Marijuana Business Magazine October 2019

October 2019 | mjbizdaily.com 71 By Bart Schaneman Marijuana growers can weather a price drop by keeping tabs on payroll and other costs as well as diversifying their customer base and using futures contracts W ith traditional agriculture commodities such as corn or soybeans, it’s common for farmers to try to hold on to their crops until the market offers a better wholesale price. But marijuana cultivators aren’t inclined to store their flower for months at a time if the wholesale price bottoms out, as has happened in California, Colorado, Oregon and other markets over the past several months. The quality of the plant deteriorates, making it harder for growers to sell their crops to retailers and manufacturers. Plus, most grow operations don’t have the capital to sit out a glut. Electrical bills and rent, for starters, are due every month. Plant matter and cannabinoids degrade, and the harvest date on the label is a giveaway that the product has been sitting on a shelf. In a market with too much canna- bis, no one’s buying the old stuff. “Cannabis is like A/C units and ice cream,” said Joshua Haupt, master grower and chief revenue officer at Medicine Man Technologies in Denver. “You sell a bunch in the summer.” What can a marijuana grower do when the market hits peak saturation—often immediately after the fall outdoor harvest—otherwise known as “Croptober?” Industry officials who have experienced a glut firsthand say cultivators trying to survive should consider the following: • Know your budget and how to operate within the constraints of your finances. • If you’re a wholesaler, diversify your relationships by working with multiple clients to protect your ability to sell product. • Set up futures contracts to ensure you’ll get a fair price and won’t have to scramble to find a buyer. “Most of these businesses have very weak balance sheets, and one bad harvest can put them under,” said Wes Matelich, CEO of RX Green Technologies, a supplier of nutrients, substrates and other cannabis inputs with offices in Denver and Londonderry, New Hampshire. “Knowing where you can flex is key to surviving.” Joshua Haupt of Medicine Man Technologies Courtesy Photo Photo Courtesy of GTI