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National Ag Day: An Interview with Industry Leaders Disrupting Agriculture in Positive Ways

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National Agriculture Day (March 23, 2021), is an annual event held by the Agriculture Council of America (ACA), a not-for-profit 501-c (6) organization, to increase the public awareness of agriculture’s vital role in our society.

The ACA believes that every American should:

  • Understand how food and fiber products are produced.
  • Appreciate the role agriculture plays in providing safe, abundant and affordable products.
  • Value the essential role of agriculture in maintaining a strong economy.
  • Acknowledge and consider career opportunities in the agriculture, food and fiber industry.

We investigated how the hemp and cannabis industry is disrupting agriculture in positive ways, from automated trimming, to controlled environment agriculture, to water conservation and beyond. We interviewed Aaron McKellar, CEO and President of Eteros Technologies, parent company of Mobius Trimmer and Triminator, Mark Doherty, Executive Vice President of Operations, urban-gro, Inc. and Derek Smith, Executive Director at Resource Innovation Institute (RII) to get their perspective on agricultural innovation.

Aaron McKellar, CEO and President of Eteros Technologies

Aaron Green: Why is hand-trimming inefficient at scale?

Aaron McKellar: Hand-trimming is inefficient at scale because it is so labor-intensive and time-consuming, not to mention repetitive and frankly boring. It’s hard to stay fully engaged as a worker trimming by hand, so the consistency of your finished product isn’t reliable with a crew of hand-trimmers.

Aaron McKellar, CEO and President of Eteros Technologies

A hand-trimmer can produce good quality trim on about 2 or 3 pounds per day. A scaled-up facility running just one Mobius M108S Trimmer can realize up to 120 pounds per hour, replacing many dozens, or even into the hundreds of hand-trimmers. The HR nightmare this presents, and all the associated costs of paying and facilitating dozens of employees (parking, washrooms, lunchrooms, PPE and gowning, etc) is simply unworkable. And that’s before COVID.

Green: How does automated trimming benefit large producers and how does the quality compare to hand-trimming?

McKellar: Not all automated trimmers are created equal. Any of the machines out there will help to reduce the need for hand-trimmers by taking off the bulk of the leaf, leaving a small team of “hand-polishers” to finish it up. The Mobius Trimmer is the only automated trimmer on the market today that leaves the technology of the original machines in the past and employs next-gen technology to truly mimic hand-trimmed quality with stunning through-put rates.

We have high-end producers using Mobius Trimmers whose own QC department cannot discern Mobius-trimmed flower from hand-trimmed flower. Hand polishing crews tend to be far smaller when using a Mobius vs first-gen machinery, and many Mobius users don’t touch up at all, instead going straight to market right out of the trimmer. For a look at how our technology differs from the rest of the field, check out this look under the hood.

Mark Doherty, Executive Vice President of Operations, urban-gro, Inc.

Aaron Green: What is controlled environment agriculture?

Mark Doherty: Cannabis cultivators understand growing indoors because, prior to legalization, they had been doing it for years in the gray market. It is by way of that experience that cultivators learned how to manipulate a highly-valuable, complex plant in an indoor setting. As cannabis legalization spread across the United States, many government regulators required that it be cultivated indoors according to strict regulatory protocols. Fast forward 10 years, and we have an industry that is keenly aware of the indoor environmental conditions required to be successful. Critical factors like heating, cooling, ventilation, dehumidification, and how to best mimic Mother Nature’s energy through lighting are all deliberately optimized.

Mark Doherty, Executive Vice President of Operations, urban-gro, Inc.

With cannabis cultivation driving the advancements of controlled environment agriculture, market and regulatory forces demanded higher efficiency, reduced energy and resource consumption, and clean crops. In most states, cannabis crops have more stringent testing than food crops. For instance, the lettuce in Massachusetts will not pass the standards for cannabis in Massachusetts. It’s through rapid innovation and technology adoptions that the cannabis industry has paved the way for lettuce to be profitably grown indoors.

Green: How can controlled environment agriculture help alleviate supply chain stresses?

Doherty: By growing food closer to the consumer, you reduce food miles; meaning, that link in the food supply chain gets a lot shorter and is less prone to disruption. Whether you have hyper small cultivation facilities on every street corner, or a larger cultivation facility geographically close to consumers, you can grow 24/7/365. Furthermore, growing locally allows for better prediction of facility output—10 boxes of greens on Monday, 50 boxes of greens on Tuesday, and five boxes of greens on Thursday. This eliminates harvesting a large crop before it is ripe and likely requiring cold storage. The controllability of controlled environment ag is that consistent, reliable contribution to the food supply chain and shortening that path to the consumer.

Derek Smith, Executive Director at Resource Innovation Institute (RII)

Aaron Green: What motivated you to publish the Cannabis H2O: Water Use and Sustainability in Cultivation report?

Derek Smith, Executive Director at Resource Innovation Institute (RII)

Derek Smith: Until this report, if you searched for cannabis water usage, you’d basically find one cited statistic. It was “six gallons per plant per day.” We knew this was from a model based on one extreme illicit market scenario. Based on the data we were seeing and the conversations we were having, this number seemed way off. So, we pulled together a multidisciplinary Water Working Group as part of our Technical Advisory Council. The objective of the Water Working Group was to establish a scientific understanding of how, and how much, water is used for cannabis cultivation so that cultivators have confidence in taking steps to be more efficient, and so that industry leaders, governments and media can be accurately informed about the range of water practices of today’s regulated market.

Green: What key points should cannabis cultivators take away from the report? What key points should regulators and policymakers take away from the report?

Smith: As the cannabis industry matures, water use efficiency will become more important, as it has for other agricultural crops. Pressures to use water efficiently will mount from multiple channels including – reducing input and energy cost, protecting the environment, meeting regulatory standards and simply being good stewards. We recommend that industry and regulators focus efforts on the following areas:

  1. When grown outdoors, water for cannabis production should be assessed like any other agricultural crop and be subject to state and local regulations that apply to other crops. Our research indicates that cannabis neither uses a massive share of water nor uses more water than other agricultural crops. Applying the same standards to cannabis as to other agricultural crops will correctly categorize outdoor grown cannabis as an agricultural crop.
  2. In areas where there may be conflict between water use for cannabis and environmental concerns, regulators and the industry should focus (1) on the timing of water use and (2) the potential of storage to mitigate environmental conflict. Our results show that in many parts of the country legal cannabis farmers have ample water storage to satisfy their needs. In areas where storage is insufficient, increasing storage should be a priority for farmers and regulators.
  3. Our research shows there are still massive differences between cannabis production techniques. As farmers continue to experiment and improve, we expect to see water use be a more important part of cannabis farming decisions and expect new plant varieties and growing techniques to be developed that increase water use efficiency. Yet more data from actual farms and facilities are needed to point the way toward the technologies and techniques that drive optimal efficiency and productivity. It is recommended that producers benchmark their performance and governments consider requiring energy and water reporting by producers. The Cannabis PowerScore can assist in these efforts.
  4. As indoor production continues to grow, especially in areas that have unfavorable climatic conditions for outdoor growing, we expect more cannabis users to rely on municipal water sources. Yet, it is unclear if municipal water suppliers are equipped to work with the cannabis industry. We suggest outreach efforts between the cannabis industry and municipal water suppliers to incentivize efficiency where possible.

Should Your Business Invest in Delta-8-THC?

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Editor’s Note: This article has been adapted from Chapter 2: Grow Rooms Today: A New Dawn from Getting Grow Rooms Right, written by Geoff Brown, Quest’s VP of Technical Solutions, and Dan Dettmers, Quest’s Applications Engineer.

