As competition increases within the cannabis cultivation sector, newcomers need every advantage to be profitable.
They don’t have time to lose as part of a “learning curve.” They can’t rely on the reputation of an established brand. They are entering the industry at a time of mass consolidation, falling wholesale prices and increasing scrutiny by consumers, investors and regulators alike.
Yet, new operators do have one significant advantage compared to their well-established peers: They have the benefit of watching the market unfold before investing countless hours and millions of dollars in an emerging, immature and constantly evolving market.
The three co-founders of Vera Cultivation — CEO Alex Park, chief operating officer Harrison Somoza and chief production officer Eric Haughton — have waited two long years to get their Boulder, Colorado operation up and running. The wait has been excruciating, but it’s allowed the company to identify gaps in the marketplace and the trends that will affect marijuana growers for years to come.
A Holistic Approach
When it comes to cannabis production, there are cutting-edge operations and then there’s Vera Cultivation, a wholesale marijuana cultivator that redefines the look of high technology.
The 22,000-square-foot hybrid greenhouse features insulated metal walls, hydronic heating and cooling, deep water culture hydroponics, full-spectrum supplemental lighting, an acrylic roof and the automated controls to dial in the environment throughout the year.
“We’re completely sealed, so unlike greenhouses with wet walls, there’s very little air movement coming in or out of our facility,” Somoza says. “That allows us to hold our environment with precision control. We can keep it as climate-controlled as an indoor facility, while still reaping all the benefits of the natural sunlight.”
The greenhouse has four separate flowering spaces, and the crew has implemented a staggered production schedule to harvest every two-and-a-half weeks. Vera Cultivation will sell cannabis to a combination of retailers and processors, and its first harvested crop is expected to hit the market by mid-December.
“The project presented a number of design and entitlement challenges,” Park says. “I think part of the beauty of this project is that some of those development and design constraints ultimately forced us to innovate and think outside the box and put together what we think is a fairly unique facility type in the market.”
One of those challenges is that water must be trucked in to the Boulder site, so the company needs to conserve water as much as possible.
“That’s one of the elements that forced us to go to the drawing board,” Park says.
The deep water culture hydroponic system not only facilitates rapid growth for the plants, but it also allows Vera to recapture the vast majority of its water.
“It plays into the holistic approach that we designed here, as far as efficiency,” Somoza says. “We’re able to recapture all the water that comes out of our hydroponic system, instead of draining it into the sewer or the ground.”
The hydroponic setup also provides the ability to control water temperature in the root zone, which Haughton says is “paramount to allowing the plants to deal with potential temperature swings.”
Before breaking ground, the company’s founders extensively researched the market and the different cultivation methods that were available. They looked at indoor grows, which are generally believed to produce the highest quality cannabis, but put a heavy demand on the energy grid. They looked at traditional greenhouse models, but saw the stigmas of lower quality and inconsistency.
They also believed there was a need in the Colorado market for high-quality, low-cost cannabis that can be produced consistently year-round.
“That led us on the road to develop a model for cannabis cultivation that combined the advantages of greenhouse and the advantages of indoor, and stripped away as many disadvantages as possible,” Somoza says.
Vera worked with a variety of consultants, architects and engineers to construct the facility, including Ceres Greenhouse Solutions, which took the lead in building the shell.
“The model we’ve created is well-suited for the high-end product demands for some of the high-end brands,” Park says. “We identified a gap in the premium production market, and we designed this facility to deliver high-end product at a very low cost to produce.”
The energy demands of the cannabis industry have been well publicized. With so much marijuana grown indoors under energy-intensive artificial lighting, environmentalists across North America are questioning the long-term impacts of legalization.
“I think we are all conscious of what is going on with energy demands and greenhouse gas emissions and the desire to reduce those, both around the country and globally,” Somoza says. “If we could do something to play a part in having the right direction with regard to those issues, then we were excited to be able to do that.”
By utilizing one of the most energy efficient grows possible, the Vera Cultivation founders hope to do their part in reducing the industry’s carbon emissions.
“Boulder has a reputation of being progressive and forward-thinking when it comes to energy, so it seemed like an ideal location to put a progressive and forward-thinking approach to cannabis production,” Somoza says.
While most of Colorado’s outdoor and greenhouse growers are located in Pueblo, Boulder presents several advantages over the state’s sun-grown cannabis capital, including the ability to attract quality employees. But most important is the city’s geographic location. Not only does the college town have 26 recreational marijuana shops and 24 licensed product manufacturers, but it’s also conveniently located to make deliveries to Denver and the other population centers.
“Being on the front range, we have good proximity to where most of the commerce in Colorado takes place,” Haughton says. “Compared to being in the interior Rockies or down in Pueblo, we have access to a lot of the large-scale processors and retailers, right in our backyard.”
Two years ago, Vera Cultivation was started with a concept and a piece of raw land. The company endured the painfully slow permitting process and nearly a year of construction, before finally bringing plants inside the hybrid greenhouse.
“It’s unbelievably exciting, particularly when you’ve got a two-year lead time associated with the project,” Park says.
“Now that we’re up and running and growing plants, it feels like we’re at the easy part,” Haughton jokes — although the entire team recognizes the next hurdle of breaking into an already crowded field.
“It is going to be tough, but we are up for that challenge,” Somoza adds. “And if we’re able to succeed in the well-established, highly regulated market that is Colorado, it would only further the concept and make us feel very confident in other emerging markets that are popping up all around the country.”
Two years of research, planning, building and waiting have given the three founders plenty of time to watch the market. The average wholesale price in 2016 was just under $2,000 a pound. Now, that number has fallen by half.
“We’ve certainly been following those numbers,” Somoza says. “We had no illusion they were going to stay that high. From the beginning, we were designing this facility with the belief that that price was going to come tumbling down.”
But the Vera team realizes in an ever-changing marketplace, price isn’t the only concern. There’s also the stigma of sun-grown cannabis being inferior to indoor, an idea they hope their high-tech production facility will help put to rest.
“We’re trying to change the way people look at that,” Park says.