Across the state of California, communities are discussing the importance of legacy cannabis farmers.  According to the Origins Council, a Nor-Cal advocacy group, legacy farmers are those who have cultivated in historical producing regions for at least twenty years.  Humboldt, Trinity, Mendocino, Sonoma, and other counties throughout the state have lots of them. Legacy farmers are of cultural and historical significance as their efforts paved the way for cannabis legalization and normalization.  They have contributed significantly to their respective economic regions and have been outspoken advocates for personal freedom, environmental protection, and creating loving communities.

Given mounting production in both legal and illegal channels, limited retail outlets, increasingly discerning consumers, and a predatory tax structure, legacy farmers are at risk.  And it’s hard to see.  Suicide rates among the cultivation community are rising, people are going out of business and some growers are left with little ability to replace the higher-than-average incomes growing cannabis historically provided.[1]

While many consumers prefer outdoor flower as they believe it’s more environmentally responsible and generally higher in medicinal compounds like terpenes, acquiring dispensary shelf space is challenging for sun-grown farmers.  Most localities across the state ban dispensaries and well-capitalized corporations pay slotting fees for shelf space…a pay-to-play arrangement of sorts. Vertically integrated corporations have their own dispensaries and tend to push proprietary products, while some distributors require large production to onboard farms as clients and ignore the small-lot production batches many farms produce.  Legacy cultivators feel they are being pushed out of the industry they created and are crying afoul – cursing the corporatization of cannabis markets and rapidly declining wholesale prices.

A recent pricing report from New Leaf Data paints an unsettling picture stating that “of all the factors weighing on legacy state outdoor prices, market commoditization, succinctly demonstrated by outdoor growers selling almost exclusively to processors for extraction, is the most inevitable and least reversible.”  While this is certainly not a popular conversation in sun-grown legacy regions, the data is becoming crystal clear.  Currently, outdoor flower accounts for just 12% of sales volume among reported transactions in legal states.  Last year at this time it was 26%, the year before it was 35%.^[2]    

In other words, the market is changing, and quickly.  The outdoor flower that Humboldt’s reputation was built on is rapidly losing market share and that has legacy farmers and communities nervous.  While there is a renewed push to highlight the benefits of sun-grown products and provide them some shelf space, a sun-grown resurgence will play out slowly over time and will benefit only the best operators.  Consumers and retailers are increasingly discerning and not all farms will meet the quality mark.  With a proliferation of climate-controlled greenhouse flower across the state and explosive growth in the high terpene full spectrum extract markets, folks just aren’t as excited about outdoor as they once were.

And begrudgingly, I get it.  The last few seasons have been really smoky and a lot of outdoor product was tainted and caused problems for distribution companies and retailers.  Additionally, cannabis is a plant where environmental exposure is critically important to outcomes.  You can grow the same strain in one set of environmental conditions versus another and have the finished product look entirely different, so much so that you might not recognize it as the same cut.  As we know from other industries, product quality and consistency are key.  If I own a dispensary and want to put a SKU on 1/8-ounce jars of a certain type of flower, I don’t want it to look totally different from run to run or from farm to farm.  

While for some cannabis connoisseurs the variability of cannabis expression is acknowledged, accepted, and revered, for others, it is clearly not.  The simple truth is that indoor flower and greenhouse flower grown with strict environmental controls are far more consistent.  This consistency, for many distributors and retail outlets, is highly desirable.  Additionally, because of climate controls, indoor and greenhouse product is often more visually appealing with a heavier outer trichome layer, less leaf, and a tighter, more podded-out bud structure.  While I make a living managing sun-grown operations and grow large, beautiful buds outside, I don’t find outdoor matches up visually with what one can do in a controlled environment.  Although educated consumers understand that cannabis bag appeal is just one buying criterion, purchasers and retailers are currently emphasizing that over other attributes.

When growing light deprivation flowers outdoor it is harder to keep the flower color on point.  Flowers tend to darken or bronze as they near maturity and not many operations use shade cloth the last two weeks to prevent scorch and terpene loss.  For full-term flowers, I find they often disappoint visually after being dried and processed.  While term buds look gorgeous on the vine, they often dry a bit sterile, at least when compared to indoor or greenhouse products.  The buds look hairy and don’t boast of the same calyx formation as other grow types.  After being trimmed the buds often lack contour and are rounded or oval and just don’t have the same character in most cases.

Additionally, I know some consumers who don’t like sun-grown flower as it gives them an allergic reaction when consumed.  While recent evidence suggests cannabis pollen, and perhaps THC itself can trigger allergic reactions, outdoor flower is fully exposed to the elements.[3]  Just as our cars are dusted with pollen from surrounding vegetation, such is the case for outdoor-grown plants as well. 

Nonetheless, there is still hope for sun-grown farmers.  I personally prefer consuming full-term flower grown in native soil and many others do as well.  Despite scary times, not all is lost for the ganja warriors of Humboldt and beyond.  By aggressively focusing on sales/marketing, quality improvements, production increases, and cost savings, sun-grown farmers can stay in the game and eventually capitalize on better times to come with interstate markets and broad adoption of organic certification for cannabis.

Sales & Marketing

Launching a brand is an expensive endeavor and is out of reach for many family farms.  That said, several well-established brands source products from partner farms.  These brands have already done the leg work in creating an online presence and securing valuable dispensary shelf space.  Some are fans of sun-grown flower and have an ever-expanding footprint that family farms can benefit from.  Co-branding or piggybacking on the success of a reputable brand, getting product into jars or pouches, and ultimately achieving retail shelf space can radically improve your price per pound.  Of course, without an exceptionally high-quality product, this will never happen.  In Humboldt, partnering with brands is often viewed as heresy or as selling out, but for some, it can be a viable path forward.