Just as the cannabis industry has grown at a rapid rate over the past five years, the grow room environment has also experienced significant evolution. 

Growers have gone from amateur to pro, seemingly overnight. As they seek to produce massive harvests and secure a place in the market, they’re coming up against several major challenges associated with producing at scale. This is a new frontier for many and a new field that requires different ways of thinking — novel solutions, many of which are unfamiliar to both long-time growers and the new entrants into the industry like engineers and equipment vendors.  

The four key challenges of scaling up in this landscape are:  

  • Lack of experience across multiple domains,
  • market and regulatory pressures,
  • lack of standards,
  • misapplication of traditional equipment. 

These four challenges have combined to put tremendous strain on the new, modern-day cannabis companies. However, before we can hope to solve these problems, we need to first understand what the problems and challenges are and how they came to be. 

 

1. Lack of Experience Across Multiple Domains 

There are severe knowledge gaps in this industry that need to be closed before it can truly progress and mature. 

The issue is not necessarily knowledge related to cultivation. As noted, master growers are experts when it comes to growing cannabis. Some of them were once amateur growers operating out of their basement or small-footprint operations, others have a Ph.D. in related fields — now they’re bringing their world-class knowledge to a newly legitimized market as employees, shareholders, executives or even founders, of new cannabis companies. Naturally, any industry that started in a basement is bound to experience some growing pains.  

We want to talk about the knowledge that is missing or has serious inconsistency as it relates to how best to scale up the production environment. The ideas that applied well to basement grow-ops are not applying well to commercial indoor grow facilities — something the industry is discovering through great pain and expense. 

Lack of understanding also persists among those who are ancillary to the industry, such as third-party equipment suppliers. Manufacturers are paying serious attention to the grow industry these days, as they hope to provide some much-needed solutions to many of the challenges growers are facing. Doing so successfully means big profits and the possibility of significant repeat business. 

But getting traditional suppliers involved with the cannabis industry has its risks. It’s a mixed bag — you could benefit, or you could lose. They don’t all necessarily understand the growing environment. On top of that, growers — who do understand — are now dealing with products and services they never had to before, or at a scale they never dealt with before. The result is confusion, poor communication and poor implementation of proposed solutions, which often don’t hit the mark. 

“It’s important to select and work with manufacturers who know the industry and offer products that are purpose-built for it.”

The inconsistency of knowledge has led to major harm, especially to growers in new markets who are scaling up to meet the demands of the market and investors looking for outsized returns on investment before commoditization at massive volume. Facilities of a million or more square feet are under construction, and huge amounts of money are being poured into these developments. But with technology and knowledge in its infancy, it’s an open question whether those dollars are being invested intelligently and put toward a facility that will work and deliver value. 

2. Market and Regulatory Pressures 

Pressures related to the market or regulations are a very modern challenge facing growers. Obviously, under the illicit market, someone growing cannabis at home didn’t have to worry about following any government regulations. Additionally, there were very few market pressures for them to worry about, as they most often had a captive customer base — as long as their prices were reasonable, clients were not likely to seek out another supplier. 

The legal market has brought about a new landscape that changes that game dramatically.  

For one, many growers are now large publicly traded companies with regulated facilities. This brings some transparency requirements, including quarterly releases of financial results. Producers are also typically expected to publish in their quarterly reports the grow yields they are achieving. There is  pressure to improve financial results on a quarter-to-quarter basis, and investors want to see that production is being maximized at all facilities as quickly as possible.  

The public nature of these companies means more diversity in the types of investors who hold stocks in them. Many of the new investors on the scene have less patience than the early venture capitalists or angel investors. There is now an expectation among many investors that there will be a certain level of market maturity in the cannabis industry, but that market maturity is still evolving. The industry is simply too new to expect anything else. However, with many growers relying on investors to supply the capital needed to take on the market and build up, falling short of expectations is not an option. 

Cannabis markets are unpredictable and rapidly evolving. Any new markets under development  are experiencing major supply shortages, as few were prepared to meet the tremendous demand among people in areas where cannabis has become legal for adult and medical use. It drives the pace of facility development to dizzying levels as growers, seeing an opportunity to grab market share early on, scale up to fill the demand. By having a large supply and brand recognition in markets where there is little product available, growers improve their chances of gaining large market share at an early stage – which has huge business and strategic value. But the execution must be done properly. For one, they need to be able to consistently produce — so avoiding mistakes that could lose crop or create inconsistent product is necessary. They also need to ensure quality and consistency even as they attempt to grow lots of crop very quickly.

Therefore, it is critical that growers scale up the right way. This is no area for a “rush job.” The idiom “buy once, cry once” applies well here — while it is slower and more expensive at first to take time to do things right, you’ll save more in the long run by way of avoiding headaches and unnecessary ownership costs. 

Adding to this pressure, the varying regulatory environments also challenge growers a lot. 

Some regulatory set-ups may make business less flexible and require different approaches. For example, some may require a full grow to be evaluated before the producer can receive a production permit. To minimize their capital exposure early on, this may motivate the grower to build a small first stage of their facility simply to satisfy this licensing requirement. After they go through the required harvests and receive the permit, the facility can be expanded to accommodate full production. This is a good example of how local regulations can have an impact on all aspects of growing, because it impacts the HVAC system type and design. Some types of HVAC systems are not conducive to incremental expansion. The ideal HVAC solution is one that can cost-effectively scale with additional rooms or square footage. 

Another example of regulatory pressures relates to the economics of growing in a given market. Some markets that have low barrier of entry for growers and don’t limit the number of licenses are having the opposite of a supply shortage – they have an enormous glut. These markets are at or near saturation, causing the market price per gram to drop. This results in even more pressure for growers to cut costs so they can offer cheaper products. In a saturated market, one of the drivers of success for a producer is lower cost.  

The economics of growing is discussed more in the next chapter, but the key takeaway is that your choice of HVAC equipment can vary significantly depending on variables like what kind of company you are, where you’re located and what the regulatory landscape looks like. These factors further contribute to challenges in the new frontier of growing at-scale. 

3. Lack of Standards 

One of the main reasons there is lack of consistent knowledge in the grow industry is because there are no standards in place regarding buildings and their systems. It’s seriously hurting the industry right now by contributing to the information vacuum.  

“Standards are important for any industry because they help ensure the right solutions are applied, because those involved in the sector already discussed and agreed on them. The cannabis industry does not yet have any standards for buildings and systems, which makes the design process more challenging.” 

In the mainstream, engineers rely on proven and documented standards in order to properly handle buildings they are not familiar with. An example are codes published by the American Society of Heating, Refrigeration and Air Conditioning Engineers — or ASHRAE. ASHRAE’s codes are used as well-defined standards relating to built environments and are applied in all kinds of buildings across North America, as well as implemented as the basis for countless local building codes. ASHRAE’s handbook has been published for many years with continual updating, with the earliest version dating to the 1920s. 

However, ASHRAE’s codes are geared toward residential and commercial buildings that are primarily designed for humans. There currently are no ASHRAE standards that relate directly to indoor plant environments and few of their standards are sufficient to address the unique needs and demands of these spaces. 

Of particular note in the hyper-competitive grow industry: even the folks who think they have found the answers to these challenges are not inclined to share information or insights. This “secret sauce” mentality has exacerbated the challenges by ensuring no research or data-sharing occurs in the industry. If this secrecy continues, there can be no hope for developing industry standards and best practices. 

As a result, engineers are without guidance as they get involved in the design and construction of modern grow rooms. It forces them to improvise and feel their way along. They wind up inventing solutions based largely on guesswork and the application of best practices from other environments or industries. The result is a bit like trying to put a square peg in a round hole. It doesn’t quite fit.  

