Although cannabis is currently a $6 billion a year industry in Canada according to Statistics Canada, only 17% of that demand is being supplied by licensed producers due to a variety of production and regulatory limitations.
Instead of fulfilling on investor expectations for rapid growth, otherwise promising businesses in this emerging industry have actually experienced growth slowdowns. Numerous issues impact their ability to produce within their planned schedules or to established product quality parameters.
Making the need to address production issues more urgent, growth expectations currently are for the sector to hit $7.8 billion by 2022 in Canada due to the introduction of the Cannabis Food and Beverage legalization in October 2019 combined with the massive increase to production being supported by new construction and retrofitting of existing greenhouses and warehouses.
However, since the industry is so new, no one has historical data or reference points. Everyone is figuring out what the most challenging issues are, and experimenting to address them.
A heat wave, while uncomfortable for most people, may be an operational crisis for a grower whose chiller system is already struggling. A long period of rain may make too-wet cannabis plants struggle to survive – an issue temporary equipment can immediately mitigate while providing more lead time for an engineer to design a long-term solution. High fuel costs can drain potential profits until a custom-fit power plant package is introduced to save millions of dollars on fuel costs while reducing harmful emissions.
Sooner than later, the players in this industry must learn to apply proven temporary solutions routinely deployed by other sectors to prove to investors and policy-makers that their trust in early entrants to the cannabis industry has been well placed.
So, what’s the hold up?
Given that producers tend to cluster in remote geographies that best support an agricultural endeavor of this size and type, almost no producer is immune to the production issues affecting the young cannabis industry. Four common drivers of production delays are often cited.
- Power please, any time now.
First, multiple producers grieve the same lack of grid access in remote areas that their neighboring competitors face. They all confront the difficulty and added expense of lobbying and negotiating with reluctant municipalities and utility providers whose investment decisions rely on surety of long-term returns.
Without power, construction cannot progress. Growing conditions cannot be normalized. Routine operations cannot be established. All the while, revenue opportunities and market share advantages slip by.
- New life for the land.
In addition to constraints due to lack of permanent power, much of the preparation of the land being acquired involves repurposing properties – both soil and facilities – that were once dedicated to other agricultural purposes. To meet the highly-guarded growing strategies designed for each strain to yield the best possible crops – right down to the exact amount of sunlight and number of hours of darkness per day — specified greenhouse conditions must remain constant regardless of changing climate conditions year round. The plant growing environment is dynamic, and so must be timely solutions to supply power and lighting for uninterrupted production.
- Design and construction dilemmas.
Construction delays and facility retrofits frequently introduce hazards to planned growing timelines and conditions. For instance, if a drying room was not properly designed for the purpose or if flowering room RH (relative humidity) is too high, excess moisture could destroy millions of dollars of inventory. Temporary dehumidification equipment powered by temporary generators can save the day, and the crop.
Another common issue is the fact that HVAC systems in re-purposed facilities are often undersized for the new demands placed on them. Or, existing units don’t operate effectively. In the case of new construction and renovation, mechanical designs and retrofits often omit the ability to later cost-effectively tap into a chilled or heated water line to accommodate a temporary solution that will allow a site to stay operational even if HVAC systems need to be addressed.
- Success brings expansion challenges.
Successfully making one’s way around the game board ultimately brings a player back to Start, and the need to once again build – and power and light and climate control– additional capacity. Load factors, external elements, building siting, and many other factors influence operational success at this new increased level of production. During expansion, and in some cases, throughout operations during seasonal and market impacts, temporary equipment engineered specifically for a grower’s unique situation can produce immediate, reliable impact on the bottom line.
Temporary solutions mitigate production risks immediately.
Temporary power, dehumidification and temperature control are routinely deployed by a multitude of industries that grapple with similar constraints, from oil and gas exploration companies in remote drilling locations to food processors balancing product quality and safety with seasonal and regulatory impacts on production.
The cannabis industry, during this formative period and well beyond, can similarly apply long-proven temporary equipment solutions in four stages of a company’s growth:
- During construction
Power generation to supply office and bathroom trailers, general construction and tools, lighting, and security and climate control equipment can free producers from the handcuffs of the local utility company. Temporary lighting and climate control equipment can be part of a hybrid or alternative fuel power package for a full turnkey solution.
