The three primary methods of cultivation – outdoor, greenhouse and indoor – have different production profiles.
Outdoor cultivators produce one harvest per year in the fall, whereas indoor cultivators produce year-round and can generate between 4 and 6 harvests per year. Greenhouse cultivators combine elements of both – exploiting natural light, while leveraging infrastructure and technology – to produce between 1 and 4 harvests per year, though sophisticated, well-equipped greenhouses can run year-round on schedules analogous to indoor production. The result of this mix of cultivation methods is that growers approach the market differently at different times of the year. Since outdoor cultivators produce one large harvest in the fall, which drives prices down, they tend to release product into the market in a controlled manner – selling enough in the fall to generate cash flow to cover expenses, but holding back inventory to release later in the year as prices rise. Thus, outdoor cultivators – in general – are price setters in the fall and price takers in late spring and early summer.As noted in the chart, sellers of outdoor grown flower sold lots averaging 33 pounds in January as they were recouping expenses, and then reduced lot sizes to optimize revenue ahead of the next outdoor harvest. What happened next was not characteristic of prior years, and changed the status-quo. Outdoor growers – encumbered with more inventory than in years past – began to sell larger quantities in June and July, as it became apparent that large quantities of greenhouse grown flower from the first light deprived harvests would be coming to market, potentially creating an oversupply situation. While it remains to be seen if last year’s fall harvest has been fully liquidated, the race by outdoor cultivators to preserve value drove prices down as the first light-deprivation harvests of the year hit the market; the average greenhouse deal size nearly doubled from June to July. The average deal size for indoor growers appears to reflect the conventional experience of reduced yields in the late spring and summer, as cooling and humidity control costs increase and growers shutter portions of their operations until conditions for 100% capacity utilization return, generally in September.
The Cons of outdoor growing include:
- Growing location is government regulated
- Dry season requires more effort in watering
- Deer like to eat and destroy if not tended
Main indoor cons include:
- Maintaining proper ventilation is difficult
- Higher household energy costs
- Pumped with fertilizers
Due to the high energy costs and difficulties with water supplying many businesses now develop their marijuana growing business in greenhouses. Those structures are showing an average cost savings of 33% – electric costs for growing marijuana for that way can drop to about $350 a pound.
Our cannabis cultivation financial model and cannabis cultivation business plan template will help you to estimate all revenue and cost line-items monthly over a flexible seven year period, and then sums the monthly results into quarters and years for an easy view into the various time periods.
We create medical and recreational cannabis business plans for different types of cannabis business:
Please do not hesitate to contact us to make an order for a cannabis business plan or a cannabis industry research. We will create complete and professional business plans, including pro forma financials and projections to help you know how much money it’ll cost to start your business and how much money you can make by starting and operating your 100% legally compliant medical and recreational marijuana business.