In Part 2 of this Beyond the Bud series, we’ll look at the business of supplying young plants. If you missed Part 1, you can read it here.
There is a dire need for young plant suppliers in the cannabis industry.
Young plants are seedlings, plantlets, or rooted cuttings produced by one company and sold to another.
This demand presents a lucrative opportunity for cultivation businesses that want to earn additional revenue from their existing production site.
First, let’s differentiate between the three types of young plants:
Seedlings, as the name implies, are new plants started from seed. They are typically raised and delivered to the customer in “flats” or “plug trays” of 50-72 seedlings per tray.
These are most common with outdoor growers because they allow farmers to jump-start the growing season by transplanting young plants directly into the field.
Buying seedlings can save farmers time and money. The alternative—direct seeding into the ground—can result in unused cultivation space if birds or small animals eat the seeds or they simply don’t germinate.
Plantlets look similar to seedlings, except they aren’t started from seed.
Instead, they’re created inside tissue culture labs through micropropagation, which is the duplication of identical plants using minimal plant material. Thousands of plantlets can be made from a single plant.
Plantlets arrive certified disease-free because they are raised in a sterile environment using a sterile medium.
Rooted cuttings look similar to plantlets, but they’re not created inside a lab.
They are young, vegetative shoots (clones) cut from stock plants (moms) and then forced to grow roots.
Typically, 80-90% of these cuttings root within three weeks, resulting in a room full of plants genetically identical to the mother plant.
Both seedlings and plantlets serve a great purpose, but the last one—rooted cuttings—is the focus of this article.
During the start-up phase, every licensed cultivator faces the same problem: “What will we grow?”
But the real issue goes beyond just variety selection. “How do we obtain clean plants with known characteristics, and how do we do that in volume?”
Fortunately, most licensing entities turn a blind eye when it comes to acquiring starter plants. One day it’s an empty grow site, and the next day—poof! It’s filled with plants.
Unfortunately, it can be a long road to building a portfolio of varieties that are in demand and perform well in a commercial setting.
Most companies start their cultivation program by acquiring just a few excellent cuttings.
The problem is that the time required to turn a few cuttings into a room full of stock plants that generate hundreds of cuttings each week can take six months or longer.
There’s nothing more frustrating for the owners, operators, and investors of a cultivation business than to finish a multi-million dollar buildout and then have the cultivation team standing around a dozen small plants, waiting for them to grow.
Each day the flower rooms aren’t filled is another day of forfeited market share, zero sales, and lost opportunity.
Existing operators aren’t immune to the vagaries of problematic propagation, either.
Not every cultivation team is good at rooting cuttings. Neglected stock plants or poor rooting practices can result in a 50% rooting success rate or worse. This results in partially filled flower rooms, low yields, and higher production costs.
In-house propagation programs also run the risk of contamination.
Stock plants should be replaced every 3-4 months, but it’s common for growers to hang onto them for years.
As a result, these plants inevitably attract insects or become infected with disease. Cuttings taken from diseased plant material will carry that disease into the flower room and infect the rest of the crop. Cleaning up this problem by killing the stock plants and growing new ones can result in lots of downtime and empty flower rooms.
In traditional horticulture, cultivation businesses have helped eliminate these risks by specializing in just one stage of the value chain: young plant production.
Cannabis companies looking to increase the profitability of their production sites would be wise to emulate this model.
The are many benefits to doing business with a young plant supplier, including:
• Start-ups can begin growing immediately, allowing them to capture lucrative market share in hot new markets.
• Growers can eliminate cultivation space dedicated to stock plants and propagation, allowing more flower production.
• Operators can change the varieties they grow by simply ordering something different. Doing this in-house through breeding, seeding, selecting, and propagating takes at least 18 months.
• Production plans aren’t affected by skill, luck, or the variability of in-house propagation programs.
If your company has an extensive library of desirable genetics and your team is adept at rooting cuttings, you already have everything you need to start this side business.
Some factors to consider:
Production: Cuttings don’t take up much space. Most cloning trays hold 50 plants and are just 10” x 20”.
Because cuttings have no roots, their light, water, and fertilizer needs are minimal, and they require almost no labor.
Records should be provided with each batch of cuttings to ensure customers their plants were treated with beneficial insects, organic fungicides, and randomly tested for viruses.
Varieties: Keep proprietary or unique varieties just for your business, but still offer lots of options to the public. Make sure they have desirable qualities like high THC, a rich mix of unique terpenes, and a flowering time of 8-9 weeks.
Shipping: Young plants are technically hemp because no rooted cutting will exceed .3% THC of dry weight.
But given the uncertainty surrounding interstate transport, entrepreneurs are justified to be cautious.
Companies with national aspirations should service customers close to home while ironing out the learning curves of becoming commercial suppliers. Once interstate transport of cannabis is permitted, they’ll be poised to immediately service the national market.
Pricing: There are very few commercial producers of young cannabis plants, so you get to name your price. $10-$25 per rooted cutting is a good starting point.
Consider this: One 4’ x 2’ clone rack holds 1,000 young plants. At $12 per clone, that’s $12,000 in 3 weeks from just eight square feet of space.
A small, dedicated propagation room with ten racks would generate $120,000 every three weeks. Do this several times a year, and you’re pushing $1 million in additional revenue.
The demand for young plants is strong today, and it will only increase as the cannabis industry matures.
Is there room on your balance sheet for an extra $1 million in revenue?
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