June Newsletter: Dropping Prices Demand Efficiency

Each month, we publish a newsletter discussing a trending topic within the cannabis industry and how it shapes Surna's philosophy. To be one of the first to receive this information, be sure to sign up for our email list at the bottom of the page.

June 29, 2015

Each month, we publish a newsletter discussing a trending topic within the cannabis industry and how it shapes Surna’s philosophy. To be one of the first to receive this information, be sure to sign up for our email list at the bottom of the page.

 

Even though demand for state-legal cannabis is going up, the sale price is dropping. Both Colorado and Washington are seeing steep declines in price – from $30 a gram to $12 a gram in Washington.

As a study by Convergex put it, “More competition and expansion of grow facilities contributed to this price decline, but it is also a natural result for any maturing industry as dispensaries try to find the market’s equilibrium price.”

This means  the price declines seen in Colorado and Washington are likely to occur in any medical state as well. As the industry matures, more competition will enter the market and more product will become available, making price drops inevitable. The best way to counteract these price drops is to make sure your operations are as efficient as possible.

Small changes such as increasing the use of automation and cleaning the glass on air-cooled lights can make a difference, but it is equally important to look into larger changes that can be made. For most growers, the largest monthly expense is electricity. Finding ways to reduce costs of goods sold, namely electricity usage, can make or break a cultivator during the highly competitive stage the market is entering.

Things to look into include:

The good news is that even as prices decline, sales are increasing, with Colorado seeing a 98% year-over-year increase in April. More product is necessary to keep up with demand and finding ways to increase your yield per square foot can also have a huge impact on the bottom line.

Tips to increase yield per square foot:

  • Trellis plants to catch wasted light – trellising uses all the light available and creates extra bud sites
  • Add CO2 – plants need CO2 to grow and levels of 1500 ppm can increase yield up to 30% over atmospheric normals
  • Embrace hydroponics – hydroponics allows plants to grow up to 50% faster than they do in soil
  • Hire a grower that can get the most out of the plant – this can potentially double production with little added cost

As with any industry, the companies that make the most profit will be those that create an efficient operation, from top to bottom. Surna is dedicated to creating efficient technologies. From our chilled-water climate control system to our 300 PPD Dehumidifier and our ground-breaking Surna Reflector to the upcoming hybrid building, we find ways to improve existing operations and help growers increase their bottom line.

 

To see past newsletters, follow the links below:
May 2015 – Importance of Cannabis Advocacy
April 2015 – Medical Marijuana Sees Widespread Acceptance
March 2015 – Cultivation Energy Usage Takes Spotlight

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