Benefits of Standards

Standards in any industry are critical. Countless industries before have faced a similar challenge and wound up developing their own sets of standards. It’s the mark of a maturing industry and has served many useful purposes. 

One key benefit of having standards is that it reduces risk for businesses. As companies in the grow industry navigate their way to market, they need a clear set of guidelines to streamline the process and minimize false moves. Investments can be made with more confidence by knowing there is a body of work that backs up any decisions that have been made. This provides a clear sense of direction for executives and investors, as well as people directly involved in projects, like engineers. It would help all parties involved to learn strategies to repeat success and create consistent and sustainable outcomes — something that’s good for everyone! 

By seeking out the best standards, the grow industry can benefit from improved business economics, better efficiency, better ROI and a reduced environmental footprint. 

Standards also provide a framework for innovation. As the British Standards Institution notes, agreed-upon guidelines establish “rules of the game” by “defining common vocabularies, establishing the essential characteristics of a product or service, and by identifying the best practice within the ecosystems that will ensure successful outcomes.” Most relevant for the grow business is that standards allow everyone to identify what the main issues are and then work together to find solutions. This is especially critical in the early stages of a new business ecosystem, which is exactly where this industry is in the present day.  

While innovation exists to a great degree, the industry would benefit from the kind of scope and direction that comes from having a set of standards in place. That could signal to ancillary manufacturers exactly what the market needs and remove the guesswork involved in providing it by breaking down communication barriers. 

Medical Cannabis

You may think some standards would have been created in the 25 years of medical cannabis. While it’s certainly true that some things have changed since that industry got started, it isn’t necessarily true that the experience of the industry has translated into formalized guidelines. Nor would those standards reflect the extraordinary advancements made in industry technologies just in the past couple of years. The main standards borne out of medical grows are governmental regulations relating to quality of crop and specific chemical contents, such as level of CBD vs. THC, for example. But these are of little help to someone building a new operation today with questions relating to facility design and operation. The medical grows of before are not necessarily similar to what is being built today, especially for adult use grows — which, as a reminder, are expected to be the fastest-growing market segment in cannabis for the next few years.  

The game is different now. A lot of medical cannabis operations from before were at a lower scale than what growers want to accomplish today with adult use crops and medical crops. While the plant is similar, and the facility operates in much the same ways, we know the scale is a lot bigger and that presents its own challenges. 

As well, the nature of medical grows is quite different than adult-use grows. It’s important to recognize this difference, because it can have consequences in the cost of designing and operating a grow room. For example, medical cannabis operations and products are typically regulated very tightly by both the grower and government. There are a different set of regulatory requirements to follow, and there may potentially be more stringent testing required. Medical crops must be very consistent, because successful patient outcomes depend on it. People usually choose their medical product based on trial and error. Once a good solution is found, they stick with it and expect that it will be regularly available and provide the same results every time. This is obviously important for both the patient’s health and consistency of medicinal benefits as well as the grower’s business success.  

Adult-use cannabis grown at scale similarly must be consistent, but its needs are driven more by the brand and its target market rather than certain regulations. A facility for adult-use grows may have different requirements in terms of its design than one intended for medical cultivation. What works for medical may not be the best or most cost-effective solution for adult use.  

Standards In Progress

Clearly, the grow industry is missing out on a lot by not having building standards in place. So, what kind of work is underway now to create them? 

The American Society of Agricultural and Biological Engineers (ASABE) has taken notice of the vacuum that exists today and has partnered with ASHRAE to create a new guideline for indoor growing environments: ASABE X653 guideline “Heating, Ventilating, and Air Conditioning (HVAC) for Indoor Plant Environments without Sunlight.” The author of this book is a contributing member on the developing committee. This guideline is intended to provide clarity for engineers regarding the design and operation of isolated indoor plant environments — in other words, warehouses that do not have windows and totally rely on high-performance HVAC systems to control the environment. 

Certainly, one reason engineers may be prone to make mistakes in this context is because grow rooms are so different from other indoor environments. For example, unlike most other types of facilities, grow room HVAC systems normally don’t introduce any outdoor air. They are typically 100% recirculation with CO2 added, to the tune of about three times the normal ambient concentration. This is just one of many examples, all of which contribute to significantly different requirements for the design of grow room HVAC systems that engineers who are unfamiliar with this space may not realize. Not having any standards certainly does not help. 

4. Misapplication of Traditional Equipment 

In many cases with new grow rooms, certain solutions have been used simply because they’ve worked before in other applications. As noted, the unique nature of the cannabis growing environment means different approaches need to be taken. Many of the solutions proposed in the recent past for grow rooms are simply not sufficient and deliver poor value for growers.  

There are potentially many approaches to HVAC that could be applied to this space. But some of them would be a misapplication of technology. One example is standard commercial air conditioners. These types of air conditioners been a typical choice because they’re cheap and are often used in similar large facilities. The setup is quite simple, and many engineers are familiar with how they work, so they feel comfortable applying them here. 

But ordinary air conditioners are not necessarily well-suited to the grow space. This is because they have some technical limitations that may cause them to be poor performers on the metrics that growers care about, like control of humidity and ability to cool the indoor space when it’s cold outside, not to mention energy efficiency and optimal room control. 

This has led to some growers to spend  a lot of money on new projects that involved equipment that doesn’t work for what they need. This results in underperforming grows that cost even more money in terms of reduced yield to the company and higher operating expenses. 

As a result, the predominant technologies applied are actually band-aid solutions meant to mitigate the limitations of existing equipment that was already installed. For example, supplemental dehumidification has exploded as of late. These only have a moisture removal capacity in the hundreds of pints and typically include no outdoor heat rejection device because they’re so small. This means they have no capacity to do air conditioning — only dehumidification, and any heat generated by the compressor goes back into the space. It solves the biggest challenge with air conditioners — lack of latent capacity — but this comes at the cost of adding more sensible heat to the space and thus requiring more air conditioning, which reduces efficiency.  

This may not always be the best solution and is often used as a quick fix for the grower in a jam. In the long-term, more growers need to look at unitary HVAC solutions instead, particularly for large-scale operations where installing a large number of separate, low-capacity dehumidification units, paired with traditional air conditioners, is likely to represent a larger installation and maintenance cost than fewer high-capacity unitary systems. It would require hanging multiple small units inside a space, all with separate electrical and condensate lines, along with related maintenance costs due to filter changes and repairs.  

Fundamentally, the misapplication of technology is largely due to lack of knowledge and understanding of the products available on the part of many different stakeholders in the industry. This goes back to engineers, but also contributing to this information vacuum are traditional HVAC suppliers and contractors.  

On the side of manufacturers, one issue has been the lack of purpose-built HVAC equipment for grow rooms. Traditional large-scale manufacturers have been reluctant to invest R&D capital into producing a dedicated product for this marketplace for potentially many reasons: Indecision over how to approach the design, questions about liability due to legal uncertainties and uncertainty over whether the market opportunity was worth the required investment to make a new type of product. The cannabis market has had an arguably questionable trajectory until late 2018, with federal adult-use legalization in Canada, so the potential market size for HVAC manufacturers up until that point had been unclear.  

Few manufacturers are offering purpose-built HVAC systems specifically for cannabis growing, due to reluctance to invest in R&D for a new market that was quite small until relatively recently.  

The Limitations of Repurposing

For those who have entered the market, most are repurposing existing products designed for a different application. It’s not necessarily that the solution has to be designed from scratch — there are some applications that bear similarity to grow rooms that can provide a starting point. For example, indoor swimming pools have similar latent loads and operating conditions in terms of temperature and relative humidity levels. This has meant manufacturers of indoor pool dehumidifiers have been well-positioned to provide for the cannabis market — but only to a certain degree. There is still a requirement to further develop their product line specifically for grow rooms and not all have been willing to invest significantly in doing this. 

