In america, cultivation licenses are frequently viewed as by far the most useful for the highly competitive application processes that many states use to figure out who is allowed to cultivate and dispense within their states. This value is partly derived from the fact many populous states initially only grant a restricted number of cultivation licenses. As an example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, having a population over 20 million, granted 7; while Ohio, with more than 11 million people, granted 12; and New York City, with a population of nearly 20 million people, granted only 5 before recently expanding to 10. For context, Colorado has roughly 1,400 licensed cultivators for a population of just 5.5 million people. Competition for such limited permits is fierce, and those companies lucky enough to win one see sky-high values attached to these licenses just before they become operational. In Florida, a coveted cultivation/dispensary license sold for $40 million ahead of the company had seen a dime in revenue. Similarly, a pre-revenue New York City license sold for $26 million.
Indeed, in states with my site cannabiscultivationconsulting, those businesses that hold them can see large returns on the investments within the near term. With artificially limited competition as a result of restricted license classes, cultivators in many states have the ability to control pricing and sell their product in large volume. Many of these cultivators grow their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities greater than traditional commercial agriculture.
The current green rush has brought with it a powerful give attention to large-scale cannabis cultivation. Across the usa and round the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis will be cultivated in greenhouses in excess of 250,000 sq. ft. that are capable of yielding a lot more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses inside the millions of square feet and building similar-sized facilities in Europe, Australia, and elsewhere.
But is it trend sustainable? Or are these companies setting themselves up for long-term failure? As stated within my previous column Are Canada’s Cannabis Companies Overextended?, were already going to a trend towards large-scale greenhouse and outdoor production, which can be driving prices down in states which do not have strict limits on the variety of licenses they grant. For instance, the typical wholesale cost of cannabis in Colorado has dropped from nearly $3,500 per pound at the outset of legalization in 2013 to roughly $1,012 a pound on April 1, in accordance with the Colorado Department of Revenue. In Oregon, in which the state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of the leaves; those leftover leaves are known as the trim and may be used to produce cannabis products) is now selling for only $50 per pound, that is reportedly driving some cultivators inside the state away from business.
This trend will only continue if the federal government`s 80-year try out cannabis prohibition finally concerns an end. Today the cannabis sector is based on individual state markets, where no product can cross state lines because of laws prohibiting interstate commerce of the federally illegal product. However, when prohibition eventually ends, then interstate commerce will open and businesses will likely be able to import their cannabis from any state in the united states. When this occurs, we can expect aprknj large-scale outdoor and greenhouse production will dominate the marketplace as cannabis commodifies. Lots of the same environmental problems that make northern California suitable for the creation of grapes for wine may also make it perfect for large-scale commercial cannabis production. The greatest greenhouse complex in the united states, estimated at approximately 300 acres (approximately 13 million sq. ft.) of greenhouse space, is situated in Wilcox, Ariz., since the desert conditions make it ideal to manage humidity in a greenhouse setting, something which adds a huge additional cost to greenhouse operators on the East Coast. These same conditions will apply to cannabis.