Quality Improvements

Having lived in Humboldt my whole life and having consumed cannabis for nearly three decades, I’ve seen that flower has largely declined in quality here in the Triangle.  Weed tastes greener and smokes hotter and harsher than it did a couple of decades back.  Bowls don’t ash like they used to and instead, often char out and are largely un-smokable for me.

High-quality or top-shelf commercial flower is visually appealing with a tight, podded-out structure and heavy outer trichome layer.  It tastes like it smells and goes down smooth while delivering the desired effect.  Many “premium” flowers are poorly formed, ugly, hairy, and harsh.  By focusing on genetics, plant structure, pruning, organic or quasi-organic nutrient delivery, sugar content, artful stress, and an active flushing program, your flower can stand out from the rest and get some real momentum in the marketplace.   

Increasing Production

Increasing production is a real possibility for most farms, even those doing quite well.  I’ll never forget several years back when a retired soil scientist told us we could increase production by 20% or more if we got serious about soil structure and biology.  Note the garden he toured was my mentor Mike’s and had two plants that went over 13 pounds.

Whether growing in soil or another medium, focusing on more advanced techniques like crop steering or simply manipulating the size and shape of your plants through topping, pruning, coring, and opening can meaningfully impact your bag weight.  Supplemental feeding – especially through a foliar regime that pushes nutrients through the leaves – is another way to radically boost yields, as are strain selection and quality of starts.

Of course, every grower you talk to is killing it.  Clearly not the case as I still see tons of Instagram posts where farmers are growing lanky Christmas trees instead of more stump-like bushes that really pack on the weight.  Many trellises’ have huge canopy gaps and lots of finished tops aren’t even fist-sized. 

Cost Savings

During the multi-decade cannabis bull market where prices were high, cultivators could be a bit loose with the budget.  They could “overpay” for products and services and many did.  As things have tightened up meaningfully, largely absentee farm owners should get back in the dirt personally as a way to reduce labor costs.  Putting goods and services out for bid is another way to potentially save.  Rather than simply accepting “dope grower” prices for inputs, construction, or consulting services, requesting discounts, purchasing in bulk, or shopping around can lead to significant savings.

National legalization is moving slower than many of us would like.  Biden is not a huge fan of recreational cannabis and there is growing chatter that republicans may make a strong showing in the mid-term elections.  Even with a national marketplace, some states will seek to protect their own producers and limit imports from other places.  Given such, I expect another tough year or several years here on the west coast.  Upping our cultivation game, being proactive concerning sales and marketing, and tightening our belts seem like the best path forward.  The economic vibrancy of our community is depending on us so I wish everyone well.

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[1] Schroyer, John.  (2021, August 16).  Marijuana Farmers at Greater Risk of Taking own Lives Amid Hardships, California Industry Officials Warn.  MJBIZ Daily.  https://mjbizdaily.com/marijuana-farmers-at-greater-risk-of-taking-own-lives-amid-hardships-california-industry-officials-warn/

[2] New Leaf Data.  (2021, December 17). U.S. Cannabis Spot Index.  Cannabis Benchmarks.   https://www.cannabisbenchmarks.com/2021/12/?post_type=reports&report-category=united-states

[3]Scully, Ross.  (2016, July 14)   A Guide to Cannabis Allergies and Symptoms.  Leafly https://www.leafly.com/news/health/a-guide-to-cannabis-allergies-and-symptoms

For years now the California commercial cannabis community has argued that taxes are too high.  With declining pot prices, slackening consumer sales at the retail level, an impending tax hike, and ever-expanding illicit market production things have come to a fever pitch recently.  Industry insiders are lobbying governor Newsom for tax reform and he is listening.  Newsom has publicly stated that he supports reform and his spokeswoman, Erin Mellon recently stated that the “current tax construct is presenting unintended but serious consequences” in reference to the continued strength of the underground market.[1]  

Given higher regulatory costs and a heavy tax burden, legal companies have a hard time competing with illicit market operators not burdened with the same cost structure.  Despite more cannabis tax dollars being directed toward enforcement, the underground or unregulated market continues to thrive.  As mentioned last week, the sheriff’s office estimates approximately 4,000 illegal farms in Humboldt alone.  Across the state, reports are the same.  For example, Southern California has seen a massive influx of illegal operators launching huge scenes in the California desert around areas like Palmdale and others.

With millions of pounds produced, in many cases, with cheap or forced migrant labor, illicit operators are flooding the market and putting downward pressure on prices.  Unfortunately, when given the opportunity to purchase more expensive products through legal channels, or much cheaper ones on the street, many consumers opt for the latter.

Both retailers and cultivators are feeling the pain.  A recent report from California’s Legislative Analyst’s Office notes that on average, retail pot shops pay a tax rate of 27% based on the state excise tax and tax on price markups alone.  Add to that business operating costs, payroll taxes, workers comp, and local taxes it’s clear to see the legal market is facing an uphill battle with respect to competing with the black market where zero taxes are paid.[2]  In fact, it’s estimated that regulated storefront price tags are 50% higher than street prices.

Cultivators face an even more challenging scenario.  Here in Humboldt, cultivators pay from one to three dollars a square foot of cultivation area depending on whether they grow outdoor, mixed-light, or indoor.  In addition, the state charges cultivators approximately $154 per pound and around $46 a pound for trim.  These rates are set to increase nearly 5% on the first of the year as the law ties cultivation tax rates to the rate of inflation.  Given wholesale or bulk flower prices of around $400 currently, taxes for sun-grown or outdoor cannabis farmers are enormously high and make competing with illicit operators nearly impossible.