Then there are applications that are not as compatible with grow rooms. One example is data center air conditioning. At face value, it would appear data centers are quite like grow rooms — they’re both isolated indoor spaces with significant heat loads that originate from equipment that require active air conditioning year-round. For data centers, the heat comes from servers while, for grow rooms, it comes from lamps. But data centers have no need to dehumidify the air — in fact, most add humidity to help reduce static electricity. Meanwhile, grow rooms have a large humidity load due to plant transpiration and evaporation from the watering system. That makes a huge difference from a science and technology application perspective. Therefore, the air conditioning equipment that works well in data centers does not usually apply well to grow rooms.  

Air conditioners for data centers are great for cooling the air but are not usually designed to effectively remove moisture — that’s because data centers typically want slightly humid air to control static electricity, but grow rooms want to control humidity in fine detail to protect the plants. 

Related to misapplication of technology is the poor implementation of it. For example, not all growers are familiar with the modern and high-tech building control systems of today. After all, they have never needed to use these systems before. Some growers are still sorting out their approach to building and equipment controls and not everybody understands how to properly implement them. This requires more involvement from equipment manufacturers and start-up contractors to solve. Building control systems, or specific equipment controls, may require software engineering to tailor their logic to the grower’s needs.

 

 

Cannabis Revival and Year of the SPAC’s: What’s To Be Expected the Rest of 2021?

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The unusual nature of 2020 gave rise to a reciprocally roller-coaster-like cannabis market. Cannabis was cemented officially as an essential industry with the rise of COVID-19, and November elections resulted in even more United States markets welcoming medical and adult-use sales.

The stagnant cannabis stock market of 2019 became a thing of the past by the end of 2020. Throughout the course of last year, bag holders anxiously watched cannabis options creep back up. Now, nearly two years since market decline in 2019, the cannabis stock market is exploding with blank checks and buyout fever. Much of this expectant purchasing is due to Canadian companies considering U.S. market entrance. Combined with the recent surge in the use of special purpose acquisition companies (SPACs) to invest, this has led to an increase in asset prices.

A SPAC is defined as “a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.” Though they have existed for decades, SPACs have become popular on Wall Street the last few years because they are a way for a company to go public without the associated headaches of preparing for a traditional IPO.

In a SPAC, investors interested in a specific industry pool their money together without knowledge of the company they’re starting. The SPAC then goes public as a shell company and begins acquiring other companies in the associated industry. Selling to a SPAC is usually an attractive option for owners of smaller companies built from private equity funds.

The U.S.-Canadian market questions that this rising practice asks are: Can Canadian companies enter a bigger market and be more successful? Is it advisable for U.S. companies to sell their assets to Canadian corporations whose records may be marred by a history of losses and a lack of proper corporate governance? Regardless — if both SPAC’s and Canadian bailout money is here, what comes next?

What is Driving this Bull Market?

Underpinning these movements are record cannabis sales internationally, making last year’s $15 billion dollars’ worth of sales in the U.S. look small in comparison. New markets have opened up in various states and countries throughout 2020, and that trend is only expected to continue. New demographics are opening up, especially among older age groups. This makes sense, as most cannabis sales — even in a recreational setting — are people treating something that ails them like insomnia or aches and pains.

Cannabis is set to take off, and we are entering only the second phase of its market expansion. The world is becoming competitive. Well-run companies that are profitable in key markets are prime targets for bigger, growing companies. At the same time, the world of SPACs will continue to drive valuations. Irrespective of buying assets, growing infrastructure is and will continue to be greatly needed.

The Elusive Profitability Factor

When Canada blew up, one of the biggest changes was companies began focusing the year on cost cutting and — most importantly — profitability. Profitability became the buzzword. But bigger companies are on the search for already-profitable enterprises, not just those that have the potential to be. However, profitability is currently still unobtainable in Canada. Reasonable forecasters should expect this year will show a few companies getting bailed out while many others will be forced to either merge for survival or declare bankruptcy.

An ideal company’s finances should highlight not only revenue growth, but also profitability. Attention should be focused on how well businesses are run, and not on how much money they have the potential to raise or spend. Over the years, there have been many prospective companies that spent hundreds of millions only to barely operate, and are now shells in litigation. Throwing money at any deal should have been a lesson learned in the past, but SPACs are tempting because they are trendily associated with new, interesting management styles and charismatic businesspeople.

Companies should be able to present perfect and clear financials along with maintenance logs for all equipment. In today’s day and age, books must be stellar and clean. As money pours into SPACs, asset valuations for all qualities of companies will rise. The focus instead becomes about asset plays, which will cause assets to continue rising as money is poured into SPACs.

Once upon a time, if number counters presented a negative review or had to dig too much, executives would turn a cold shoulder on investment. But in the age of SPACs, these standards of evaluation will be greatly undervalued. Aging equipment and reportability of every piece of equipment may or may not be properly serviced and recorded in a fast-moving market. Costs of repair or replacing equipment that isn’t properly maintained may be a problem of the past. Because when money comes fast, none care for the gritty details.

Issues for SPACs

Shortage of talent and training has become a big concern already in the era of SPACs. How many quality assets are out there? Big operators in the U.S. are content and don’t see Canada as an enticing market to enter. So, asset buys are likely to primarily be in the U.S. Large companies like Aphria may buy out some of the major American players, but most Canadian companies will use new funding rounds to pay down debts. Accordingly, they will then be forced to piece together smaller operators as a strategy.

A cannabis company’s personnel and office culture are very important when looking to integrate into a larger corporate culture. Remember, it’s not just the brick and mortar that is being invested into, it is also the people that run a facility. Maintaining employee retention when a deal occurs is always critical. Your personnel should be highly trained and professional if you want to exit. Easy to plug-in corporate structures make all the difference in immediately gaining from the sale or having to retool the shed and bring in all new people.

The rise of the SPAC-era and Canadian entry into the U.S. market will cause asset increases, but it is only the second chapter in the market expansion of cannabis. Proper buys will nail profitability, impeccable books, proper maintenance records and will have created an efficient corporate structure with talented personnel. The rest will be overpriced land buys that will require massive infrastructure spending. The basics of a well-run organization don’t change. The cannabis market is going to ROAR, but don’t worry if the SPACs pass you by- they are buying at the start of cannabis only.

Glass House Group Partners With Alcott Enterprises for Digital Transformation and Technology Infrastructure

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Editor’s Note: This article has been adapted from Chapter 2: Grow Rooms Today: A New Dawn from Getting Grow Rooms Right, written by Geoff Brown, Quest’s VP of Technical Solutions, and Dan Dettmers, Quest’s Applications Engineer.

Just as the cannabis industry has grown at a rapid rate over the past five years, the grow room environment has also experienced significant evolution. 

Growers have gone from amateur to pro, seemingly overnight. As they seek to produce massive harvests and secure a place in the market, they’re coming up against several major challenges associated with producing at scale. This is a new frontier for many and a new field that requires different ways of thinking — novel solutions, many of which are unfamiliar to both long-time growers and the new entrants into the industry like engineers and equipment vendors.  

The four key challenges of scaling up in this landscape are:  

  • Lack of experience across multiple domains,
  • market and regulatory pressures,
  • lack of standards,
  • misapplication of traditional equipment. 

These four challenges have combined to put tremendous strain on the new, modern-day cannabis companies. However, before we can hope to solve these problems, we need to first understand what the problems and challenges are and how they came to be. 

 

1. Lack of Experience Across Multiple Domains 

There are severe knowledge gaps in this industry that need to be closed before it can truly progress and mature. 

