What advice does Master Grower Shlomo Booklin have for cannabis businesses looking to grow?
There are many nuances that come along with commercial cannabis cultivation, but it is also not unlike other agricultural commodities. So what are some of the tips to growing your cannabis business that your cannabis consultant may not tell you?
Insight 1: Top Shelf vs Regs
GrowerIQ (GIQ): Comparing types of grows, is there a financial advantage to cultivating a larger volume of regular to lower quality cannabis versus cultivating top-shelf cannabis (quality vs quantity)?
Shlomo Booklin (SB): There is (in Canada) the recreational market and the medicinal market, both need to follow Health Canada regulation in terms of quality and other regulation. So there is not really a “lower quality.”
The market gets more and more competitive and experiences price wars, and there are always varieties that will sell better and others. However, not much has changed since Adam Smith and the rule of the market, it has always been demand and supply.
There is of course the “economy of scale,” and the production cost per unit is lower per unit if you produce lots of units. However, if the market is not really in demand for it or you quality is not meeting the standards, your losses are far greater. I do work with a good and big producer; he produces about 1,000 kg per week! It is really good quality! But he can not sell it for lack of demands, his cost, (including 300 employees) are very high.
Insight 2: Planning and Efficiency Increase Yields
GIQ: What are some things that growers can do to increase yields (other than growing high yielding cannabis strains) to improve their cannabis business?
SB: Good planning and efficiency are key. A modern agriculture production facility should operate like an airport. Once a plane lands, a trained team knows how to take off the luggage, another team refueling the plain, a third team is cleaning, and another team on the other side of the airport dealing with passengers that will board the plane. Within an hour or so, the plane can take off to another destination. The teams know that at 11:45 there is a K.L.M flight, at 11:48 there is Air Canada, at 11:50 there is Air France, and so on.
If a grower has a team for mother room and propagation, a growing team, a harvest team, and post harvest team, the production facility can work like that. We know when room 1 needs to be planted, when room 2 needs to be harvested, when defoliating is needed in room 3, when pruning is planned in room 4, and so on. Similar efficiency can be achieved.
Insight 3: Reduce Costs by Reducing Waste
GIQ: Keeping cultivation costs low is always ideal for a cannabis business, where are some places that growers can increase savings and reduce waste? What are some things that growers should not try to cut costs on?
SB: Of course making quality standards a bigger part of the production will help growers to move to a positive cash flow. Many growers (especially in Canada) have to throw away about 15% or more of their cannabis crops if they do not meet quality standards for production.
This is mostly due to high humidity which in turn causes mold. In my opinion, it’s also to do with the way they dry the product, many growers also choose to irradiate and pass most of the product under gamma radiation. That process kills all living bacteria in the buds, however, it also destroys the terpenes and in most European countries it’s not allowed.
About 55% of the cost of the operation is labor, having good planning and efficient labor will reduce the costs.
Lots of growers go “overkill” with fertilizers, growers should know what the plants need in terms of fertilizer and give it to the plants. If you give the plant excess amounts of fertilizer it will not make the plants grow faster. It will more likely slow growth and waste nutrients.
CO2 enrichment, is another area where I see waste. Growers should know and understand plant biology, the plants do not use CO2 at night, so why pump in CO2 at night when the plants do not use it?
Good growers have 4-5 tools at their disposal, temperature, light, humidity, water/fertilizer, and CO2. A good gower should know how best to use these tools.
Our job as growers is to “mimic” nature and give the plants the best condition in order for the plants to achieve their full potential. Knowing that “natural” condition is an integral part of being a good grower, if you don’t know the natural habitat of the plant, how can you “mimic” it?
Insight 4: Planning vs Cannabis Trends
GIQ: What are some of the highest yielding/best cannabis varieties for cannabis businesses to use?
SB: As said before, there is more to success than varieties and yield. One of the easier varieties to grow is Nordel, that variety is almost not affected by Powdery Mildew (one of the most common fungi in cannabis cultivation). However, this variety is not much in use as it has relatively lower THC and market trends are more towards the higher THC content.