Many conscious consumers prefer to buy lab-tested, pesticide and pathogen-free products from a permitted dispensing facility and are willing to pay more for them.  Others, however, shop on price and purchase in the underground market even though illicit products are often laden with harmful pesticides and fungicides.  When growing organically keeping plants free from pests and pathogens like mildew can take considerable effort.  Many growers, especially those farming in regions with high nighttime humidity levels, often spray plants once a week with approved pesticides such as oils, insecticidal soaps, or citric acid-based products.  Not only is this expensive, but time-consuming as well.  Those using dangerous chemicals can spray once or twice an entire cycle and be done with it.  Some of those poisons remain in the plant for months and are incredibly bad for your health when combusted.

It gets worse.  The Connecticut Forensic Science Laboratory states that over the past four months, some 39 individuals claiming to have consumed cannabis have experienced differing levels of overdose – the culprit Fentanyl laced flower.  Fentanyl is an incredibly powerful, highly addictive narcotic that’s estimated to be some fifty times stronger than heroin.[3]      So not only is illicitly grown and sold product often tainted with harmful toxins, cannabis is now being laced with deadly and addictive compounds…scary stuff indeed.  While not everyone selling cannabis in the unregulated market poisons their products, generally speaking, stuff off the street is far more likely to be toxic.  Additionally, unregulated grows tend to have far more egregious environmental violations, and many use forced labor, subjecting employees to terrible living conditions and inhumane treatment. 

By reducing tax rates, cultivators and retailers can become more price competitive and can begin to compete more effectively with non-licensed operators.  Prices for consumers can be reduced and, in all likelihood, more operators would enter into the regulated space.  With greater participation in legal channels, the state would have a broader, more sustainable tax base, and receipts would likely meet or exceed those received currently.  Interestingly the Legislative Analysts Office previously mentioned articulates the same argument – that reducing tax rates for legal operators will help curb illicit activity and contribute to a more functional industry.

As someone who cultivates commercially, I obviously have an ax to grind in this matter and would like to see lower taxes and greater participation in the legal marketplace.  That said, I am also sensitive to arguments that we ganja farmers are a bunch of tax-evading lawbreakers.   I remind colleagues that when we originally lobbied the county and the state of California to allow commercial cultivation several years back, many of us stated a desire to support our communities by paying taxes.  In fact, tax revenue for localities and the state was one of the major selling points in legitimizing the industry. When Humboldt County ultimately proposed cultivation tax rates that were two times higher than the $1-3 range landed upon, a host of growers showed up in front of the Board of Supervisors arguing rates were too high.  I feel the cultivation community and the California cannabis industry more broadly suffered a reputational hit as a result.  Some leaders within the county agreed.  The County Treasurer, Mr. Bartholomew called out the cultivation community during that meeting and noted that many had been avoiding taxes for twenty years…it was on camera and gave me a real sense that our industry had a lot of bridges to build and a lot of ground to cover in terms of professionalizing and legitimizing ourselves.

Fast forward a few years to the current time and there are now calls from across the industry for a complete repeal of state cultivation taxes and a few years pause to the fifteen percent excise tax on products.  To be clear, I fully support my colleagues in the area of tax reform and reduction but understand how some community members will roll their eyes when hearing this.  I would remind folks of three simple truths.  First, cannabis is here to stay and will soon be produced and distributed legally around the world.  Despite your personal views, acceptance of cannabis as medicine and as an honorable profession is growing worldwide and the train has already left the station.  Second, without cannabis, the economic prospects for Humboldt look bleak, at least over short and intermediate horizons.  Finally, if legal operators can’t become more competitive, the illicit marketplace will continue to dominate the industry and continue to harm the environment, workers, and consumers alike.

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[1] Blood, Michael.  (2021, December 17).  California Pot Companies Warn of Impending Industry Collapse.  Yahoo News.  https://news.yahoo.com/california-pot-companies-warn-impending-

[2] Petek, Gabriel.  (2019, December).  How High? Adjusting California’s Cannabis Taxes. Legislative Analyst’s Office. 

202704687.htmlhttps://lao.ca.gov/reports/2019/4125/cannabis-taxes-121719.pdf

[3] Miller, Shannon.  (2021, November 22).  CT Lab Confirms Marijuana Laced with Fentanyl is New Public Safety Threat.  NBC Connecticut.  https://www.nbcconnecticut.com/news/local/ct-lab-confirms-marijuana-laced-with-fentanyl-is-a-new-public-safety-threat/2658007/

Cannabis has long been the economic backbone of Humboldt County.  While efforts to quantify exactly how large a contribution cannabis makes to the local economy are challenging, a recent estimate from the Humboldt County Sheriff’s office states that approximately 4,000 illegal pot farms still operate in the county.[1]  Including licensed grows, the total is around 5,000 farms. Assuming just 500 pounds of production each and a price of $500 per pound, these farms would generate approximately $1.25 billion a year.  In addition, Humboldt has a large number of commercial-sized indoor grows not included in these numbers.  Regardless of the exact figures, cannabis plays a huge role in the local economy and has since the demise of the timber and fishing industries.  

