Quality Over Quantity

Some MJ cultivators are opting for ‘micro’ grow rooms and smaller operations to produce premium cannabis

by R.W. Navis

Many expansion-minded companies and entrepreneurs with dollar signs in their eyes believe that bigger is better when it comes to cannabis cultivation, hence the emergence in recent years of large grows focused on producing as much marijuana as possible.

But a number of growers are choosing another path – one that emphasizes quality over quantity. Some are opting to split up large cultivation sites into smaller “micro” grow rooms, while others are simply opting for just a few thousand square feet of space so they can focus on producing premium cannabis.

The California-based medical cannabis cultivator Canndescent is one company that has gone in this direction. Canndescent currently has a 9,600-square-foot facility that is broken up into smaller grows. The company will continue to employ this philosophy as it expands to 115,000 square feet of space.

What led CEO Adrian Sedlin to make this choice? He felt it was the best option for carving out a niche in the cannabis market.

The predominance of outdoor grows in California leads to seasonal shortages that can last for months. Even the same strains offer very different quality.

“Not only can cannabis smokers rarely find good product, but also they can rarely reacquire it after having had a successful experience,” Sedlin said.

Given these issues, Sedlin decided to chart his course in the marijuana industry by focusing on micro grow rooms, which he believes are the key to producing a consistent, high-quality brand of cannabis.

Travis Howard, founder of the Green Dream Cannabis in Boulder, Colorado, came to the same conclusion several years ago as well. His boutique, vertically integrated operation now includes 5,000-square-foot, 3,000-square-foot and 2,000-square foot grows.

Green Dream considers itself a “craft grow,” similar to the craft beer movement sweeping the nation. Howard said buying his company’s marijuana is like “going to a very fresh seafood restaurant where they tell you when and where the fish was caught.”

Howard and others believe that the culture of cannabis is ideal for micro grows, with marketing themes similar to those used for craft beer and farm-to-table meals. Connoisseur-grade cannabis is an idea that could gain increasing traction with consumers who value high-quality marijuana.

Increasing Capacity & Productivity

There are good business reasons behind a decision to stay small or divvy up a larger grow into micro rooms.

Smaller grows can offer greater capacity utilization and yields. They do this by “perpetual growing,” which can increase the yield-per-square foot by up to 50%.

Looking at the process as an assembly line, the flowering phase lasts for more than half the entire cycle, or between 42-65 days out of 90. In many large room grows, this production step requires a great deal more capacity.

Using smaller perpetual grows (660-1,200 square feet), Canndescent facilities increase the yield per square foot to six crops a year with a 60-day grow cycle, vs. four crops a year with a 90-day cycle in a large room operation.

This just-in-time management approach to cannabis cultivation results in smaller product runs with increased frequency. The benefits include product freshness and decreased inventories. A smaller, more specialized workforce can be used with smaller batches coming online continually. A larger site with bigger quantities, on the other hand, can lead to workforce inefficiencies and much higher employment costs.

More Strains, Happy Plants

Both Sedlin and Howard say that demand is strong for high-end strains, and both patients and recreational consumers are clamoring for more options on this end. Micro rooms allow for cultivation of many strains and attention can be paid to the unique cultivation processes and methods required for each strain. Small rooms also allow the grower to customize temperature, humidity, CO2, air circulation, nutrients, and lighting to fit the needs of each strain. This pampering creates happy plants that produce increased resins, higher gross margins, and higher yields.

Large single-strain grows may not fit a market where the customer builds resistance to individual strains and needs continual diversity.

“Climate-controlled micro grows provide the continuous and consistent product quality, supply and variety necessary for us to maximize market share and curate the cannabis journey each user requires,” Sedlin said.

Risk Management & the Math

Smaller grows also can help mitigate risk. Even in clean rooms, a spider mite, fungus or accident can destroy an entire crop – which can push an entire company over the edge, leaving a large grow room idle for 90 days.

To be sure, small rooms lose a bit of growing capacity given that walls take up more space on a relative basis vs. larger grow rooms.

But increased yields and higher product prices can more than offset this.

Canndescent calculates gross margins on high-end product to be $2,150 a pound vs. $1,580 a pound on the mid-grade cannabis most often produced in large grow rooms.

Larger Grows Weigh In

Of course, small sites and micro grow rooms aren’t for every company, and many prefer larger rooms – which can offer economies of scale and help a business capture more overall market share.

MJardin, an industry leader in cultivating and managing grows that produce premium marijuana, is one of them. The company has 40 management contracts covering marijuana cultivation sites ranging from 5,000 to 200,000 square feet in Colorado, Nevada, Massachusetts, Arizona, Vermont, Hawaii, Florida, Maryland and Missouri. Co-founder John Fritzel brings plenty of expertise to the business, as he owns 14 dispensaries and 11 grow facilities in Colorado.

Fritzel prefers large grow rooms. His large-scale grows also run on a perpetual cycle, and with their size they always have ample amounts of product coming online. Their water and feeding systems are automated, minimizing labor costs.

“Our operations average 45-50 grams per square foot with six harvests per year, and one harvest hit a record this year with 71 grams per square foot,” he said.

Corey Barnette – owner and operator of District Growers, a registered medical marijuana cultivator in Washington DC – is also a proponent of large grow rooms, or “bloom rooms” as he calls them.

He feels that the economies of scale outweigh the benefits of small rooms.

“All of my lighting works together like the sun; smaller rooms lose this efficiency,” Barnette said.

Barnette did concede that smaller rooms could be more beneficial for pest control but says that an experienced management team can see changes in the plants and employ pest control treatment well in advance of crop failure.

The choice between micro and large room grows really comes down to where you want to be in the market. If you plan on serving the high-end/boutique market, micro grows may well be your best choice. Companies looking to produce for the extraction market or those with very experienced management might want to opt for large grows.

An honest assessment of your company’s ability to manage the grow environment and pests is a must.