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Greenhouse v.s. Indoor Cannabis Cultivation: Which is best?

It seems the low cost providers are the ones surviving the glut. Can indoor compete with greenhouse in the long run?

What are your thoughts?

Recent webinar on greenhouse vs. indoor cannabis growing: Greenhouse v.s. Indoor Cannabis Growing Webinar

-Dan

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This is a great topic that I want to explore more. I’m calling in the experts! @DispensaryOwners, @DispensaryEmployees, @growopowners, @GrowOpEmployees, @mastergrowers, @Caregivers

Will indoor cultivation be able to survive the commodity price plummet? Will your consumers stand only the outdoor/greenhouse grown cannabis? Is there a way for indoor cultivation to survive the oncoming price drop?

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I believe there is but that comes with some challenges. I believe to survive the outdoor price plummet you have to get your indoor game up to a minimum of 2 pounds per Gavita (3 pounds per light optimal. You also must have a huge fallowing support on social media to push your brand. Branding has seem to become the biggest sources of revenue from this industry. People like to buy and tend to buy brands they come to trust over time.

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This is a tough one! I think that it depends on the specific market. Unfortunately the average consumer is not experienced enough to know the difference in quality between indoor and outdoor/greenhouse at this point and all they look at is THC numbers. I believe that you can achieve those high THC numbers much easier in a controlled environment (indoor) so as long as the indoor folks can keep turning out those high THC numbers for the consumer they can survive until the market stabilizes and the consumer gains education. With that being said some indoor facilities can get around this in some states by going vertical if legal to do so in that state. Then they can funnel their own supply into their dispensary and out the door. Right now in most markets the greenhouse guys are positioned best in my opinion due to utilizing sunlight to cut costs and growing in a much more stable environment than outdoor with lower operating costs than indoor in most cases.

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IMO, I don’t see indoor facilities being able to sustain in the future. The price to produce a pound is much higher than greenhouse/outdoor. If the market levels out some, there might be a niche for an indoor wholesaler with really high quality, but in CO at least, the amr is dropping drastically.

Greenhouses make the most sense to me for large scale operations. You have the high quality of indoor, the power of the sun, AND lower overhead costs than indoor. Win/win right? The downside to these state-of-the-art greenhouses though, is the initial start-up cost. It’s a pretty penny to be state-of-the-art!

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Do you see the market in CO leveling out anytime soon?

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As for the Market leveling out… My educated opinion… No. Not for some time. We are just getting the end of prohibition, and while it takes other states to catch up, I see a lot of off paper transactions occurring to fill voids in the market in other areas just coming into the picture.

This will keep fluctuating values, until there is more stabilization across the country. Once we complete the end of prohibition federally, we have another huge mess to deal with… New intrastate commerce laws, which will again adjust the values once commercially crops can legally be moved from one state to another.

We are so new to this as a country, its going to take time. Already, farming Co-ops are having steady value challenges in the hemp market waking up with the Dept of Ag.

Indoor… It will always remain. Aside from certain strains doing better in an indoor environment, the light manipulation to expedite crop production to meet commercial demand that can be accomplished.

One example that comes to mind, and is a prime example of commercial indoor growing, would be LivWell’s facilities, especially their largest indoor facility in Denver. I cant recall what the SqFt run is, but definitely the largest I have ever seen.

The demand for all methods will be strong!:cowboy_hat_face:

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While I believe there will always be a market for high-quality indoor flower product, ultimately the energy costs of production will be too high for cultivators trying to stay competitive in the commercial marketplace on indoor alone. There is no other plant in the world being cultivated on a massive scale where most of the production takes place indoors.

As @thatgatesguy mentioned, cannabis that is skillfully grown in a high-tech modern greenhouse can compete with indoor when it comes to quality and potency. While these structures can have a high start-up cost, building out an entirely new indoor facility of the same size will cost far more. Even retrofitting existing warehouse space to properly cultivate cannabis may end up costing more than a new greenhouse in some cases. I have seen indoor retrofit operations where environmental control was more of a concept than an achievable goal and the results can be disastrous and ultimately expensive.

In the webinar that @Dan_Monk shared, Nick Earls broke down the energy usage of indoor operations and found that lighting, cooling and dehumidification comprised 89% of energy consumption. There are many ways to reduce those energy costs in a greenhouse. Evaporative cooling systems cost 50% less than traditional A/C systems. Dehumidifiers are often unnecessary and even when required they will not be utilized as often as is typical in a sealed indoor setting.