For those who don’t know, the price of outdoor or sun-grown cannabis collapsed this year, down over fifty percent from a year ago.  Humboldt County, like the state of California, produces a lot of outdoor weed and because 70% of localities throughout the state have banned commercial cannabis activity, there are relatively few dispensaries to sell products.  With excess supply and limited opportunities for distribution, prices are falling fast.  Add to that the fact that Oregon and Oklahoma are now moving enormous amounts of cannabis on the black market, Humboldt pot farmers in both legal and underground markets are getting squeezed. 

To the dismay of many in our local industry, we are finding there simply isn’t much demand in the marketplace for the outdoor cannabis we produce.  Indoor and mixed-light flower which tend to have a tighter bud structure and tend to be more visually appealing are predominantly filling dispensary shelves and commanding better prices.  Admittedly, stating this is near heretic here in the county given our historic reputation of producing “premium” organic sun-grown product.  Regardless of our beliefs or our historic dominance in the market, transaction data shows the same – that Humboldt ganja is no longer what it once was. 

Cannabis Benchmarks aggregates reported sales data from states with medical and adult-use markets and produces pricing and transaction data on a weekly basis.  The most recent report dated the tenth of December shows that outdoor flower accounts for just 8% of legal transactions, versus 65% for indoor-grown product.  In terms of volume of overall product sold, outdoor accounts for 13% and indoor, 53%.[2]   Mixed-light or greenhouse flower makes up the balance.  In other words, the numbers (not our opinions) show that outdoor-grown cannabis is seeming to lose its luster, with prices and market action reflecting this new reality.  While many believe that sun-grown cannabis is better for the environment and for your body as it houses a greater percentage of medicinal compounds like terpenes, the market simply isn’t on board at the current juncture, and resultingly, our local economy is at risk.    

I know many growers throughout Humboldt and neighboring counties who can’t move their product in either the legal or underground market right now.  Desperation is growing among the farming community, and sadly, it’s been noted that suicides are on the rise among growers.[3]  Some of us have already lost friends and it’s terribly sad to see.  

Given the significant price collapse we saw in wholesale or bulk prices for outdoor flower this year, the Humboldt economy is facing significant risk.  According to the St. Louis Federal Reserve Bank, countywide GDP or economic output slacked off in 2020 (presumably due to COVID).  One might expect this year to show another decline in formal economic activity given the dynamics we are discussing.[4]  While much of the revenue derived from cannabis production goes unreported as a majority of farms still operate in the unregulated market, consumption of goods and services will undoubtedly take a hit as growers struggle to move product or sell at very low prices and have less to spend.

As cannabis prices fall and sales stagnate, economic activity in the county will be negatively impacted.  Inefficient farms and those with moderate product quality are already going out of business, trimmers are being offered far less or being stiffed on their pay altogether, laborers are losing work, and cannabis brokers are getting squeezed and fading away.  Retailers and others providing services to these groups will likely be hit hard in the coming months.  Unfortunately, we’re probably in the early innings of what promises to be a tremendously uncomfortable and disruptive adjustment to the local economy. 

Remember that economic activity is primarily a function of two things, how much people have to spend and, importantly, how they feel about their future economic prospects.  With greater economic uncertainty, folks generally spend less.  Without another pony show, our county may be in very deep trouble.  Luxury goods and service providers will likely be the first to feel the pain, with other industries groups following as overall economic activity declines and people tighten their belts, spending less on things like clothing, autos, and recreation.  

You may recall that pot prices collapsed similarly in 2017.  During that time, some local businesses like retailers reported 25-30% declines in sales and there was real fear in some circles that Humboldt faced an economic collapse.  It never materialized as corporate interests, out of towners, and successful local growers built out cannabis infrastructure and sunk large sums into engineering, compliance, construction, and legal services as part of the regulatory permitting process.  Humboldt and other areas began to aggressively abate illegal operations and statewide, demand for legal cannabis increased rapidly with the onset of adult-use or recreational sales in 2018.  New dispensaries opened and many manufacturers came online who needed cannabis to create value-added products like extracts, edibles, tinctures, and topicals such as lotions and salves.  Pot prices, after cratering just a year or so prior, then increased significantly in 2019 and 2020.  Upward price momentum, coupled with the infrastructure buildout and permit-related spending just mentioned spurred Humboldt’s economic growth once again and helped us avoid economic disaster.

I’m not sure we get such a quick rebound this time around.  While things like cannabis tourism, and the potential for national and international cannabis markets bode well for the county’s economic future, neither will happen overnight.  Instead, industry insiders believe it could be years.  Mark Lovelace, our former supervisor who now works as a cannabis consultant to municipalities and counties recently noted on The Humboldt Chronicles that it could be five years or so for a fully functioning national marketplace to take hold.  Others think even longer.  By then, many Humboldt County farmers will be out of business.  In fact, within the cannabis industry, folks are now estimating that fifty percent or more of small operators will fail in California this year and the current environment has been labeled an extinction event.

The ramifications of widespread farm failure will be serious for Humboldt.  Right now, we boast of moderate unemployment rates and record home values.  With the collapse of the cannabis industry, we may all feel some economic pain given the interconnectedness.   Mountain properties are currently experiencing huge declines in value and residential home values could eventually follow suit, as they too collapsed during the last recession in 2007-2008.  A local recession (or depression) will hamper consumption and spending and force many to reevaluate their lifestyle.  Depending on the duration of the downturn and developments regarding national and international cannabis marketplaces, the county may have to redefine its economic paradigm once again.  Only time will tell.

