Trimming and packaging often cause bottlenecks for grow operations
By Alen Nguyen
I’ll preface this article by saying that I’m not a grower. In fact, I’ve never grown any kind of plant successfully in my life, but I do have experience in business and operations, so I’ll stick to those avenues.
Given that it was Croptober not that long ago, it’s probably safe to assume there is a whole lot of processing and packaging going on at cannabis farms across the country right now. This is really a bottleneck area for everyone. Adding regulation to the mix slows that process down even more. So how can we improve trimming and packaging to reduce cost and time to market?
Growers take great pride in their work and want their product to show its best, but do we understand what kind of price premium can be charged for hand-trimmed versus machine-trimmed cannabis from a commercial operation?
I’m probably going to catch a lot of flak for this, but if that price premium is less than what you would be saving on machine trimming, then it doesn’t really make financial sense to hand-trim as long as your sales stay consistent. A large number of my customers prefer to hand-trim their product, which makes for great-looking bud, but I’ve also seen some impressive trimming machines out there.
I’ve recommended that people run a batch of product through a rented trimming machine and have another batch of the same product hand-trimmed and packaged. Sell them under different labels so as not to change the existing product at all, and don’t mention anything about the trimming process. Discount the machine-trimmed product just slightly based on some of the efficiency you gained by using the trimmer, then see what happens at the sales counter.
If the customer is happy, are you really doing a disservice to them or your product?
We’ve seen many people who focus on the unit cost of packaging, and driving that price down as low as possible. This is a good way of controlling expenses, but I recommend looking at the packaging process as a system, and not just the unit cost of the packaging.
When I say system, I mean the total labor and material cost for the packaging. Sometimes the cheapest piece of packaging isn’t the cheapest total cost. The labor cost can equal or exceed the packaging material itself.
For some businesses, time studies have been conducted on the packaging they are using. How long does it take to package your product in one type of packaging versus another? Using the time study, you’ll be able to see how much labor is involved with different types of packaging and then make a decision based on the total cost of the process.
In some medical markets, where many of the recreational growers came from, there wasn’t as much regulation and taxation built into the product. This allowed for higher profit margins and didn’t require as much scrutiny on cost in order to make a healthy profit. In a heavily regulated and taxed market, higher profit margins are getting chopped away by taxation. If the goal is to eradicate the black market through legalization, retail prices need to be comparable to that of the black market.
I am not saying you have to run your grow like a high-output production facility that sacrifices quality, and I would never want that for our industry. However, if you want to stay in business doing what you love, you must be able to thrive. And that means looking at how to improve your bottom line.
Alen Nguyen is the CEO of Green Thumb Industries, a B2B distribution company for the cannabis industry. He holds a bachelor’s degree in electrical engineering from the University of Washington and a master’s degree in business administration from Embry-Riddle Aeronautical University. He can be reached at Alen@greenthumbind.com.