The issue is not necessarily knowledge related to cultivation. As noted, master growers are experts when it comes to growing cannabis. Some of them were once amateur growers operating out of their basement or small-footprint operations, others have a Ph.D. in related fields — now they’re bringing their world-class knowledge to a newly legitimized market as employees, shareholders, executives or even founders, of new cannabis companies. Naturally, any industry that started in a basement is bound to experience some growing pains.  

We want to talk about the knowledge that is missing or has serious inconsistency as it relates to how best to scale up the production environment. The ideas that applied well to basement grow-ops are not applying well to commercial indoor grow facilities — something the industry is discovering through great pain and expense. 

Lack of understanding also persists among those who are ancillary to the industry, such as third-party equipment suppliers. Manufacturers are paying serious attention to the grow industry these days, as they hope to provide some much-needed solutions to many of the challenges growers are facing. Doing so successfully means big profits and the possibility of significant repeat business. 

But getting traditional suppliers involved with the cannabis industry has its risks. It’s a mixed bag — you could benefit, or you could lose. They don’t all necessarily understand the growing environment. On top of that, growers — who do understand — are now dealing with products and services they never had to before, or at a scale they never dealt with before. The result is confusion, poor communication and poor implementation of proposed solutions, which often don’t hit the mark. 

“It’s important to select and work with manufacturers who know the industry and offer products that are purpose-built for it.”

The inconsistency of knowledge has led to major harm, especially to growers in new markets who are scaling up to meet the demands of the market and investors looking for outsized returns on investment before commoditization at massive volume. Facilities of a million or more square feet are under construction, and huge amounts of money are being poured into these developments. But with technology and knowledge in its infancy, it’s an open question whether those dollars are being invested intelligently and put toward a facility that will work and deliver value. 

2. Market and Regulatory Pressures 

Pressures related to the market or regulations are a very modern challenge facing growers. Obviously, under the illicit market, someone growing cannabis at home didn’t have to worry about following any government regulations. Additionally, there were very few market pressures for them to worry about, as they most often had a captive customer base — as long as their prices were reasonable, clients were not likely to seek out another supplier. 

The legal market has brought about a new landscape that changes that game dramatically.  

For one, many growers are now large publicly traded companies with regulated facilities. This brings some transparency requirements, including quarterly releases of financial results. Producers are also typically expected to publish in their quarterly reports the grow yields they are achieving. There is  pressure to improve financial results on a quarter-to-quarter basis, and investors want to see that production is being maximized at all facilities as quickly as possible.  

The public nature of these companies means more diversity in the types of investors who hold stocks in them. Many of the new investors on the scene have less patience than the early venture capitalists or angel investors. There is now an expectation among many investors that there will be a certain level of market maturity in the cannabis industry, but that market maturity is still evolving. The industry is simply too new to expect anything else. However, with many growers relying on investors to supply the capital needed to take on the market and build up, falling short of expectations is not an option. 

Cannabis markets are unpredictable and rapidly evolving. Any new markets under development  are experiencing major supply shortages, as few were prepared to meet the tremendous demand among people in areas where cannabis has become legal for adult and medical use. It drives the pace of facility development to dizzying levels as growers, seeing an opportunity to grab market share early on, scale up to fill the demand. By having a large supply and brand recognition in markets where there is little product available, growers improve their chances of gaining large market share at an early stage – which has huge business and strategic value. But the execution must be done properly. For one, they need to be able to consistently produce — so avoiding mistakes that could lose crop or create inconsistent product is necessary. They also need to ensure quality and consistency even as they attempt to grow lots of crop very quickly.

Therefore, it is critical that growers scale up the right way. This is no area for a “rush job.” The idiom “buy once, cry once” applies well here — while it is slower and more expensive at first to take time to do things right, you’ll save more in the long run by way of avoiding headaches and unnecessary ownership costs. 

Adding to this pressure, the varying regulatory environments also challenge growers a lot. 

Some regulatory set-ups may make business less flexible and require different approaches. For example, some may require a full grow to be evaluated before the producer can receive a production permit. To minimize their capital exposure early on, this may motivate the grower to build a small first stage of their facility simply to satisfy this licensing requirement. After they go through the required harvests and receive the permit, the facility can be expanded to accommodate full production. This is a good example of how local regulations can have an impact on all aspects of growing, because it impacts the HVAC system type and design. Some types of HVAC systems are not conducive to incremental expansion. The ideal HVAC solution is one that can cost-effectively scale with additional rooms or square footage. 

Another example of regulatory pressures relates to the economics of growing in a given market. Some markets that have low barrier of entry for growers and don’t limit the number of licenses are having the opposite of a supply shortage – they have an enormous glut. These markets are at or near saturation, causing the market price per gram to drop. This results in even more pressure for growers to cut costs so they can offer cheaper products. In a saturated market, one of the drivers of success for a producer is lower cost.  

The economics of growing is discussed more in the next chapter, but the key takeaway is that your choice of HVAC equipment can vary significantly depending on variables like what kind of company you are, where you’re located and what the regulatory landscape looks like. These factors further contribute to challenges in the new frontier of growing at-scale. 

3. Lack of Standards 

One of the main reasons there is lack of consistent knowledge in the grow industry is because there are no standards in place regarding buildings and their systems. It’s seriously hurting the industry right now by contributing to the information vacuum.  

“Standards are important for any industry because they help ensure the right solutions are applied, because those involved in the sector already discussed and agreed on them. The cannabis industry does not yet have any standards for buildings and systems, which makes the design process more challenging.” 

In the mainstream, engineers rely on proven and documented standards in order to properly handle buildings they are not familiar with. An example are codes published by the American Society of Heating, Refrigeration and Air Conditioning Engineers — or ASHRAE. ASHRAE’s codes are used as well-defined standards relating to built environments and are applied in all kinds of buildings across North America, as well as implemented as the basis for countless local building codes. ASHRAE’s handbook has been published for many years with continual updating, with the earliest version dating to the 1920s. 

However, ASHRAE’s codes are geared toward residential and commercial buildings that are primarily designed for humans. There currently are no ASHRAE standards that relate directly to indoor plant environments and few of their standards are sufficient to address the unique needs and demands of these spaces. 

Of particular note in the hyper-competitive grow industry: even the folks who think they have found the answers to these challenges are not inclined to share information or insights. This “secret sauce” mentality has exacerbated the challenges by ensuring no research or data-sharing occurs in the industry. If this secrecy continues, there can be no hope for developing industry standards and best practices. 

As a result, engineers are without guidance as they get involved in the design and construction of modern grow rooms. It forces them to improvise and feel their way along. They wind up inventing solutions based largely on guesswork and the application of best practices from other environments or industries. The result is a bit like trying to put a square peg in a round hole. It doesn’t quite fit.  

Benefits of Standards

Standards in any industry are critical. Countless industries before have faced a similar challenge and wound up developing their own sets of standards. It’s the mark of a maturing industry and has served many useful purposes. 

One key benefit of having standards is that it reduces risk for businesses. As companies in the grow industry navigate their way to market, they need a clear set of guidelines to streamline the process and minimize false moves. Investments can be made with more confidence by knowing there is a body of work that backs up any decisions that have been made. This provides a clear sense of direction for executives and investors, as well as people directly involved in projects, like engineers. It would help all parties involved to learn strategies to repeat success and create consistent and sustainable outcomes — something that’s good for everyone! 

By seeking out the best standards, the grow industry can benefit from improved business economics, better efficiency, better ROI and a reduced environmental footprint. 