Then there are the obvious savings on lighting. As demonstrated in the webinar, the ability to use the sun as a primary light-source for just a few hours per day resulted in a 4.5x reduction in energy usage.

Many growers are resistant to a greenhouse operation due to concerns over heating the structure in the winter. While that is a valid concern, in most cases the savings on energy consumption will outweigh the added costs of heating.

Zachary Carr, one of our Commercial Greenhouse Designers, has provided a tool to help growers estimate annual energy costs and make that assessment:

Estimated fuel use - Fuel use (FU) = C x U x A x D where

C = coefficient based on heat value of fuel and efficiency of heating unit

U = “U” value of glazing or building wall

A = surface area of building where heat is lost

D = degree days for period when greenhouse is heated (inside night temperature minus 5°f to 6°F for solar gain). Degree days are available at www.degreedays.net. A site nearest the greenhouse should be selected. An average of three years data is best. Degree days may from year to year vary by 20% above or below the average.

After calculating fuel use we factor in energy savings from use of screens (light deprivation or shade systems) with a 25% safety factor.

For electric (heating, venting & cooling only) we assume 3.5kWh/ft2 coefficient.

Example:

The number below represents a 10,080 square foot Series 2000 greenhouse facility using 93% efficient heaters & a temperature setpoint of 70F – all one room with 14’ sidewalls – comprised of (3) 35’ wide x 96’ long spans gutter connected using 2017 weather station data from Pueblo Memorial Airport in CO.

Based on my calculations we would conservatively estimate that 10,296 gallons of propane & 35,280 kWh would be consumed annually.

10,296 X $2.00 = $20,592.00

35,280 X $0.20 = $7,056.00

Compare this with Nick Earls’ conservative estimate of 175kWh/ft2 for annual indoor energy consumption. Powering an indoor facility of the same size could cost over $350,000 a year.

175 X 10,080 = 176,4000kWh

176,4000 X $0.20 = $352,800.00

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I’d be willing to hedge my bets that greenhouse wins in the long run.

Indoor grows may be unparalleled in their ability to maintain a totally climate controlled environment, but I can easily see greenhouses winning in terms of sheer scalability.

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Whats fun, both will survive commercially!

Not all Dispensaries will have access to good growing light even in a green house for sustainable supply. Take large cities such as Denver, where growing on location due to property demands at a store front, may not be obtainable. Some of our far northern states where seasons are very challenging to grow under a greenhouse.

Both will continue to thrive, but the income potential of green house does far outweigh that of indoor!:cowboy_hat_face:

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You are both correct: there is a place for everyone! I think the only place you’ll see powerhog lights like DE’s will be in greenhouse settings, while indoor cultivation facilities with precise environmental controls will be growing vertically with LED’s. You are seeing similar trends happening with produce in densely packed populations like Japan. Japanese growers have taken produce to a whole new level. Check out this short video from Wired to show you what I mean:

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Nick… Whats funny, as you posted that, i giggled as i didnt want to be the one to open the door on that topic. I find a lot heated discussion stems when I tell folks thst, yes, the asian market of manufacturers are really stepping up their game, especially with LED production quality as well…

At this point, folks throw hot dogs at me…

But I have been watching a lot of that, and their market is taking a strong turn for the better, as lately their R+D has become better. Their more serious approach is apparent by their interaction with other growers worldwide.

I may have went sideways with that, but I did want to say you are spot on!:cowboy_hat_face:

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Most of china’s vegetable production is now grown in some form of protected production (glasshouses, hoop houses etc). I think @GrowSpan nailed it on the head. When you do the math, the amount of free energy given by the sun beats lighting costs hands down.
Indoor ag will always have a place though, imo esp for greens and small vegetables and more artisanal products. but for large scale production, i think greenhouses will soon take over.
doesnt mean lights would phase out, imo, but become supplemental fixtures like CO2 injection and ac to optimize crop output.

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This is a great discussion and a topic I’ve thought about often over the last year. While I think greenhouse is the way to go for large scale commercial production (significantly lower energy costs) I just don’t see indoor going away. Maybe this is the consumer in me that doesn’t see demand for indoor going away… There are growers right now who haven’t had to compromise on price - despite drastic market drops - and that’s because consumers want their product and ask for it by name. It reminds me of craft brewers. Craft brewers haven’t gone away even though Budweiser and Coors can produce beer for significantly less - and that’s because of consumer demand. Just my 2 cents…

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You have any greenhouse related questions?

AMA With Adam Pound from Agra Tech Greenhouse Manufactures TODAY 10/31 11am PST

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