In the usa, cultivation licenses tend to be considered probably the most valuable in the highly competitive application processes that most states use to find out who is permitted 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. As an example, Pennsylvania, with nearly 13 million people, only granted 13 licenses; Florida, with a population over 20 million, granted 7; while Ohio, with over 11 million people, granted 12; and New York City, 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 fortunate 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 a dime in revenue. Similarly, a pre-revenue New York City license sold for $26 million.
Indeed, in states with Get More Information at cannabiscultivationconsulting, those businesses that hold them can easily see large returns on their investments within the near term. With artificially limited competition as a result of restricted license classes, cultivators in numerous states are able to control pricing and sell their product in large volume. Most of these cultivators grow their product in state-of-the-art indoor warehouses with clean-room environments that resemble pharmaceutical production facilities greater than traditional commercial agriculture.
The current green rush has brought along with it an intense focus on large-scale cannabis cultivation. Across the United States and round the globe, we routinely hear stories of companies building larger and larger cannabis farms. In Arizona, Colorado, California, and Oregon, cannabis is being cultivated in greenhouses more than 250,000 sq. ft. that are capable of yielding greater than 50,000 pounds of flower. While large-scale Canadian producers are building greenhouses inside the millions of sq ft and building similar-sized facilities in Europe, Australia, and elsewhere.
But is it trend sustainable? Or are these businesses setting themselves up for very long-term failure? As i have said within my previous column Are Canada’s Cannabis Companies Overextended?, were already visiting a trend towards large-scale greenhouse and outdoor production, which is driving prices down in states that do not have strict limits on the variety of licenses they grant. For instance, the average wholesale price of cannabis in Colorado has dropped from nearly $3,500 per pound at the outset of legalization in 2013 to roughly $1,012 a pound on April 1, according to the Colorado Department of Revenue. In Oregon, where the state ramped up licensing after early product shortages, wholesale marijuana trim (after harvest, the cannabis is trimmed of its leaves; those leftover leaves are referred to as the trim and can be used to produce cannabis products) is now selling for only $50 per pound, which can be reportedly driving some cultivators in the state away from business.
This trend will simply continue when the federal government`s 80-year test out cannabis prohibition finally comes to 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 the federally illegal product. However when prohibition eventually ends, then interstate commerce will open and businesses will be permitted to import their cannabis from any state in the united states. When this occurs, we are able to expect aprknj large-scale outdoor and greenhouse production will dominate the marketplace as cannabis commodifies. Many of the same environmental issues that make northern California ideal for producing grapes for wine will even make it ideal for large-scale commercial cannabis production. The greatest greenhouse complex in the nation, estimated at approximately 300 acres (approximately 13 million sq. ft.) of greenhouse space, is located in Wilcox, Ariz., since the desert conditions make it ideal to manage humidity in a greenhouse setting, something that adds a massive additional cost to greenhouse operators on the East Coast. The same conditions will pertain to cannabis.