Michael Gillespie has spent a decade at the intersection of heavy-industrial engineering and cannabis cultivation, first as a consultant, then as the engineer who helped a multi-state operator spend $200 million across five states in 22 months, and now as co-founder of CannaDiligence, an initiative that audits and optimizes cultivation facilities to help owners squeeze more yield and more profit from the assets they already own.
Marijuana Venture spoke with Gillespie to understand why so many grows are leaving money on the table, and what it actually takes to fix it.
Marijuana Venture: You’ve described cultivation facilities as being “structurally misunderstood as an asset class.” What do you mean by that?
Michael Gillespie: The first time I walked into a cannabis cultivation facility, I looked around and immediately saw what my background in naval engineering had trained me to see: a fully integrated system where lighting, CO2, HVAC, extraction and manufacturing all had to move seamlessly under one roof. A ship is very similar. You have to make your own power, your own water, keep people alive and move the vessel. Everything is interdependent.
The problem is that a lot of cannabis facilities were built without that industrial process mindset. If you walked into an Intel chip fab or a pharmaceutical plant and then looked at cannabis, the contrast was jarring. In cannabis, the building was always on fire. Something was always out of commission. Operators were constantly fighting against their asset when the asset is supposed to be how the business does what it does. Your facility can either make or break your business, and it’s called an asset for a reason.
MV: What’s the single biggest misconception owners and investors carry into these facilities?
Gillespie: They think about cost reduction when they should be thinking about optimization. Corporate types want to reduce, reduce, reduce. But just cutting costs isn’t the right framework. Think about it this way: if you lay off half your workforce, half the work gets done. You might get a mild bump in the short term because everyone gets scared, then morale drops and performance follows.
The same applies to energy. Everybody talks about energy savings, but your energy cost per pound is a ratio. If you have a staff of five cultivators, fixed nutrient costs and fixed energy overhead, and one facility produces even 10% more yield than another, that’s 10% less cost of goods — a direct translation to the bottom line. I always say: it’s not downsizing, it’s not upsizing, it’s right-sizing. Optimal. That’s where you want to be.
MV: Can you give us a real-world example of what that looks like in practice?
Gillespie: I went into a large facility that had become heavily reliant on a vendor that was, quite frankly, taking advantage of them. After a couple of days of assessment, working alongside their cultivation and central plant managers, we were able to stabilize operations and interrogate the maintenance costs. We removed roughly $2 million a year in maintenance costs from that facility. That’s pure bottom-line improvement, and we hadn’t even touched production efficiency yet.
A second client had a different version of the same problem: one major piece of equipment had been out of service for months. Mold outbreaks were happening monthly. We traced the failure to some original installation errors: a couple of misplaced hangers. Not a catastrophic problem, but nobody had ever caught it. We got the vendor to deliver on the maintenance contract, fixed the installation issues, and that facility went from monthly mold explosions to roughly one major outage per year. The knock-on effects of labor savings, quality improvements and reputational benefits were enormous.
MV: What metrics should cultivators actually be tracking that they typically aren’t?
Gillespie: Most growers focus on yield per light or yield per square foot of canopy. Those matter, but they don’t tell the whole story. You have to incorporate turn rate, labor intensity and energy performance together. On energy specifically, there’s a useful benchmark: a well-run LED facility with good environmental control should be hitting around 1,000 kilowatt-hours per pound of dry weight. If you’re at 3,000 kilowatt-hours per pound, the problem is almost certainly your production output, not just your equipment’s efficiency rating. You’re not getting the yield you should from the energy you’re spending.
The biggest driver of that gap is usually environmental control, specifically vapor pressure deficit. When you can’t maintain the right VPD, you stress the plants. Stressed plants don’t yield as much, and they’re more susceptible to disease and pests. Hot, moist air and cool, dry air don’t want to mix; these same physics that create weather systems in nature create microclimates inside your grow rooms. Operators try to brute-force it with more fans, more dehumidifiers, more everything. But the real solution is understanding how air moves and adjusting accordingly. Often, I can make relatively simple control and scheduling changes that cost nothing.
MV: How do you get past facility managers who feel threatened by an outside audit?
Gillespie: That’s always the biggest barrier. Most facility managers know their building well, and the last thing they want is someone from the outside pulling back the curtain and making them look bad in front of senior management. So we flip the script: we position ourselves as advocates for the facility team, not inspectors. We’re there to help them justify their capital requests, to give them third-party backing for the upgrades they’ve been asking for, and to take some of the firefighting off their plates.
Nobody likes getting called at 2 in the morning. When we can help facility managers make that stop happening, they become our biggest allies. Soon enough the owners start to see their asset for what it actually is: the foundation their entire business runs on.