Although those opportunities in cannabis businesses are obvious, no investment is risk-free. Overvaluation and hyperactive speculations in financial markets will mislead investors and industries, some financial analysts cautioned. In 2016, two licensed medical marijuana manufacturers in Minnesota – the Minnesota Medical Solutions and LeafLine Labs – posted millions of dollars in losses in their first year of operations, according to financial documents obtained by The Associated Press. Minnesota Medical Solutions posted a US$3 million loss in 2015, while LeafLine Labs lost an estimated US$2.2 million.
The audit for Minnesota Medical Solutions explains the loss was due to high production costs and discounts offered to first-time patients. Tightly regulated legal structures, lack of clients and high costs of production are also being blamed for the losses.
The high costs of production are typically associated with costs associated with cannabis cultivation, processing, marketing, required laboratory testing and other regulatory compliance costs. As a result, cannabis producers are turning to greenhouse experts for help in reducing the cost of producing cannabis in greenhouses.
Another way to reduce production costs is by growing cannabis in outdoor fields. It is usually where illegal marijuana crops are grown. The Cannabis Act aims to provide for the legal production of cannabis to reduce illegal marijuana production, and keep profits out of the hands of criminals. The regulations would permit both outdoor and indoor cultivation of cannabis (under all four classes of cultivation licence: standard cultivation, micro-cultivation, nursery and industrial hemp.
It is a challenge for the legal greenhouse cannabis producers to compete with the black market that is able to produce at a lower cost and sell products at lower prices. No doubt, outdoor growing of cannabis makes economic sense. It is likely that more licensed producers would consider growing cannabis outdoors. However, to most existing licensed producers who have been heavily investing into their indoor grow facilities, their portfolio for cannabis production remains to be seen.
Similar to other field crops, growing cannabis outdoor is limited by the short-growing season in Canada. Soil fertility and suitability should also be considered when growing cannabis outdoors. It could be more difficult to achieve uniform, stable yield and high quality of cannabis products. Lack of knowledge on many cannabis strains give even more uncertainties to producers.
Another big challenge for both indoor and outdoor cannabis growers is pest management. As of July 30, 2018, only 20 registered pesticides (see Table 1) are approved by the Pest Management Regulatory Agency for use on cannabis grown indoors. Twelve of them are insecticides, and the rest are pesticides.
Among those 20 pesticides approved, their active ingredients (a.i.) are either biological in nature or non-toxic minerals. Clearly, food safety is of top concern by legislators. With limited pesticides available, cannabis growers will face serious challenges in their pest management, especially for outdoor growth, which does not have the physical barriers that help prevent pest invasion – something that indoor growing facilities have. When it comes to pest management, outdoor growers face more challenges than indoor or greenhouse growers.
A number of diseases commonly occurring on cannabis crops are listed in Table 2. For yellow and brown leaf spots caused by a fungal pathogen, Septoria lycopersici, there is no copper-based fungicide nor neem oil registered yet. The best available solution is canola oil. It is similar to the olive leaf spot caused by Spilocaea oleaginea on cannabis crops. Other challenges for cannabis growers are managing diseases caused by bacteria, viruses and nematodes. Clearly, cannabis growers require more tools for pest management.
Because cannabis products are used for medicinal use or consumed recreationally, the product quality should be regulated to food grade or higher. Ideally, most of the common pests on cannabis should be managed biologically. Biological pest control means managing pests either by living organisms or products with biological origin, i.e. biological pesticides or bio-pesticides. Bio-pesticides are similar to chemical pesticides. Growers can manage pests by utilizing living organisms, which is can be more challenging for outdoor grows.
Here are few principles for growers on cannabis pest management.
- An indoor/greenhouse growth environment is a relatively closed ecosystem compared to an outdoor, open field.
- It is easier to reach and maintain an ecological balance within an indoor/greenhouse environment than an outdoor, open field.
- Both pests and their antagonisms are living organisms. Success of pest management depends on the balance of two antagonisms in a specific ecosystem.
- It is important for growers to understand both antagonisms and the ecosystem they are living in.