Marijuana Business Magazine - Issue 09, Oct 2017

EXECUTIVE SUMMARY The cannabis nutrient and soil industry is exploding thanks to at least two factors: The number of legal growers globally has skyrocketed, and the demand for quality and potency has gone up among consumers. Here are some takeaways about the sector: • The customer base for nutrient and soil companies is quickly expanding, comprised of small-scale growers and huge commercial grows with thousands of plants. • Innovation among nutrient and soil companies remains key, with most developing cannabis-specific products that cater to the needs of marijuana growers and their plants, as opposed to general agricultural crops. • Keeping up with overall demand for nutrients and soil has been a major hurdle for many companies, which report a decrease in seasonal demand because greenhouses are turning cannabis cultivation into a year-round cycle. • An increase in competition is expected in coming years, but contraction is likely to be driven by acquisitions involving larger firms such as Scotts Miracle-Gro, which already has bought Arizona-based Botanicare. companies in the cannabis business. It has a presence in 95 countries and is on track to ring up $105 million in sales this year, said CEO and owner Mike Straumietis. And while smaller-scale cultivation operations with 100 grow lights or less still account for about 60% of the company’s sales, that’s probably not going to last, Straumietis predicted. “The tide is going to change very quickly here. Because the (licensed producers) are huge. We’ve got guys out there with 4,000 lights ... and they’re expanding even more,” Strau- mietis said. “The writing is on the wall.” That means more demand for sup- plies that will give those cannabis pro- ducers high-quality cannabis that allows them to compete for market share. Market Dynamics Several dozen companies already specialize in cannabis-specific nutrients, fertilizers or treated soil for growing. And even more retailers and distributors carry those products. Most retailers work with brands such as Advanced Nutrients and S.J. Enter- prises’ Cyco Platinum Series. Many – if not most – of the manu- facturers don’t even sell directly to growers. Instead, they sell to retail shops or distributors like Oregon- based Savant Plant Technologies. “The retail partners are a big piece of this pie. They really grew this market, and they’ve been the shepherds of it for the past 20 years,” said Renee Shoppach, sales director at Botanicare, an Arizona-based can- nabis nutrient producer. For wholesale distributor Savant, only about 35% of the company’s sales are for nutrients or soil, said CEO James Knox. The other 65% rep- resent other types of grower supplies. Knox also runs a pair of hydroponic stores in Oregon, simply because smaller growers typically don’t purchase enough in bulk to justify the expense of him delivering soil or nutrients directly. “I’m able to hit both fronts. I have retail stores where the smaller grow- ers can go, but Savant is here for the big dogs that need to do big work that, truthfully, can’t afford to buy at retail stores because that price point isn’t affordable,” Knox said. But Savant, like Advanced Nutri- ents and S.J. Enterprises, has seen tremendous growth since its found- ing in 2013. Advanced Nutrients was founded in 1999, and S.J. Enterprises in 2008. Knox said his sales figures are easily in the millions. “I have steadily grown 100% in (soil and nutrients sales) every year. Advanced Nutrients CEO and founder Mike Straumietis. Photo courtesy of Advanced Nutrients 106 • Marijuana Business Magazine • October 2017