(Cannabist) Prices are tumbling as formerly illicit cultivators emerge from the shadows to invest millions of dollars in massive pot factories. In Colorado, the average price sought by wholesalers has fallen 48 percent to about $1,300 a pound since legal sales to all adults started in January 2014, according to Cannabase, operator of the state’s largest market. Supply is surging as growers expand and install the latest agricultural technology.
The focus on efficiency can cut production costs for some indoor growers to less than $300 a pound from more than $1,000, said J. Chandler, vice president at Cultivation Technologies in Boulder, Colorado. His company sells machinery originally developed for tomato greenhouses, such as automated feeding and watering systems from Israel’s Netafim Ltd. and France’s Dosatron International.
Retail prices also are dropping, though not as fast as in the wholesale market. Marijuana shops in Colorado collected an average $6.61 per gram in November, down 25 percent from the first quarter of 2014, according to BDS Analytics, a research firm.
The drive toward efficiency isn’t cheap. Brian Lade, owner of Smokey Point Productions in Arlington, Washington, started growing marijuana in a garage at age 17. He endured police raids and a few days in jail before the laws changed. Now he’s raised $25 million to expand his 15,000-square-foot warehouse operation to 135,000 square feet (12,500 square meters).
That’s enough space to pump out 1,700 pounds of buds monthly from dozens of custom-bred strains such as Dirty Girl and Cinderella’s Dream, up from 100 pounds (45 kilograms). He also can process 2,200 pounds of purchased marijuana into cannabis oil and other concentrates for vaping.
While Lade increased production by 16 times, his employee count is up only four-fold, to 100, thanks to economies of scale and automation, he said. A machine mixes soil ingredients, pours the dirt into containers and then digs holes for young plants. A conveyor belt carries the container to an employee who does the delicate job of planting. Rather than relying on people to trim away leaves and stems from harvested pot, he’s trying out machines that automate the job.