Standards also provide a framework for innovation. As the British Standards Institution notes, agreed-upon guidelines establish “rules of the game” by “defining common vocabularies, establishing the essential characteristics of a product or service, and by identifying the best practice within the ecosystems that will ensure successful outcomes.” Most relevant for the grow business is that standards allow everyone to identify what the main issues are and then work together to find solutions. This is especially critical in the early stages of a new business ecosystem, which is exactly where this industry is in the present day.  

While innovation exists to a great degree, the industry would benefit from the kind of scope and direction that comes from having a set of standards in place. That could signal to ancillary manufacturers exactly what the market needs and remove the guesswork involved in providing it by breaking down communication barriers. 

Medical Cannabis

You may think some standards would have been created in the 25 years of medical cannabis. While it’s certainly true that some things have changed since that industry got started, it isn’t necessarily true that the experience of the industry has translated into formalized guidelines. Nor would those standards reflect the extraordinary advancements made in industry technologies just in the past couple of years. The main standards borne out of medical grows are governmental regulations relating to quality of crop and specific chemical contents, such as level of CBD vs. THC, for example. But these are of little help to someone building a new operation today with questions relating to facility design and operation. The medical grows of before are not necessarily similar to what is being built today, especially for adult use grows — which, as a reminder, are expected to be the fastest-growing market segment in cannabis for the next few years.  

The game is different now. A lot of medical cannabis operations from before were at a lower scale than what growers want to accomplish today with adult use crops and medical crops. While the plant is similar, and the facility operates in much the same ways, we know the scale is a lot bigger and that presents its own challenges. 

As well, the nature of medical grows is quite different than adult-use grows. It’s important to recognize this difference, because it can have consequences in the cost of designing and operating a grow room. For example, medical cannabis operations and products are typically regulated very tightly by both the grower and government. There are a different set of regulatory requirements to follow, and there may potentially be more stringent testing required. Medical crops must be very consistent, because successful patient outcomes depend on it. People usually choose their medical product based on trial and error. Once a good solution is found, they stick with it and expect that it will be regularly available and provide the same results every time. This is obviously important for both the patient’s health and consistency of medicinal benefits as well as the grower’s business success.  

Adult-use cannabis grown at scale similarly must be consistent, but its needs are driven more by the brand and its target market rather than certain regulations. A facility for adult-use grows may have different requirements in terms of its design than one intended for medical cultivation. What works for medical may not be the best or most cost-effective solution for adult use.  

Standards In Progress

Clearly, the grow industry is missing out on a lot by not having building standards in place. So, what kind of work is underway now to create them? 

The American Society of Agricultural and Biological Engineers (ASABE) has taken notice of the vacuum that exists today and has partnered with ASHRAE to create a new guideline for indoor growing environments: ASABE X653 guideline “Heating, Ventilating, and Air Conditioning (HVAC) for Indoor Plant Environments without Sunlight.” The author of this book is a contributing member on the developing committee. This guideline is intended to provide clarity for engineers regarding the design and operation of isolated indoor plant environments — in other words, warehouses that do not have windows and totally rely on high-performance HVAC systems to control the environment. 

Certainly, one reason engineers may be prone to make mistakes in this context is because grow rooms are so different from other indoor environments. For example, unlike most other types of facilities, grow room HVAC systems normally don’t introduce any outdoor air. They are typically 100% recirculation with CO2 added, to the tune of about three times the normal ambient concentration. This is just one of many examples, all of which contribute to significantly different requirements for the design of grow room HVAC systems that engineers who are unfamiliar with this space may not realize. Not having any standards certainly does not help. 

4. Misapplication of Traditional Equipment 

In many cases with new grow rooms, certain solutions have been used simply because they’ve worked before in other applications. As noted, the unique nature of the cannabis growing environment means different approaches need to be taken. Many of the solutions proposed in the recent past for grow rooms are simply not sufficient and deliver poor value for growers.  

There are potentially many approaches to HVAC that could be applied to this space. But some of them would be a misapplication of technology. One example is standard commercial air conditioners. These types of air conditioners been a typical choice because they’re cheap and are often used in similar large facilities. The setup is quite simple, and many engineers are familiar with how they work, so they feel comfortable applying them here. 

But ordinary air conditioners are not necessarily well-suited to the grow space. This is because they have some technical limitations that may cause them to be poor performers on the metrics that growers care about, like control of humidity and ability to cool the indoor space when it’s cold outside, not to mention energy efficiency and optimal room control. 

This has led to some growers to spend  a lot of money on new projects that involved equipment that doesn’t work for what they need. This results in underperforming grows that cost even more money in terms of reduced yield to the company and higher operating expenses. 

As a result, the predominant technologies applied are actually band-aid solutions meant to mitigate the limitations of existing equipment that was already installed. For example, supplemental dehumidification has exploded as of late. These only have a moisture removal capacity in the hundreds of pints and typically include no outdoor heat rejection device because they’re so small. This means they have no capacity to do air conditioning — only dehumidification, and any heat generated by the compressor goes back into the space. It solves the biggest challenge with air conditioners — lack of latent capacity — but this comes at the cost of adding more sensible heat to the space and thus requiring more air conditioning, which reduces efficiency.  

This may not always be the best solution and is often used as a quick fix for the grower in a jam. In the long-term, more growers need to look at unitary HVAC solutions instead, particularly for large-scale operations where installing a large number of separate, low-capacity dehumidification units, paired with traditional air conditioners, is likely to represent a larger installation and maintenance cost than fewer high-capacity unitary systems. It would require hanging multiple small units inside a space, all with separate electrical and condensate lines, along with related maintenance costs due to filter changes and repairs.  

Fundamentally, the misapplication of technology is largely due to lack of knowledge and understanding of the products available on the part of many different stakeholders in the industry. This goes back to engineers, but also contributing to this information vacuum are traditional HVAC suppliers and contractors.  

On the side of manufacturers, one issue has been the lack of purpose-built HVAC equipment for grow rooms. Traditional large-scale manufacturers have been reluctant to invest R&D capital into producing a dedicated product for this marketplace for potentially many reasons: Indecision over how to approach the design, questions about liability due to legal uncertainties and uncertainty over whether the market opportunity was worth the required investment to make a new type of product. The cannabis market has had an arguably questionable trajectory until late 2018, with federal adult-use legalization in Canada, so the potential market size for HVAC manufacturers up until that point had been unclear.  

Few manufacturers are offering purpose-built HVAC systems specifically for cannabis growing, due to reluctance to invest in R&D for a new market that was quite small until relatively recently.  

The Limitations of Repurposing

For those who have entered the market, most are repurposing existing products designed for a different application. It’s not necessarily that the solution has to be designed from scratch — there are some applications that bear similarity to grow rooms that can provide a starting point. For example, indoor swimming pools have similar latent loads and operating conditions in terms of temperature and relative humidity levels. This has meant manufacturers of indoor pool dehumidifiers have been well-positioned to provide for the cannabis market — but only to a certain degree. There is still a requirement to further develop their product line specifically for grow rooms and not all have been willing to invest significantly in doing this. 

Then there are applications that are not as compatible with grow rooms. One example is data center air conditioning. At face value, it would appear data centers are quite like grow rooms — they’re both isolated indoor spaces with significant heat loads that originate from equipment that require active air conditioning year-round. For data centers, the heat comes from servers while, for grow rooms, it comes from lamps. But data centers have no need to dehumidify the air — in fact, most add humidity to help reduce static electricity. Meanwhile, grow rooms have a large humidity load due to plant transpiration and evaporation from the watering system. That makes a huge difference from a science and technology application perspective. Therefore, the air conditioning equipment that works well in data centers does not usually apply well to grow rooms.  

Air conditioners for data centers are great for cooling the air but are not usually designed to effectively remove moisture — that’s because data centers typically want slightly humid air to control static electricity, but grow rooms want to control humidity in fine detail to protect the plants. 