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[1] Cortez, Mario.  (2021, June 29).  Illicit Cannabis Grows Remain in the Thousands Humboldt County Sheriffs Office Says.  The Times Standard.  https://www.times-standard.com/2021/06/29/illicit-cannabis-grows-remain-in-the-thousands-humboldt-county-sheriffs-office-says/

[2] New Life Data Services.  (2021, December 10).  U.S. Cannabis Spot Index.  Cannabis Benchmarks. https://www.cannabisbenchmarks.com/report-category/united-states/?utm_source=Weekly+Report+Subscribers&utm_campaign=e7cc08c9fc-Wkly+Premium+Report+for+May+4+2018+CUST_COPY_01&utm_medium=email&utm_term=0_fc4ce88a6f-e7cc08c9fc-185153329&ct=t(Y_COPY_01)

[3] Schroyer, John.  (2021, August 16).  Marijuana Farmers at Greater Risk of Taking Own Lives Amid Hardships, California Industry Officials Warn.  Marijuana Business Daily.  https://mjbizdaily.com/marijuana-farmers-at-greater-risk-of-taking-own-lives-amid-hardships-california-industry-officials-warn/?cn-reloaded=1

[4] FRED.  (2021, December 8). Real Gross Domestic Product: All Industries in Humboldt County, CA.  St. Louis Federal Reserve Bank.  https://fred.stlouisfed.org/series/GDPALL06023

As I wrote about last time, sun grown cannabis farmers are struggling in Legacy or historical producing regions such as the Emerald Triangle.  Amid rapidly expanding production and sluggish growth of retail outlets, prices have collapsed in recent months – down over 50% from a year ago. 

Despite scary times, not all is lost for the ganja warriors of Humboldt and beyond.  By aggressively focusing on sales/marketing, quality improvements, production increases and cost savings, sun grown farmers can stay in the game and eventually capitalize on better times to come with interstate and international markets.

Sales & Marketing

Launching a brand is an expensive endeavor and is out of reach for many family farms.  That said, several well-established brands exist that source product from partner farms.  These brands have already done the leg work in creating an online presence and securing valuable dispensary shelf space.  Some, like Cookies, are fans of sun grown flower and have an ever-expanding footprint that family farms can benefit from.  Co-branding or piggy backing on the success of a reputable brand, getting product into jars or pouches, and ultimately achieving retail shelf space can radically improve your price per pound.  Of course, without exceptionally high-quality product, this will never happen.

Quality Improvements

If I had a dollar for every time a grower told me they produce killer shit I’d be retired.  Having lived in Humboldt my whole life and having consumed cannabis for nearly three decades, I attest to the fact that most flower grown in Humboldt today is decent at best.  Over the years flower has declined in quality here in the Triangle.  Weed tastes greener and smokes hotter and harsher than it did a couple decades back.  Bowls don’t ash like they used to and instead, often char out and are largely un-smokable for me.

Truly high quality or top shelf commercial flower is visually appealing with a tight, podded out structure and heavy outer trichome layer.  It tastes like it smells and goes down smooth while delivering the desired effect.  It’s getting harder and harder to find weed like that nowadays.  Many “premium” flowers are poorly formed, ugly, hairy and harsh.  By focusing on genetics, plant structure, pruning, organic or quasi-organic nutrient delivery, sugar content and a flushing program, your flower can stand out from the rest and get some real momentum in the marketplace.   

Increasing Production

Increasing production is a real possibility for most farms, even those doing quite well.  I’ll never forget several years back when a retired soil scientist told us we could increase production by 20% or more if we got serious about soil structure and biology.  Note the garden he toured had two plants that went over 13 pounds.

Whether growing in soil or another medium, focusing on more advanced techniques like crop steering or simply manipulating the size and shape of your plants through topping, pruning and opening can meaningfully impact your bag weight. Supplemental feeding – especially through a foliar regime – is another way to radically boost yields, as are strain selection and quality of starts.

Of course, every grower you talk to is killing it.  Clearly not the case as I still see tons of Instagram posts where farmers are growing lanky Christmas trees instead of more stump-like bushes that really pack on the weight.  Many trellis’ have huge canopy gaps and lots of finished tops aren’t even fist sized. 

Cost Savings

During the multi-decade cannabis bull market where prices were quite firm, cultivators could be a bit loose with the budget.  They could “overpay” for products and services and many did.  Additionally, some farm owners quit growing altogether and spent time pursuing hobbies and passions while crew did the work for them.

As things have tightened up meaningfully, largely absentee farm owners should get back in the dirt personally as a way to reduce labor costs.  Putting goods and services out for bid is another way to potentially save.  Rather than simply accepting “dope grower” prices for inputs, construction or consulting services, requesting discounts, purchasing in bulk or shopping around can lead to significant savings.

National legalization is moving slower than many of us would like.  Biden is not a huge fan of recreational cannabis and there is growing chatter that republicans may make a strong showing in the mid-term elections.  Even with a national marketplace, some states will seek to protect their own producers and limit imports from other places.  Given such, I expect another tough year or several years here on the west coast.  Upping our cultivation game, being proactive with respect to sales and marketing, and tightening our belts seem like the best path forward.

Much Luck,

Jesse Duncan

Sun Grown Peanut Butter Breath Dep 2021

Lots of West Coast pot farmers are crying afoul right now – cursing the corporatization of cannabis markets and rapidly declining wholesale prices.  As a cultivation and farm manager myself, I certainly empathize with challenging market conditions.  Sun grown farmers are struggling and it’s hard to see.  Suicide rates among the cultivation community are rising, people are going out of business and many Legacy farmers are left with little to no ability to replace the higher-than-average incomes growing cannabis historically provided.

That said, I shy away from the negativity and protectionism that has collectively gripped Nor-Cal and other Legacy producing regions.