Growers should also be aware of market trends and be fast enough to react to the changing market trends. In most cases, that can be the hardest part. It can take 6-8 months from the time a grower decides on varieties that they would like to grow until that product can get to the market. Taking into account the time it takes to establish mother plants, cutting, propagation and growing, harvesting, etc., how can a grower “know” which varieties will be popular in 6-8 months?
So apart from all the challenges related to the cultivation, the marketing and sales is as important. For that reason, I do work mostly with medicinal cannabis. The varieties are much more stable, some of them have studies and or clinical trials that can attest to the effectiveness and or dosage of specific variety to a specific medical condition.
Studies done in Israel are mostly focused on that aspect of medical cannabis. Growers are encouraged to give some of the cannabis they produce and “donate” it to hospitals and old age homes, and in return they get “validation” on dosing and effectiveness. However, there are many varieties with higher yield, yes.
Insight 5: Think Internationally and Don’t Forget Sales and Marketing
GIQ: Are there any important considerations that you see commonly left out of a cannabis business plan?
SB: Sales is something that I see again and again. No one really gives enough attention to that crucial element, which I don’t know why…
We talk about massive investment, long term planning, and somehow people think the production is the “end goal,” well it’s not! Selling your product and having a positive cash flow, like any other business is the main goal.
Canada happened to be the first G7 country that allows for medical cannabis and later also allowed recreational. However, Canada, by far, is not the ideal place to grow Cannabis. Similarly, we also don’t grow bananas nor mango here. 7 months of the year is winter, cost of labor is among the highest.
As said above, if 55% of the production cost is on labor, and on top of it security concerns and weather issues, clearly Canada is not an ideal place to grow. International trade agreements and overcoming restrictive environments in relation to moving “control substances” will change the landscape of where it will be best to grow Cannabis, and Canada, despite the market size will not be forever the “hub.” Colombia has a good chance to fill that spot.
GIQ: Is there anything that makes growing cannabis and cannabis business in Canada unique from cultivation in other locations (with regard to cultivation methods and cultivation facilities)?
SB: Regulation in the beginning of the licensing in Canada, and the fact that many growers came from the “underground” or illegal market, made the first and second generation of [licensing] applications to move into “indoor” production. As the regulations loosen up, the third generation of [licensing] applications have moved into greenhouse which is much more economical.
There is also some lack of understanding that like many others crops, cannabis is an agricultural product and if one can grow tomatoes in a greenhouse why not cannabis?
It’s still not to say that Canada is the best place to grow on a commercial scale. In my opinion, Colombia is the best place – whether the local government there will be smart in doing so, is still to be seen.
Insight 6: Brace Yourself for Competition
GIQ: Why is/isn’t it a good time right now to start a cannabis business? Is there a particular type of cannabis business that is more in demand (cultivator, processor/extractor, distribution, retail, etc.)?
SB: As said earlier, the rush into production created an oversupply, and many growers are downsizing their production facilities. As said, Israel is leading the front in research for finding varieties that are symptoms related. As more research is done and more cannabinoids have discovered (CBN, CBG), and new delivery/dosing methods are developing, more and more aspects and uses of cannabis will emerge, and that will be at the forefront of the industry.
It took 15 years after the “prohibitions” of alcohol for mainstream companies to fill the demand… Each country has few beers, and few of the mega-companies have international presence (Corona, Heineken, Carlsberg to name a few). In the first few years [of cannabis legalization], endless companies have tried to enter the market, today there are few left.
Insight 7: Future Trends in Cannabis
GIQ: Where do you think cannabis businesses will be three to five years into the future?
SB: I think the recreational market will be more and more about the experience that a variety gives the user. That is people will pay more attention to how one feels with any of the varieties, which will be the norm, as opposed to “just getting stoned.”