Related to misapplication of technology is the poor implementation of it. For example, not all growers are familiar with the modern and high-tech building control systems of today. After all, they have never needed to use these systems before. Some growers are still sorting out their approach to building and equipment controls and not everybody understands how to properly implement them. This requires more involvement from equipment manufacturers and start-up contractors to solve. Building control systems, or specific equipment controls, may require software engineering to tailor their logic to the grower’s needs.

 

 

New Mexico Adult-Use Bill Stalls in Senate; Gov. Lujan Grisham to Call Special Session

by

Editor’s Note: This article has been adapted from Chapter 2: Grow Rooms Today: A New Dawn from Getting Grow Rooms Right, written by Geoff Brown, Quest’s VP of Technical Solutions, and Dan Dettmers, Quest’s Applications Engineer.

Just as the cannabis industry has grown at a rapid rate over the past five years, the grow room environment has also experienced significant evolution. 

Growers have gone from amateur to pro, seemingly overnight. As they seek to produce massive harvests and secure a place in the market, they’re coming up against several major challenges associated with producing at scale. This is a new frontier for many and a new field that requires different ways of thinking — novel solutions, many of which are unfamiliar to both long-time growers and the new entrants into the industry like engineers and equipment vendors.  

The four key challenges of scaling up in this landscape are:  

  • Lack of experience across multiple domains,
  • market and regulatory pressures,
  • lack of standards,
  • misapplication of traditional equipment. 

These four challenges have combined to put tremendous strain on the new, modern-day cannabis companies. However, before we can hope to solve these problems, we need to first understand what the problems and challenges are and how they came to be. 

 

1. Lack of Experience Across Multiple Domains 

There are severe knowledge gaps in this industry that need to be closed before it can truly progress and mature. 

The issue is not necessarily knowledge related to cultivation. As noted, master growers are experts when it comes to growing cannabis. Some of them were once amateur growers operating out of their basement or small-footprint operations, others have a Ph.D. in related fields — now they’re bringing their world-class knowledge to a newly legitimized market as employees, shareholders, executives or even founders, of new cannabis companies. Naturally, any industry that started in a basement is bound to experience some growing pains.  

We want to talk about the knowledge that is missing or has serious inconsistency as it relates to how best to scale up the production environment. The ideas that applied well to basement grow-ops are not applying well to commercial indoor grow facilities — something the industry is discovering through great pain and expense. 

Lack of understanding also persists among those who are ancillary to the industry, such as third-party equipment suppliers. Manufacturers are paying serious attention to the grow industry these days, as they hope to provide some much-needed solutions to many of the challenges growers are facing. Doing so successfully means big profits and the possibility of significant repeat business. 

But getting traditional suppliers involved with the cannabis industry has its risks. It’s a mixed bag — you could benefit, or you could lose. They don’t all necessarily understand the growing environment. On top of that, growers — who do understand — are now dealing with products and services they never had to before, or at a scale they never dealt with before. The result is confusion, poor communication and poor implementation of proposed solutions, which often don’t hit the mark. 

“It’s important to select and work with manufacturers who know the industry and offer products that are purpose-built for it.”

The inconsistency of knowledge has led to major harm, especially to growers in new markets who are scaling up to meet the demands of the market and investors looking for outsized returns on investment before commoditization at massive volume. Facilities of a million or more square feet are under construction, and huge amounts of money are being poured into these developments. But with technology and knowledge in its infancy, it’s an open question whether those dollars are being invested intelligently and put toward a facility that will work and deliver value. 

2. Market and Regulatory Pressures 

Pressures related to the market or regulations are a very modern challenge facing growers. Obviously, under the illicit market, someone growing cannabis at home didn’t have to worry about following any government regulations. Additionally, there were very few market pressures for them to worry about, as they most often had a captive customer base — as long as their prices were reasonable, clients were not likely to seek out another supplier. 

The legal market has brought about a new landscape that changes that game dramatically.  

For one, many growers are now large publicly traded companies with regulated facilities. This brings some transparency requirements, including quarterly releases of financial results. Producers are also typically expected to publish in their quarterly reports the grow yields they are achieving. There is  pressure to improve financial results on a quarter-to-quarter basis, and investors want to see that production is being maximized at all facilities as quickly as possible.  

The public nature of these companies means more diversity in the types of investors who hold stocks in them. Many of the new investors on the scene have less patience than the early venture capitalists or angel investors. There is now an expectation among many investors that there will be a certain level of market maturity in the cannabis industry, but that market maturity is still evolving. The industry is simply too new to expect anything else. However, with many growers relying on investors to supply the capital needed to take on the market and build up, falling short of expectations is not an option. 

Cannabis markets are unpredictable and rapidly evolving. Any new markets under development  are experiencing major supply shortages, as few were prepared to meet the tremendous demand among people in areas where cannabis has become legal for adult and medical use. It drives the pace of facility development to dizzying levels as growers, seeing an opportunity to grab market share early on, scale up to fill the demand. By having a large supply and brand recognition in markets where there is little product available, growers improve their chances of gaining large market share at an early stage – which has huge business and strategic value. But the execution must be done properly. For one, they need to be able to consistently produce — so avoiding mistakes that could lose crop or create inconsistent product is necessary. They also need to ensure quality and consistency even as they attempt to grow lots of crop very quickly.

Therefore, it is critical that growers scale up the right way. This is no area for a “rush job.” The idiom “buy once, cry once” applies well here — while it is slower and more expensive at first to take time to do things right, you’ll save more in the long run by way of avoiding headaches and unnecessary ownership costs. 

Adding to this pressure, the varying regulatory environments also challenge growers a lot. 

Some regulatory set-ups may make business less flexible and require different approaches. For example, some may require a full grow to be evaluated before the producer can receive a production permit. To minimize their capital exposure early on, this may motivate the grower to build a small first stage of their facility simply to satisfy this licensing requirement. After they go through the required harvests and receive the permit, the facility can be expanded to accommodate full production. This is a good example of how local regulations can have an impact on all aspects of growing, because it impacts the HVAC system type and design. Some types of HVAC systems are not conducive to incremental expansion. The ideal HVAC solution is one that can cost-effectively scale with additional rooms or square footage. 

Another example of regulatory pressures relates to the economics of growing in a given market. Some markets that have low barrier of entry for growers and don’t limit the number of licenses are having the opposite of a supply shortage – they have an enormous glut. These markets are at or near saturation, causing the market price per gram to drop. This results in even more pressure for growers to cut costs so they can offer cheaper products. In a saturated market, one of the drivers of success for a producer is lower cost.  

The economics of growing is discussed more in the next chapter, but the key takeaway is that your choice of HVAC equipment can vary significantly depending on variables like what kind of company you are, where you’re located and what the regulatory landscape looks like. These factors further contribute to challenges in the new frontier of growing at-scale. 

3. Lack of Standards 

One of the main reasons there is lack of consistent knowledge in the grow industry is because there are no standards in place regarding buildings and their systems. It’s seriously hurting the industry right now by contributing to the information vacuum.  

“Standards are important for any industry because they help ensure the right solutions are applied, because those involved in the sector already discussed and agreed on them. The cannabis industry does not yet have any standards for buildings and systems, which makes the design process more challenging.” 

In the mainstream, engineers rely on proven and documented standards in order to properly handle buildings they are not familiar with. An example are codes published by the American Society of Heating, Refrigeration and Air Conditioning Engineers — or ASHRAE. ASHRAE’s codes are used as well-defined standards relating to built environments and are applied in all kinds of buildings across North America, as well as implemented as the basis for countless local building codes. ASHRAE’s handbook has been published for many years with continual updating, with the earliest version dating to the 1920s. 

