During the first year of Utah’s medical cannabis program, only a handful of growers were trying to provide enough product to meet demand. They were not able to do so. It turns out that most of the companies that applied for growing licenses did not actually have the resources to make a go of it.
It was a tough lesson to learn for Utah’s fledgling cannabis industry and the lawmakers responsible for crafting cannabis regulations. But now everybody in the Beehive State knows that you need more than a license to compete as a cannabis grower.
Growing Is a Business
Growing cannabis is a business. And as a business, it is no different than processing or retail sales. A license only gives a business owner the legal right to engage in business. It by no means guarantees success. A license also doesn’t generate revenue on its own.
Why bring this up? Because the cannabis industry is constantly being criticized by those who claim it’s discriminatory. A case in point is a recent Benzinga article that accuses Florida of discriminating against certain types of farmers who have been unable to get licenses.
You need to read the entire piece before learning why said farmers cannot get cannabis licenses. It boils down to a lack of resources. They don’t have the financial resources to get up and running. Therefore, regulators are reluctant to give them the green light.
Like so many other states, Utah included, Florida limits the number of growing licenses it issues. Regulators do not want to give a license to a grower who may not be able to get up and running because said license would be out of circulation for a year. In the meantime, another company that does have the financial resources is not allowed to grow.
Growing Requires an Investment
Growing cannabis requires a considerable financial investment long before harvesting that very first crop. Not only do you have to obtain a license, insurance, and space, but you also need to put money into the necessary equipment and the plants themselves.
If you decide to grow outdoors, you need all sorts of heavy machinery you don’t need for an indoor operation. But if you grow indoors, you’ll spend a ton of money on electricity. Growers without the money to do things right will probably fail.
The Most Expensive Business
It would be interesting to compare the costs of growing, processing, and retail sales side-by-side. This writer would not be surprised to learn that growing is the most expensive of the three.
By contrast, setting up a cannabis dispensary or pharmacy would be comparatively cheap. Beehive Farmacy, a Salt Lake City cannabis dispensary, probably didn’t spend nearly as much to get up and running as any of the growers in Utah. And as far as their day-to-day expenses, they probably pale in comparison.
Processing is undoubtedly more expensive than retail, especially since processors need to invest in expensive equipment, highly skilled labor, and a lot of indoor space. But their total operating costs are probably lower in the long run. Furthermore, their costs are controlled. A grower’s costs are not.
It is a mistake for any business owner to believe that a growing license automatically guarantees revenue and long-term success. It doesn’t. Agriculture is risky to begin with. You stand to lose a lot before you gain a thing. In the cannabis industry, it’s all about resources. If you do not have the financial resources to make an honest go of it, you will have a tough time getting a state license. That is not discriminatory. It’s reality.