Launching a new cultivation business is the culmination of extensive research, planning, and due diligence.
The success of most cultivation start-ups is made or lost in the planning phase, and 90% of cultivation problems are directly related to oversights committed long before any seeds are planted.
If you plan on launching a new cultivation business in 2022, increase your chances of success by keeping things simple.
Make sure your mixing bowl contains these 11 start-up ingredients. If you can’t tick all of the following boxes, you’re not ready to move forward.
1. License
Don’t move forward unless you have permission to cultivate from a regulatory entity that authorizes and monitors commercial cannabis production. A start-up can buy land, build greenhouses, and hire staff, but without express permission to cultivate, it can’t acquire starter genetics or start growing. If you believe no license is required, which is sometimes the case with hemp, have a lawyer verify everything is in line before planting any seeds. Rules can change.
2. Capital
Your business needs money to cover start-up and operational expenses until it generates revenue. Raising money is easier once you have a license. Anticipate needing a minimum of $200,000 to get you through licensing, but plan on raising up to $20 million depending on the size and sophistication of your greenhouse or indoor grow facility. Outdoor farmers will only need to raise a fraction of this amount.
3. Head Grower
Hire an experienced commercial cultivator. They don’t need to come from the cannabis industry. Many experienced cannabis growers don’t have the facility management, people management, or production scheduling experience to run a large commercial facility. If you find a professional grower with no cannabis experience, pair them with a cultivation consultant or subject matter expert to fill the void.
4. Cultivation team
When a start-up is small, it’s difficult to justify having many people on staff. For example, you won’t need a post-harvest manager or trim team the first day that seeds are planted, but you will need section growers and plant technicians to perform day-to-day cultivation tasks. Within six months of launch, a company should be actively hiring other key personnel to fill vacancies on the cultivation team.
5. Management structure
A lean start-up is a successful start-up. Establish clear job responsibilities to prevent over-hiring and micromanagement of key personnel. Hire the best people, and then let them do their job.
6. Facility selection and construction
Whether building new or retrofitting an existing building, ensure that your greenhouse or indoor grow site can maintain the optimal growing conditions for cannabis. Temperatures should not extend beyond 68-85 degrees F, and humidity should stay between 50-70% RH. Make sure all equipment is commissioned and working correctly before filling the cultivation area with plants.
7. Five to ten varieties
Launching production with too many varieties is a sure path to overcomplication. Diversity is great, but it’s best to start slowly and introduce new varieties once production is rolling and revenue is being generated. If you’ve already purchased dozens of varieties in seed form, they can be stored for several years in a refrigerator.
8. Cultivation method
It’s safest to launch production using a time-tested cultivation method. Advanced cultivation methods like deep water culture and aeroponics offer cultivators fast growth, high yields, and minimal insect infestations, but they are extremely risky for start-ups. If the growing parameters are out of range, it’s possible to lose an entire crop within a few hours. Launch with something easy, and then upgrade once business is good.
9. Standard Operating Procedures
Before planting the first seed, all SOPs should be written and approved by the head grower. New staff should be trained on all protocols, and completion of satisfactory training must be signed by the head grower or a qualified trainer. Make sure that any protocol changes are done following established procedures, or the finished product may be deemed non-compliant and unsaleable.
10. Realistic timelines
Investors, management, and the head grower should agree on production timelines. Unrealistic expectations will anger investors and frustrate your head grower. Well-prepared organizations should have saleable product within 18 months of receiving their cultivation license. This timeline can be drastically reduced if a company is retrofitting a facility rather than building from scratch.
11. Realistic yields
Anticipate 35 grams of dry cannabis flower per square foot per harvest, or 350 grams of dry cannabis per square meter per harvest. This calculation only applies to space dedicated to flowering plants and does not include aisleways or “dead space” along the front or rear of the grow room. By refining genetics, protocols, and people, a cultivation business should anticipate doubling its yields by the third year of business.
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