Temporary cooling commonly used by general contractors helps cure concrete and provide clean, ambient air conditioning to protect workers and structures.
Similarly, temporary hydronic heating equipment assists concrete curing, protects interior finishes, provides tie-ins for snow melting tubes, supplies in-floor heating systems, and supports both radiant and forced air heating for optimal ambient conditions. For example, in colder climates, growers must have a plan for snow load melting. If a greenhouse can’t handle a certain weight on its roof top, a boiler system loop is needed to melt snow so the roof doesn’t collapse. Some contractors fail to schedule this during pre-construction, which makes for an unnecessary and costly incident.
- While pre-commissioning
Leveraging temporary equipment can create ideal site conditions for plant growth even if sections of the project are still under construction and building power and mechanical systems are not yet fully commissioned. A good equipment solutions provider will find unique ways to accelerate construction schedule latter stages while allowing the grower to get a head start on mother plant growth, right through to cultivation, drying and packaging.
Power generation ensures adequate lighting, reliable security systems, well-managed climate control and testing of automation equipment. A well designed M&E system includes backup generators, switchgear, chillers and boilers.
Temporary cooling may include liquid cooled lights, process chillers, cooling towers and ambient air conditioners before all permanent equipment switches are flipped.
Purpose-specific, temporary heating may include boiler plants, combined power and heating units, snow melting tubes flushes, in-floor heating systems testing, and geothermal commissioning duties.
Humidity equipment can aid in dehumidifying where needed and with humidification balance testing.
- In early operation
Some of the most difficult challenges faced by growers is when a cannabis facility finally goes live and all the system gremlins and project deficiencies reveal themselves. Challenges with balancing mechanical systems, automation, re-scheduling specialty contractors for nagging issues, or awaiting parts or critical components plague progress.
Also, it can take months or years for a utility provider to deliver a multi-megawatt feed. Often enough at this stage, highline utility power is still undersized or available, introducing the need to use natural gas-fired generators. A good temporary solutions provider should be able to provide a compare-and-contrast total operating costs analyses, including different fuel sources, labor, equipment servicing and remote monitoring – not just the equipment rental costs. Utilizing a temporary equipment contractor with in-house mechanical and electrical engineers will ensure that the design is both effective and, above all else, safe.
Temporary power generation, often supplied as a long-term mini power grid, can supply growing lights, security systems, exterior site lights, climate control equipment, automation equipment, standby equipment and monitoring systems.
Temporary cooling equipment helps reduce interior temperatures resulting from lighting, and supports right-temperature process water and ambient air conditioning.
Likewise, temporary heating equipment ensures supporting boiler duty for the availability of tie-ins for snow melting tubes, in-floor heating systems, geothermal or co-gen substitution hydronic heating tie-ins, and radiant heating for ambient conditions.
Humidity-control equipment supports product dehumidifying for growth, curing and storage, as well as humidification for growth and storage when the time is right.
- For ongoing operations and contingency
On an ongoing basis, growers face a non-stop balancing act to manage interior heat, relative external temperatures, the amount and duration of sunlight, humidity levels and more. Contingency planning becomes mission critical. Things will break. Power will go out. Weather will get bad. Such production risks, especially in succession, can cost millions of dollars in unplanned expense, which may or may not be covered by insurance, especially if the carrier deems the resulting issue one related to a builder or design defect.
Temporary equipment, alone or in combination, can be configured for multi-purpose power generation, load bank, cooling, heating and humidity control solutions, giving growers complete, immediate control over their most pressing and costly production obstacles at any point in the life of the business.
For example, thoughtfully designed temporary equipment has boosted actual drying times in drying rooms to create just-right environments specific to that growers’ secret recipe for growing conditions. In one case, reducing drying time from five days to two days meant product went to market much quicker.
Some growers are ahead of the pack, already taking production matters into their own hands from the earliest stages of their businesses, and then migrating these proven strategies into their long-term building designs and operational processes.
Because they are well prepared for the unexpected, now and in the future, they plan to meet any production challenge head on – and seize the opportunity presented by would-be competitors who continue to struggle with the industry’s most prevalent production constraints. Those who engage the proven expertise of others on their teams will pass Go, again and again, and collect far more than $200.