As a financial practitioner for many years, I understand supply and demand.  My home state of California, like our neighbors to the north and east, produces far more weed than people consume – at least with respect to the regulated marketplace.  As we know from high school economics class, if supply of a good or service outpaces demand, prices fall.  In the case of cannabis, they are falling a lot.

After a brief reprieve from the price collapse of 2017 and 2018, prices cratered in the late spring and early summer of this year.  With increasingly large farms coming online, with many operators producing year-round in climate-controlled greenhouses, and with other states like Oklahoma now producing tons of flower, times are tough for many operators out west.  Legacy farmers, many of whom operate in the mountainous regions with short growing seasons, are grumbling vociferously.  While the loss of one’s livelihood is never fun, I’m not pleased to see the response among Legacy operators – many of whom are my friends.

Calls for a moratorium on cultivation licenses and taxes, acreage caps and bad mouthing “clueless” dispensaries, bud tenders, and consumers have become increasingly regular.  Even my hard right republican grower buddies are calling for protectionist measures – go figure!

During these conversations I remind friends about supply and demand.  If there was “true” demand for someone’s flower, there wouldn’t be a race to the bottom in terms of price.  Farmers wouldn’t be begging people to take their pounds and they wouldn’t be driving to hell and back trying to move a few units.  On the contrary, were their flower in true demand, their phones would be ringing, the internet would be abuzz, dispensaries would be bidding for product and prices would be moving up, not down.  It’s not that we need to educate budtenders or consumers about sun grown cannabis (yes, I’m aware of terpenes and the entourage effect), it’s that we need to deliver something people actually want.

If indoor flower is so popular and so much more expensive there’s a reason for that – it’s not because dispensaries and consumers are stupid.  It’s because the beauty, flower structure, cannabinoid content and taste of high quality indoor flower is hard to replicate outdoors and is in high demand in the legal market.  I, like many farmers here in the Emerald Triangle, grow really beautiful, really greasy outdoor, but I have yet to produce a term or dep flower that was as snow white or candy-like as my indoor SFV OG, for example.  Additionally, I know many consumers who don’t like sun grown flower as it gives them an allergic reaction when consumed.  While recent evidence suggests cannabis pollen, and perhaps THC itself can trigger allergic reactions, outdoor flower is fully exposed to the elements.  Just as our cars are dusted with pollen from surrounding vegetation, such is the case for outdoor grown flower as well.   

Legacy farmers trying to prove the marketplace wrong are barking up the wrong tree in my view.  Instead, we need to find our niche market (hopefully one other than dirt cheap flower for extracts and derived products), then capitalize on it through effective marketing, distribution and product placement.  Were we successful in identifying a niche and marketing our products effectively, pricing power would follow.  Complaining about the situation and trying to change the rules legislatively by blocking access/entry into the cultivation space are not the answers. 

Improving product quality via better flower structure and outer trichome production/preservation is one answer.  Another is getting aggressive with marketing, branding, and distribution.  Piggy backing on well-known West Coast brands like Cookies and Jungle Boys is a cost-effective way to showcase product and earn better tickets for pounds.  Selling one’s own farm and serving as a cultivation manager or lead cultivator for a larger corporate entity is another way to stay in the game and earn and fair wage.

The United States will ultimately open up to interstate commerce and most assume prices will rise for West Coast flower when sent to more lucrative markets.  Unfortunately, many Legacy cultivators will be out of business before then, especially those who think their weed is much better than it actually is.  Becoming highly proactive in terms of sales while radically increasing production and quality thru advanced cultivation principles can save your farm and allow you to capitalize on better times to come.

Kindly,

Jesse Duncan

My Sun Grown Ice Cream Cake Dep – 2021

Canopy Growth, the 800 pound gorilla of cannabis, recently furthered its impressive slide into oblivion.  After minting, then ousting the first corporate cannabis billionaire, the global firm announced last week it would shutter approximately half of its cultivation capacity.

Canopy, like others, is realizing that growing weed people actually want to consumer is harder than expected.  As I’ve long argued, with a proliferation of very high THC products like dabs, live rez carts and others, people now know what it’s like to be high.  After consuming hash or ultra high quality cannabis flower, shit weed becomes a real waste of time.  Harsh, flavorless smoke is no longer en vogue and most producers, including those in my beloved Humboldt, are coming up shy of the mark.

Growing truly premium cannabis (not crappy flower placed in pretty packaging) is arduous, and is dependent on genetics, knowledge, process, inputs, and environmental exposure.  Subjecting your plants to more extreme conditions really glosses flowers over.  Operating on a razors edge between spectacular success and utter failure, like mountaintop growers, produces larger glandular trichomes, which in turn house far more cannabinoids.

Mass Corporate failure and increasingly discerning consumer palates have put a lot of wind in the sails of artisanal producers – both small and mid-sized.  Real artisans in my circle of friends garnered fantastic prices for AAA flower this past season and 2020 promises the same.  $1,800-$2,000 deps was a real thing, although the less skilled among us earned a mere $1,200 a unit and are barely hanging on.

The capitalistic fervor that washed large cannabis firms in enormous liquidity is waning fast.  M&A activity has slowed meaningfully, headline deals are falling apart, and firms that were engaging in massive expansions and hiring sprees just one year ago are sending employees packing.  Like the tech bust in 2000, investors now demand more than just acquisition driven earnings growth.  Like other industries, cannabis investors now demand sound execution, coherent business strategies, and profitability.  Huge quarterly losses will no longer cut it…time to put up or shut up, and most firms are struggling in this regard.

