TOP 3 REASONS FOR FAILED CANNABIS CULTIVATIONS - AND HOW TO AVOID THEM

Scaling a cannabis cultivation operation is no small feat. There are numerous moving parts to manage, from financial strategy to building design, workflow efficiency, and regulatory compliance. This article will discuss the top three reasons cultivation operations fail and how to avoid potential pitfalls. Every cultivation operation poses unique challenges, but successful cultivation comes down to proper planning, thoughtful financial decisions, and knowing when to seek help.

Key Considerations Before Starting:

• Financial Strategy: Know how you’ll compete in your market.

• Building Design & Workflow Efficiency: Optimize space for maximum output.

• Experienced Guidance: Don’t hesitate to ask for help from an experienced cultivator.

• Understanding Scale: Know how all the components of your operation work together.

1. Stubborn Owners – Don’t Be Afraid to Ask for Help!

The first reason for failed cultivations is the refusal to seek expert advice. Whether it’s pride or fear of upfront costs, stubbornness can lead to costly mistakes that are difficult to recover from. Cultivation is complex; even the most experienced operators can benefit from consulting experts. Hiring a skilled operator or cultivation consultant can provide invaluable insight and help you avoid unnecessary mistakes.

Essential Question: Can you afford to be wrong? And for how long? Each mistake not only costs money but also time—a limited resource in cannabis cultivation. Avoidable errors can set back production and significantly reduce profitability.

Solution: Investing in expert advice early on can help save time, money, and headaches later. The cost of hiring a consultant is minimal compared to the potential costs of mistakes in a scaled operation.

2. Lack of Proper Planning

Another key reason cultivation operations fail is a lack of planning. It’s essential to know exactly what you're building, why you're building it, and what your goals are. Solid planning should be at the heart of every decision.

General Goals:

• Define clear metrics like target cost per pound and desired product quality.

• Plan your yield, number of lights, room size, pull-down cycles, and other factors to help you achieve these goals.

Exit Strategy:

Know your exit strategy from the outset. Do you want to operate for 1, 5, or 10 years? Do you plan to sell the business? Having a vision of where the operation is heading is essential, not just the excitement of starting.

Building Design & Workflow:

Your building’s design directly impacts workflow efficiency and input costs. Don't hesitate to rework floor plans and blueprints to ensure smooth operational flow. The layout of your facility will dictate how efficiently you can cultivate, process, and harvest your crops. Efficient designs help reduce labor costs and prevent workflow bottlenecks.

Tips for Success:

• Spend extra time planning the physical infrastructure and equipment layout.

• Ensure that the design of your operation allows for smooth processes, avoiding bottlenecks or inefficiencies.

• Depending on your location, account for environmental factors such as humidity and HVAC requirements.

Maintenance Considerations:

When planning vertical farming or multi-tier setups, consider access and maintenance. Proper equipment like ladders, lifts, or catwalk platforms improves safety and workflow efficiency. OSHA prefers using three-point stances for safety, and catwalk platforms reduce risks associated with ladders over 7 feet, which can lead to insurance claims and workplace injuries.

Padding for Mistakes:

Be prepared for things to go wrong and factor in some buffer space in the veg room to compensate for potential setbacks in flowering. Yield from the flowering phase is your primary source of revenue, so it should always receive priority attention.

Compliance with Codes & Regulations:

Stay current on the state and local regulations for your cultivation facility. Understand local zoning laws, land use restrictions, IPM testing thresholds, and OSHA requirements. Non-compliance can lead to costly fines or even the shutdown of your operation.

3. Poor Financial Decisions

One of the most common reasons cultivations fail is poor financial management, often due to operators running out of money. The cannabis industry is expensive to enter and sustain, with build costs averaging $200-$300 per square foot—significantly higher than many other industries.

Common Financial Mistakes:

• Unnecessary Spending: Overspending on infrastructure or equipment that doesn’t add value to the operation.

• Poor Planning: Underestimating the operation's cost, leading to budget shortfalls.

Proper financial planning is essential to avoid draining your budget. Plan for potential risks and setbacks, and ensure you have enough financial runway to weather challenges.

Cost Management Tips:

• Set clear financial goals and plan accordingly.

• Monitor expenses closely and avoid unnecessary expenditures.

• Clearly understand operational costs like HVAC, lighting, and labor.

The Bottom Line

The common denominator in successful cannabis cultivation is risk management. Every decision you make should be viewed as a return on investment equation. Whether you are new to the industry or have years of experience, some level of risk is always involved.

Key Takeaways:

• Plan with the end in mind: Clarity in goals is crucial, whether it’s your yield goals, financial strategy, or exit plan.

• Seek advice when needed: Don’t hesitate to bring experts to guide you through tricky decisions.

• Design efficiently: Your building’s layout, workflow processes, and maintenance plans should be optimized for smooth, scalable operations.

• Financial prudence: Monitor your finances closely, avoid unnecessary spending, and ensure you have enough runway to deal with setbacks.

Do’s and Don’ts of Cultivation Planning

DO:

• Identify your end goal and reverse-engineer the steps needed to get there.

• Seek expert advice to prevent costly mistakes.

• Rework building designs if necessary to ensure operational efficiency.

• Follow local codes and regulations to avoid compliance issues.

• Allocate extra resources to critical phases, like flowering, to avoid yield loss.

DON’T:

• Ignore your financial limits or overextend your budget without proper planning.

• Underestimate the importance of workflow design and building layout.

• Hesitate to invest in safety equipment, such as catwalks and platforms, for multi-tier setups.

• Rely on guesswork for critical decisions—consult experts and use data-driven strategies.

By carefully planning, managing risk, and making informed decisions, you can significantly reduce the chances of failure and improve the overall success of your cultivation operation.