On the medicinal front, as said earlier, more and more clinical trials will be able to “pinpoint” the exact variety and the exact dosing for specific conditions. We also see that happening now.
As I said earlier about the “baby boomers,” from a market that was 90%+ dry flower we are now around 60% dry flowers and 30%+ using cannabis oil. It is a prediction indicating that within 5 years the market will be around 70% oil and 20% dry flower, even more so in Europe.
Patches and sublingual drops will be more and more dominant. Accessories for dosing also seem to be the next “big thing.”
Lot of people predict that most of Europe will follow the footsteps of Canada and shortly after accepting medical cannabis, the demand for recreational cannabis will force politicians to change the regulation.
I don’t think so, however. In tourist destinations like Greece, Portugal and some parts of Spain (Barcelona, Ibiza etc.) the authorities will feel it useless to arrest or charge every second person with a “joint.”
GIQ: How has the cannabis business changed in the last three to five years?
SB: As cannabis became more and more recreational, varieties with high THC appear more popular, the higher the better. Then after Charlotte Figi and the discovery of the value of CBD, more and more varieties with CBD appeared in the market and a combination of THC/CBD started to be in high demand. Now we are looking at CBN and CBG as the next “stars.”
Insight 8: Staffing and Consultants
GIQ: Do you have any advice for a new cannabis business that is considering working with a consultant for cultivation or regulatory purposes?
SB: Sure, First, identify the market! And EU-GMP! It seems that most of the countries (mostly in Europe) have few common elements.
Looking at the demographic of Cannabis today, a few facts pop to my eye.
60% and more of consumers are at the group age of 55 to 60+ years old, we can give them the name of the “baby boomers generation.” Everyone born between 1950 to 1960, European as well as US and Canada, have very high segment of the population in this age group (another reason why COVID-19 was so deadly in these countries). This demographic is not really into getting “stoned,” but rather they have some pain in the joints, in the bones, in the back etc., or even more severe chronic symptoms, and they need something that will alleviate their suffering.
They know that cannabis is not “the devil’s work” and they have been at “Woodstock” if not physically, then mentally, and they are more cynical in their view of the pharmaceutical industry. So they are open to try something less harmful, as said 60% and more of the cannabis consumers are within that age group.
“Women’s health” is another big market, from lubricants to menstrual pain, for similar reasons. So again, not necessarily cultivation related, but rather developing the product, having clinical trials to back the findings in a more mainstream validation, while complying with quality standards.
GIQ: At what point in starting a cannabis business should a company hire a Master Grower? At what point should they hire a Quality Manager?
SB: Similar to the above, the QA is actually mandatory in most applications in cannabis cultivation (in Canada). In respect to the “master grower,” personally I don’t understand that “respectful title.” “Head grower” is good enough… Nevertheless, someone with a horticultural background and basic understanding of commercial growing, and the ability to follow strict regulations can fill up that position.
I have worked in greenhouses where we produce millions and millions of plants without a “master grower.” Knowing your market, and having the EU-GMP mindset as part of your production will lead you to choose the right person to fill up these positions.
On a personal note, I met countless “master growers” that grew cannabis all their life. But they are often “too stubborn” to open up to other methods of growing, and complying with regulation is (respectfully) just “not their style”… However, if you grow in a certain manner for 20 years, it’s hard to change your old habit. I used to say the cannabis market is a wedding between “Silicon Valley” to “Hell’s Angels.”
Entrepreneurs from “Silicon Valley” joined the “illegal” growers and created mega-companies with money from others… No wonder many companies end up with “fiasco” and mismanagement and borderline “fraud.”
Final Thoughts on Cannabis Business Insights
It is not easy to build a successful cannabis business in the highly competitive cannabis market, especially amid a less than ideal supply and demand environment. With these insights from Shlomo Booklin, we hope that you can take away some tips to help your own cannabis business. It is important to bear in mind that cannabis is an agricultural commodity, and workers should have professional backgrounds that can support your need to comply with regulation and function like an agricultural business that is producing a medicinal plant.
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