There are many areas in Canada and around the world that have considerable potential to become the craft cannabis regions of the future.
The Okanagan Valley now…

Originally published in Lift News.
There are many areas in Canada and around the world that have considerable potential to become the craft cannabis regions of the future.

The Okanagan Valley now supports a multi-billion dollar wine industry that was started by one lone farmer less than twenty years ago. And Prince Edward County is even younger, but still growing at an alarming rate with award-winning vintages. Micro-breweries are also enjoying incredible popularity and surpassing the growth of Big Beer.

Micro-groweries already exist in Northern California, usually in the form of collectives, and NorCal sungrown cannabis is considered some of the finest in the world. There is a good chance cannabis will become the next tourist attraction in Canada whether or not politicians and policy makers will admit it. If this is the case, micro-growery tourism signs could start appearing on our provincial highways. Imagine.

However, winery and micro-brewery models are not an accurate comparison with respect to the cultivation of cannabis when comparing the start up costs. It is worthwhile to examine what the more accurate costs might be in anticipation of the future craft cannabis farming industry.

For the purpose of this article we will compare and contrast the micro-beer costs to the micro-grow costs. Micro-breweries are not really craft. Very few of them grow the hops which make the beer, although there are some exceptions. Growing a plant is a far cry from distilling beer, especially if it is sungrown.

A more accurate comparison in costing craft cannabis would be to compare it to the costs of starting up a small farm, or most accurately, the costs of growing the hops that make the beer, not the beer itself, which is a value-added product. Value-added products typically incur the highest production costs and also the highest profits in any commodity. It is the farming of the hops we should be focused on.

Cannabis is a plant, most often compared to a tomato in how it grows and what is required in terms of sunlight, water and nutrients. Since there are very few small craft farms exclusive to tomatoes, the following estimates are taken from a variety of agricultural models including hops. So how much does it cost to start up a small hops farm?

OVERVIEW:

The cost of the growing one hops plant is estimated at fifteen dollars per plant. In comparison a tomato plant equals approximately 5.52 lb per plant per season.

“For those seeking a more lucrative and significantly higher risk and more costly venture, an independent 10 or 20-acre farm selling pellets directly to brewers may prove to be a more appealing scenario. Although the start-up capital costs are high ($250,000 to $550,000) for growing and selling pellitized hops directly to breweries, the years to profit are relatively low (3 years for 5, 10, and 20 acre farms) and the projected net incomes range from $46,000 per year for 5 acres after year 10 and $198,000 per year for a 20 acre farm after year 10.”

LAND:

Depending on where you purchase land and of course the size of a small craft micro-growery, the land will be your biggest investment. Ideally craft farmers will position themselves according to agreeable climates, proximity to markets and a hospitable and supportive infrastructure.

The wine regions of BC and Ontario support and promote all of their wineries to the benefit of surrounding communities. They have created an excellent template for future craft cannabis. Some of these regions already exist in Canada and it will be interesting to see which regions support the cannabis farming communities of the future. Farmland is both most expensive and least expensive in British Columbia.

Tantalus Labs under construction

Tantalus Labs’ cannabis greenhouse under construction outside Maple Ridge BC

GREENHOUSES:

If greenhouses are a part of the plan, expect to spend as little as or as much as you want. On the low end greenhouses are a dime a dozen if they are re-purposed. On the high end, technological advances have given us the ability for much more controlled environments and with that potentially higher yields. A top of the line, brand new greenhouse runs around 20K.

POWER:

A solar/sungrown/greenhouse cannabis farm will require very little power as opposed to indoor cultivation.

WATER:

Cannabis is a thirsty plant. A one pound plant will require one pound of water per day.

Outdoor farming in good weather will provide rain, which helps to lower costs, but any craft farmer will have to be prepared to supplement water if needed.

HARVEST/CURE:

Depending on your curing methods and what type of infrastructure you may need, including such variables as indoor space, heating costs and labour, your highest expense will be the labour costs. The licensed medical producers are currently paying trimmers approximately $12.50 per hour. The unlicensed market pays trimmers more and the rates run the gamut from about $20-$50 depending on which area of Canada you are in. More creative methods of payment are barter and by the pound.

Cannabis Bud

PACKAGING:

Packaging will also incur as little or as much costs as you choose and your market dictates. A box of GLAD bags costs less than $5, but a glass container with etching and labels is significantly more.

MARKETING:

Craft beer sales have doubled in the past five years and are currently at $20 Billion in the United States. They are expected to reach $39 billion by 2019. This is without question due to marketing and investment in consumer education. The bottom line is: be prepared to invest time, energy and money in marketing, it will be critical to success.

DISTRIBUTION/TRANSPORTATION:

Once again, your transportation costs will be a variable depending on your market and what the adult use regulations will allow. In the craft beer industry, transportation costs are significant. The licensed medical cannabis producers in Canada are currently only allowed to distribute via the mail, so depending on the weight of the package this cost is also significant. If your consumer base is coming to you, your transportation costs are nil.

The high costs of the value-added products typically come from the brewing equipment required to make the beer and the buildings which house these expensive pieces. You could apply these costs to cannabis extractions, but unless you are making bulk the costs are significantly lower. Edibles are capturing the largest part of the cannabis market in Colorado at this time. Is this the future of cannabis in Canada? It is hard to say.

Vancouver Island has a thriving craft beer industry and in recent years has had similar success in distilled alcohol. Local farmers markets have even allowed these small producers to set up and distribute, which would be unheard of in most other jurisdictions.

Local private alcohol distributors carry more locally crafted beers, wines and distillations than any other brands. It would be worth exploring if this is being propelled by consumer demand, good marketing, hospitable policy or shop owners steering the market based on their own ethics and vision for what serves their community best.

I suspect it is a combination of all these things, which leads us to our next conversation. How will the cannabis community, the farmers, consumers, medicine-makers, shop-keepers and marketing gurus help each other in order to support what they all have dreamt of and are now on the cusp of…..freedom and shared success in creating a positive and ethical industry in the true spirit of this plant.

http://www.agribusiness-mgmt.wsu.edu/agbusresearch%5Cdocs%5Cwine_grapes%5Ceb1996_05.pdf

http://www.persephonebrewing.com/wp-content/uploads/2015/07/TR1FeasibilityStudy.pdf

Featured image via wikipedia