When Andrew Lange got his start in cannabis nearly a decade ago building production facilities in the high-margin, halcyon days of medical marijuana, he knew those prices would be fleeting and knew efficiency would be the key for growers to survive as the industry became more commercialized.
Lange was an early adopter of technology and automation systems designed to squeeze every gram of cannabis possible out of every watt of electricity — a philosophy that has served him well for designing some of the elite production facilities around the world in today’s highly competitive marketplaces.
“I don’t see the price of cannabis going up substantially in the long term,” he says. “And as more sophisticated groups come into the industry, they’re focused even more on driving down their bottom-line costs.”
Lange and his company, Ascendant Management, specialize in the design, engineering and management of indoor cannabis grow facilities, including two specific projects — Onyx Agronomics in Washington and XP Agronomics in Oklahoma — that are pushing the envelope for efficiency.
As new markets come online, Lange believes the emphasis on efficiency will only intensify.
“We have more sophisticated investors coming in and these facilities are being built from the start instead of what we saw in the initial states, with people building cheap, almost throwaway facilities without much thought,” he says.
Thinking Long Term
As cannabis has evolved from a small, niche business into a genuine global industry, equipment manufacturers are increasingly developing products specifically for cannabis cultivators. In the earlier years of medical marijuana, growers and engineers had to adapt equipment designed for other industries or cobble together multiple systems to produce one solution.
While this jury-rigging is still happening to some degree, Lange says a lot of equipment has become more specialized and industrial-scale automation processes are becoming more common, improving efficiency, energy usage and overall operating costs.
“It’s not sustainable for the industry to keep building really inefficient facilities, because what happens is the price crashes,” Lange says.
Operators in most legal markets enjoyed inflated wholesale prices in the early stages of legalization, but as more production facilities came online and more operators began churning out more product, the value of cannabis declined.
In Colorado, from 2014 through 2016, average market rates of flower ranged from about $1,800 a pound to more than $2,000 per pound. Within 27 months, that price bottomed out at $759 a pound, according to data from the state’s Marijuana Enforcement Division. In Washington, without the benefit of vertical integration, wholesale prices fell even faster.
“If you look at Washington and Colorado, a lot of these legacy type facilities are either out of business or on their last legs now because they can’t compete with the price compression. And with newer markets, I see more and more people going the long-term route and fewer people going the short-term route.”
Lange says lighting is the No. 1 area where efficiency gains have been made in recent years.
The LED grow lights that are on the market today are vastly superior to what was available five to seven years ago when LEDs first started hitting the cannabis market, particularly those fixtures from less-than-reputable manufacturers who were using cheap diodes and overstating their output, Lange says.
“The performance just wasn’t there,” he says, “but it wasn’t the LED technology. It was a poorly designed, poorly manufactured light.”
Today’s top LEDs deliver not just the power to increase yields, quality and consistency, but also the energy efficiency to reduce electricity bills and save an average of 40% on mechanical costs, such as the heating and cooling system.
Although many growers have continued to use high-pressure sodium lights — especially if they’ve had a bad experience with poor LEDs at some point — Lange says that hesitance to move away from what was once the industry standard is slowly going away. It’s becoming easier to convince Ascendant Management clients that LEDs are the right way to go.
“The cannabis industry, even though we’re one of the youngest industries out there, is extremely slow to adopt technology,” Lange says. “Up until recently, it was just a snail’s pace.”
Lange says for many companies, the biggest obstacle to change is the so-called “master growers” who installed equipment they were comfortable with.
“We have found that a majority of the time these master growers don’t actually know what they’re doing,” Lange says. “They have a recipe that they follow, and if it works, it does great. But if one variable is out of whack, they lose control and can’t figure out what they’re doing or how to fix it. And so new equipment represents a big risk in that regard.”
That trend, too, is changing with the times, as cannabis companies are relying less on a “master grower” to design a multimillion-dollar production facility and putting that responsibility in the hands of an engineer or consultant like Lange, who is currently building out a facility in Portugal in addition to his work in North America.
Another technology being deployed by Ascendant Management with great success is aeroponics.
Although aeroponics has been used for decades to grow lettuce, herbs, strawberries and other crops, only a small fraction of cannabis growers have put the cultivation method to use.
“The inherent advantages of aeroponics lead me to believe that it will expand rapidly once regulation starts catching up — once we have to be energy efficient and care about water usage and things like that,” Lange says.
When Ascendant Management was contracted to provide design and engineering services for Onyx Agronomics in Shelton, Washington, Lange recommended a high level of control that could also be scaled up as Onyx expanded.
“That led us to aeroponics,” he says.
The company installed an aeroponics system designed by AEssenseGrows, as well as the company’s Guardian Grow Management software, to improve automation, reduce the risk of contaminants and pests, lower the cost of production and provide an analytics platform that eliminated guesswork in the grow.
“Overall, we were able to create a very robust, environmentally controlled facility,” Lange says. “It generates about 130 million data points a day that allows them to get real data as to what is happening with all the plants.”
Bailee Syrek, the director of operations at Onyx, says automation has helped the company produce a high-quality, consistent product, leading to more sales in less time.
Another big advantage with the aeroponics system and the various automation technologies installed at Onyx is being able to dramatically reduce labor.
“Right now, with the current labor market, automation is allowing us to keep producing at full capacity and not have downtime, even though filling vacant positions is difficult in today’s market,” says Syrek.
Lange estimates growers can reduce their labor needs by around 80%, but most don’t cut staffing that much. They prefer to reduce labor by, say, 60%, and shift 20% of their workforce to different tasks.
“Instead of spending their entire day keeping plants alive, now your staff are mostly there to improve the life of the plant,” Lange says.
Syrek confirms the labor savings of about 60%, resulting in a significantly lower overall cost of production.
“Consistency is the other big thing,” she says. “Humans just aren’t capable of monitoring all the data and making corrections like a computer is, so we wouldn’t even be able to grow how we do currently without automation.”
Ascendant is installing similar technology, including the AEssenseGrows aeroponics infrastructure, at XP Agronomics, just outside of Tulsa, Oklahoma. The 15,000-square-foot facility is expected to be operational by November.
Although the Oklahoma Medical Marijuana Authority has granted nearly 8,000 cultivation licenses, Lange says there’s a dearth of high-quality cannabis in the booming Sooner State market, leaving an opening for a top-notch producer with a highly efficient operation to make their mark.
“We’re looking to go over there and bring in a lot of the things that we’ve learned about producing medical-grade products and take it to the Oklahoma market,” Lange says.