As a mid-sized commercial producer with ultra high level farming skills, I’ve never been more confident, or more excited about a year in the dirt.  Prices for the right product are firm and will melt upward in the coming months.  Artisanal producers will continue to clean house and stack solid profits.  Deps with a 2 handle and ins north of 35, while rare, are out there for the taking.  Go get yours!!!

Kindly,

Jesse

Yum

In the legal cannabis markets distributors, retail outlets, value added businesses, and consumers are becoming ever more discerning.  They want quality, consistency, predictability of experience and a fair price.  On the cultivation side where I focus my professional attention, having a proven, written process to guide the cultivation journey from beginning to end is a must.  The transferability of this process helps you scale your business, empower employees to function at a high level, and helps drive the quality and consistency purchasers and end users demand.   This piece shares an overview of my core philosophy for competing in an increasingly crowded cultivation space and will be followed by 4 subsequent posts that will outline my process for farming ultra high end flower in detail. 

Core Philosophy

• Given equal or similar genetics, growing highly differentiated cannabis flower is arduous and is largely dependent on knowledge, experience, resources, process, and environmental exposure.

• Producing top shelf, differentiated flower requires sound infrastructure and a winning, start to finish farming process that differs from mainstream commercial production in some key way(s). 

• The repeatability and transferability of your farming systems and processes drive enterprise value and facilitate business expansion.   They must be documented in detail.

• Indoor, light deprivation and term cultivation at scale all offer ripe opportunity for product differentiation and branding.  In terms of light dep, for example, an overall lack of attention to plant structure, preventative maintenance, terpene retention, and visual appeal of finished flower currently offer significant opportunity for brand creation and strength.

• All else equal, you finish as you start in cannabis farming.  As such, the vegetative cycle is of paramount importance and should warrant significant resources.  Special attention to plant vigor, health, structure, terp content and root development early on serve as the enabling factors in the quest for high end, high value flower production.

As someone who has engaged dozens of commercial cannabis farmers through my financial consulting platform and my own work as a farmer, it’s become clear that many smaller operations could benefit from professionalizing and formalizing their operations.

For decades farming cannabis profitably and illicitly in the more permissive states was relatively easy.  Because of this, operators never had to bother with many of the business planning functions so common to other industries.  Things like business plans, mission and vision statements, target markets and product offerings weren’t really on the minds of folks operating in the space.  Rather than trouble with such unnecessary things one could buy rural land on the cheap, grow tons of crappy weed, sell it for high prices, and earn a marvelous living.  There was work involved and risk of incarceration and theft were real, but it didn’t take a rocket scientist to be successful.

Now that billions of dollars are flooding into the industry, competition is fierce and farmers must become astute businesspeople if they want to survive.  They must formalize and professionalize their operations to find lasting success.  The first step in this process is creating a written business plan to help guide the operation forth with clarity.  The second is creating an operations plan that guides day to day workflow in an effort to control quality, improve outcomes and generate the consistency necessary to build a successful brand and attract capital.

A business plan doesn’t have to be intimidating. It can actually be a real joy to create, especially for those who truly love farming cannabis and competing in the nation’s fastest growing industry.  It’s your chance to be creative and identify how you want to operate and where you want your business to go. 

When creating your business plan you must first describe your company in detail.  Things like your vision, mission, and value proposition are included here.  What problems are you trying to solve?  What market needs are you attempting to meet and why/how can you meet them better than others?  What do you hope to achieve with your business, in other words, what is its meaning and purpose?

Your plan should also include a market analysis.  Many use a SWOT analysis here that outlines your specific strengths and weaknesses as well as opportunities and threats facing you.  In the case of cannabis a market analysis should talk about increasing social normalization and competition, changing consumer needs and preferences, product proliferation, price action, and a developing national and global marketplace among other things.

The business plan should also detail your company’s organizational structure.  What type of entity are you, a corporation, an LLC, other?  How about the structure in terms of employees, management, and outsourcing of critical business functions?

Product focus and marketing/sales are often the bread and butter of the business plan.  Are you competing for shelf space with high end flower, seeking celebrity endorsements, or growing biomass for extractors and other value added participants in the supply chain?  Are you focused on cannabis as a medicinal, lifestyle or recreational product, or something else?  How will you get your product to market?  What distribution platforms will you use and will they provide acceptable sales velocity and revenue?  How does your operation help distributors fulfill the needs of their customers and do you fulfill them better than others?

A natural offshoot from this section of the business plan is financials.  Using reasonable figures for production, prices garnered for product, and a detailed breakdown of costs, how do things pencil out?  At what point during the year will you break even?  How much must you set aside post harvest to fund the following season’s operation?  How profitable is your business?  What changes can be made to improve financial performance?

When complete, you will be proud of the plan created.  It will guide your organization forward and can always be adjusted as needed.  Once commercial lending finds the cannabis space and as mergers and acquisitions pick up steam in the coming years, having a sound plan and a proven track record of success will show your professionalism and help you stand out from the crowd.

An operations plan is also critical to your ongoing success in the increasingly competitive cannabis farming space.  This plan should outline your farming process in exceptional detail.  Everything you do to create product, from start to finish, must be written down.  This not only helps improve consistency and predictability, but also allows you to transfer your knowledge efficiently to workers or potential suitors.  I personally use a weekly calendar that documents all necessary tasks all season long.  I build the calendar each Sunday and actually enjoy the process as it clears my head and allows me to farm more confidently than I otherwise would.  It is enormously beneficial in terms of dictating workflow, improving efficiency, and creating accountability.  Was the work done or not?  If not, why not?  Calendaring helps avoid distraction and helps prevent overlooking important details.   Many farmers are paranoid about documenting their “trade secrets” and workflow, but failing to do so will inhibit your ability to scale or grow your operation.  Transferability of your winning systems will help drive enterprise value and will become increasingly valuable in a growing marketplace dominated by M&A.

