Growing and manufacturing cannabis products isn’t cheap. According to the 2017 Marijuana Business Factbook, the average startup costs for wholesale cultivation of cannabis is $42/square foot. But depending if you’re growing indoors, outdoors, or a combination of both, that price per square foot can really vary. And that’s just the cost of the physical warehouse and growing space.
There are so many other factors and costs to consider for your wholesale cannabis business — it adds up quickly. An inefficient manufacturing process costs you time in the short term, but most importantly, it costs you profits in the long run. Here are five ways cannabis manufacturers can reduce costs and run a smarter business.
1. Invest in the right technology and equipment from the beginning
While most businesses in any industry try to keep startup costs as low as possible, that isn’t necessarily the best way to proceed when opening a cultivation business. Investing in the right technology and processes designed for the particular products you produce may be a high upfront cost investment, but it will save you money in the long term. Something like an advanced irrigation system may cost your business tens-of-thousands of dollars in one fell swoop. But if it saves your team hours a day of watering, that technology will pay for itself quickly in saved labor costs. This also applies for cannabis management software technology. This software can track the inputs and outputs of each of your products and your entire inventory while ensuring you’re remaining compliant from seed to sale — a legal cost any manufacturer wants to avoid at all costs. Ultimately, this software will help you grow your business from the start.
2. Optimize your facility’s design
Henry Ford changed manufacturing processes forever with the invention of the assembly line. For Ford, the mission was ultimate labor efficiency. Think like Ford and take a look at your manufacturing processes and spaces. Is the facility designed for ultimate efficiency? Take a look at the layout of your different rooms and think about each step of the cultivation process and where the product moves from one step to the next. Should the trim room be next to the dry room or the cure room? It all depends on your processes, but make sure that your physical layouts match your operating procedures as closely as possible. These small tweaks that save just a little bit of time, every time, really add up and save you tons of money in the long run.
3. Automate, where you can
The cannabis industry is a very hands-on type of industry. But at the same time, if there’s an opportunity to automate some steps of the manufacturing process, it could be in your business’s best interest to do so.
For example, there are new tools that can help automate the harvesting and processing process, like those made by companies like GREENBROZ. While there is debate around the quality of hand trimming vs. machine trimming cannabis, cutting human error out of the equation will save you time. And especially in the age of COVID-19 and the impact social distancing rules can have on manufacturing facilities, automation can keep the factory floor running with fewer people.
Like the harvesting example, think of each of the processes in your facility and how some automation could help you save time and money.
4. If you can choose your own laboratory, choose one you trust
Cannabis regulations in the United States are a constantly moving target. Every state that has legalized recreational and/or medical use of marijuana has their own set of legislative rules around testing cannabis — and those rules can change. Testing is an exact science, but the rules aren’t. Since the legal stakes are high, it’s important choose a laboratory you trust (if you’re able to.) Issues with contamination can cost your business time, lost sales, and loads of money. You want a lab partner that you trust completely.
As you scale your cannabis manufacturing business, costs inevitably grow. By pointing a microscope on your processes, technology, and partnerships, you may discover many opportunities to reduce your costs and build a more profitable cannabis business.