until all the chips fall into place and federal legalization occurs.

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