 While somewhat time consuming, professionalizing and formalizing your operation is a must.  Failing to do so, I argue, will only hasten your demise and facilitate the transfer of wealth from your pocket to larger corporate interests.

All the best,

Jesse Duncan   

As I’ve shared in other posts, the operating environment for cannabis farmers is challenging.  It also offers significant opportunity for astute, highly skilled operators.

It’s no surprise that competition in the space is increasingly rapidly.  An estimated $18.5 billion was raised in the industry last year alone and I expect 2019 will surpass that figure significantly as corporate interests eye their prize and as social acceptance globally continues to improve.   According to data provided by Veridian Capital Advisors, U.S firms have already raised over $3 billion as of early March, most notably a $1.6 Billion investment by Altria in a Canadian firm.

 As with any industry, increased competition drives margins lower.  Excess “rents” or profits go away quickly as we have seen with flower and distillate prices.  Less efficient, lower quality market participants go out of business or are swallowed up by someone better if they’re lucky.  Such is the capitalistic paradigm.  As we have seen to the north and to the east, mom and pop operators struggle to find a lasting foothold when things get tough.

Another challenge for farmers is price volatility.  Throughout the year cannabis prices swing quite significantly based on supply and demand.  Late spring and summer see the firmest prices, but few small producers are able to hold out that long without getting paid.  Many are forced to “dump” product at low prices in the fall and winter in order to make land payments, pay employees, and support their own lifestyle.  Skilled growers with desirable product, though, can use developing forward markets to improve certainty.  These contractual arrangements lock in prices pre-harvest and are a nice tool to consider if more predictable cash flow is desired.

Farmers are also challenged by the relationship between demand, scarcity and input prices.  On a local level here in Humboldt for example, increased demand for services like consultants and well contractors has led to upward price pressure and significant delays in availability of service.

Theft and fraud also challenge the farming landscape as does the “milk the cow” mentality many have when serving the industry.  I’ve heard several lines of business such as construction, consultancy services, landlords and others speak blatantly about “dope grower” rates that can tack on 50-100% or more on service fees normally charged to other customers.  Because everyone assumes growers are shitting money, they knowingly and willingly feed at the trough with exorbitant prices.  As one alleged insurance scandal recently showed, some desperate to fill their own coffers are not afraid to steal from farming operations.

Taxation, fees, and a constantly changing regulatory background also complicate things for farmers who have less time to spend on admin.  With the piecemeal and fragmented regulatory environment in California, moving compliance hurdles are simply too much for some to bear.

Despite a host of challenges, significant opportunity also awaits cannabis farmers.  For the first time ever, farms can create a brand and proudly tell their story to the world via social media and some advertising outlets.  Through quality, differentiation, authenticity, and story-telling, farms of all sizes can connect with a consumer base in an intimate way.  Awards, accolades, product mentions, interviews, print media, and instructional videos are just a few ways to get your farm on the map and your product on dispensary shelves.

Product diversification also offers many viable outlets for farms to investigate.  CBD, raw acids, extracts, breeding, tourism, and nursery operations are just a few areas you can explore to find a market for your product.

Information and technology advancements also offer opportunity for farms to get educated and improve the efficiency of their operations.  Technological advancements can improve farm output and quality while information platforms like Green Flower Media, cannabisbenchmarks.com, Cannabis Business Times, and Marijuana Business Daily can help farmers understand business trends, pricing, and other pertinent industry data.

Farmers also have a huge opportunity in helping to further professionalize and legitimize the industry.  Thru compliance, stewardship, compassion, and charity, farmers can position themselves well to capture business from conscientious consumers, while playing a role in facilitating the push to create safe, barrier free cannabis access worldwide.  In so doing, they can capitalize on ever increasing markets while making lasting social and environmental improvements through their work and charitable efforts.

All the best,

Jesse Duncan

The cannabis business is tough.  Competition is increasing, consumers are demanding higher quality products, and prices are falling significantly.  Many operations are struggling with sales velocity, compliance costs are rising, and with new tax, labor, environmental, and regulatory requirements, many operating in the farming space are failing, fast.

This piece will summarize an oral presentation I give designed to help farmers achieve financial success despite the challenges listed above.  This 9 point plan, if taken seriously and executed well, can help you not only survive, but thrive in what promises to be an increasingly crowded space.  Subsequent posts will flush out these topics in greater detail.

1. Understand the Operating Environment – the farming space entails significant risk, but offers significant opportunity as well.
2. Conduct a Feasibility Study – given your skill set, expenses and production parameters, can you operate in the new financial paradigm?
3. Professionalize and Formalize Your Operation – Create your mission and vision statements, and determine your target market and product offering appropriately
4. Focus on the Profit Function – Clearly understand revenue and costs
5. Understand Developing Resources & Stay Connected and Informed – Get plugged into industry data and developing resources
6. Work Smarter (and maybe harder too) – Create farming and business systems and put in the time necessary to be successful
7. Be Thankful and Honor The Plant – Working with the plant is a blessing, remember that always and behave according
8. Care For Yourself Physically and Mentally – Farming cannabis is not for the feint at heart, physical and mental strength are important for longevity and success
9. Manage Business and Personal Finances Prudently – Solidify company financials and undergo a personal financial planning process as well