In america, cultivation licenses are often considered probably the most valuable in the highly competitive application processes that most states use to determine who is allowed to cultivate and dispense within their states. This value is partly produced from the fact many populous states initially only grant a restricted number of cultivation licenses. For 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, 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 before the company had seen any money in revenue. Similarly, a pre-revenue New York license sold for $26 million.
Indeed, in states with navigate to this website, those companies that hold them can easily see large returns on their own investments within the near term. With artificially limited competition as a result of restricted license classes, cultivators in numerous states can control pricing and then sell their product in large volume. Many of these cultivators boost their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities more than traditional commercial agriculture.
The present green rush has brought along with it a powerful focus on large-scale cannabis cultivation. Across the United States and around 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 more than 250,000 sq. ft. that are designed for yielding more than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses within the an incredible number of sq ft and building similar-sized facilities in Europe, Australia, and elsewhere.
But is this trend sustainable? Or are these companies setting themselves up for very long-term failure? As stated inside my previous column Are Canada’s Cannabis Companies Overextended?, were already going to a trend towards large-scale greenhouse and outdoor production, that is driving prices down in states that do not have strict limits on the number of licenses they grant. For example, the average wholesale cost of cannabis in Colorado has dropped from nearly $3,500 per pound at the start 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 their leaves; those leftover leaves are referred to as the trim and can be used to produce cannabis products) has become selling for as low as $50 per pound, which can be reportedly driving some cultivators inside the state out of business.
This trend is only going to continue if the federal government`s 80-year try out cannabis prohibition finally concerns an end. Today the cannabis industry is defined by individual state markets, where no product can cross state lines because of laws prohibiting interstate commerce of a federally illegal product. However when prohibition eventually ends, then interstate commerce will open and businesses will likely be permitted to import their cannabis from the state in the united states. When this happens, we could expect aprknj large-scale outdoor and greenhouse production will dominate the market as cannabis commodifies. Many of the same environmental conditions that make northern California perfect for the creation of grapes for wine will also allow it to be ideal for large-scale commercial cannabis production. The largest greenhouse complex in the united states, estimated at approximately 300 acres (approximately 13 million sq. ft.) of greenhouse space, is found in Wilcox, Ariz., since the desert conditions allow it to be ideal to regulate humidity in a greenhouse setting, something which adds an enormous additional cost to greenhouse operators on the East Coast. The same conditions will apply to cannabis.