However, ASHRAE’s codes are geared toward residential and commercial buildings that are primarily designed for humans. There currently are no ASHRAE standards that relate directly to indoor plant environments and few of their standards are sufficient to address the unique needs and demands of these spaces. 

Of particular note in the hyper-competitive grow industry: even the folks who think they have found the answers to these challenges are not inclined to share information or insights. This “secret sauce” mentality has exacerbated the challenges by ensuring no research or data-sharing occurs in the industry. If this secrecy continues, there can be no hope for developing industry standards and best practices. 

As a result, engineers are without guidance as they get involved in the design and construction of modern grow rooms. It forces them to improvise and feel their way along. They wind up inventing solutions based largely on guesswork and the application of best practices from other environments or industries. The result is a bit like trying to put a square peg in a round hole. It doesn’t quite fit.  

Benefits of Standards

Standards in any industry are critical. Countless industries before have faced a similar challenge and wound up developing their own sets of standards. It’s the mark of a maturing industry and has served many useful purposes. 

One key benefit of having standards is that it reduces risk for businesses. As companies in the grow industry navigate their way to market, they need a clear set of guidelines to streamline the process and minimize false moves. Investments can be made with more confidence by knowing there is a body of work that backs up any decisions that have been made. This provides a clear sense of direction for executives and investors, as well as people directly involved in projects, like engineers. It would help all parties involved to learn strategies to repeat success and create consistent and sustainable outcomes — something that’s good for everyone! 

By seeking out the best standards, the grow industry can benefit from improved business economics, better efficiency, better ROI and a reduced environmental footprint. 

Standards also provide a framework for innovation. As the British Standards Institution notes, agreed-upon guidelines establish “rules of the game” by “defining common vocabularies, establishing the essential characteristics of a product or service, and by identifying the best practice within the ecosystems that will ensure successful outcomes.” Most relevant for the grow business is that standards allow everyone to identify what the main issues are and then work together to find solutions. This is especially critical in the early stages of a new business ecosystem, which is exactly where this industry is in the present day.  

While innovation exists to a great degree, the industry would benefit from the kind of scope and direction that comes from having a set of standards in place. That could signal to ancillary manufacturers exactly what the market needs and remove the guesswork involved in providing it by breaking down communication barriers. 

Medical Cannabis

You may think some standards would have been created in the 25 years of medical cannabis. While it’s certainly true that some things have changed since that industry got started, it isn’t necessarily true that the experience of the industry has translated into formalized guidelines. Nor would those standards reflect the extraordinary advancements made in industry technologies just in the past couple of years. The main standards borne out of medical grows are governmental regulations relating to quality of crop and specific chemical contents, such as level of CBD vs. THC, for example. But these are of little help to someone building a new operation today with questions relating to facility design and operation. The medical grows of before are not necessarily similar to what is being built today, especially for adult use grows — which, as a reminder, are expected to be the fastest-growing market segment in cannabis for the next few years.  

The game is different now. A lot of medical cannabis operations from before were at a lower scale than what growers want to accomplish today with adult use crops and medical crops. While the plant is similar, and the facility operates in much the same ways, we know the scale is a lot bigger and that presents its own challenges. 

As well, the nature of medical grows is quite different than adult-use grows. It’s important to recognize this difference, because it can have consequences in the cost of designing and operating a grow room. For example, medical cannabis operations and products are typically regulated very tightly by both the grower and government. There are a different set of regulatory requirements to follow, and there may potentially be more stringent testing required. Medical crops must be very consistent, because successful patient outcomes depend on it. People usually choose their medical product based on trial and error. Once a good solution is found, they stick with it and expect that it will be regularly available and provide the same results every time. This is obviously important for both the patient’s health and consistency of medicinal benefits as well as the grower’s business success.  

Adult-use cannabis grown at scale similarly must be consistent, but its needs are driven more by the brand and its target market rather than certain regulations. A facility for adult-use grows may have different requirements in terms of its design than one intended for medical cultivation. What works for medical may not be the best or most cost-effective solution for adult use.  

Standards In Progress

Clearly, the grow industry is missing out on a lot by not having building standards in place. So, what kind of work is underway now to create them? 

The American Society of Agricultural and Biological Engineers (ASABE) has taken notice of the vacuum that exists today and has partnered with ASHRAE to create a new guideline for indoor growing environments: ASABE X653 guideline “Heating, Ventilating, and Air Conditioning (HVAC) for Indoor Plant Environments without Sunlight.” The author of this book is a contributing member on the developing committee. This guideline is intended to provide clarity for engineers regarding the design and operation of isolated indoor plant environments — in other words, warehouses that do not have windows and totally rely on high-performance HVAC systems to control the environment. 

Certainly, one reason engineers may be prone to make mistakes in this context is because grow rooms are so different from other indoor environments. For example, unlike most other types of facilities, grow room HVAC systems normally don’t introduce any outdoor air. They are typically 100% recirculation with CO2 added, to the tune of about three times the normal ambient concentration. This is just one of many examples, all of which contribute to significantly different requirements for the design of grow room HVAC systems that engineers who are unfamiliar with this space may not realize. Not having any standards certainly does not help. 

4. Misapplication of Traditional Equipment 

In many cases with new grow rooms, certain solutions have been used simply because they’ve worked before in other applications. As noted, the unique nature of the cannabis growing environment means different approaches need to be taken. Many of the solutions proposed in the recent past for grow rooms are simply not sufficient and deliver poor value for growers.  

There are potentially many approaches to HVAC that could be applied to this space. But some of them would be a misapplication of technology. One example is standard commercial air conditioners. These types of air conditioners been a typical choice because they’re cheap and are often used in similar large facilities. The setup is quite simple, and many engineers are familiar with how they work, so they feel comfortable applying them here. 

But ordinary air conditioners are not necessarily well-suited to the grow space. This is because they have some technical limitations that may cause them to be poor performers on the metrics that growers care about, like control of humidity and ability to cool the indoor space when it’s cold outside, not to mention energy efficiency and optimal room control. 

This has led to some growers to spend  a lot of money on new projects that involved equipment that doesn’t work for what they need. This results in underperforming grows that cost even more money in terms of reduced yield to the company and higher operating expenses. 

As a result, the predominant technologies applied are actually band-aid solutions meant to mitigate the limitations of existing equipment that was already installed. For example, supplemental dehumidification has exploded as of late. These only have a moisture removal capacity in the hundreds of pints and typically include no outdoor heat rejection device because they’re so small. This means they have no capacity to do air conditioning — only dehumidification, and any heat generated by the compressor goes back into the space. It solves the biggest challenge with air conditioners — lack of latent capacity — but this comes at the cost of adding more sensible heat to the space and thus requiring more air conditioning, which reduces efficiency.  

This may not always be the best solution and is often used as a quick fix for the grower in a jam. In the long-term, more growers need to look at unitary HVAC solutions instead, particularly for large-scale operations where installing a large number of separate, low-capacity dehumidification units, paired with traditional air conditioners, is likely to represent a larger installation and maintenance cost than fewer high-capacity unitary systems. It would require hanging multiple small units inside a space, all with separate electrical and condensate lines, along with related maintenance costs due to filter changes and repairs.  

Fundamentally, the misapplication of technology is largely due to lack of knowledge and understanding of the products available on the part of many different stakeholders in the industry. This goes back to engineers, but also contributing to this information vacuum are traditional HVAC suppliers and contractors.  

On the side of manufacturers, one issue has been the lack of purpose-built HVAC equipment for grow rooms. Traditional large-scale manufacturers have been reluctant to invest R&D capital into producing a dedicated product for this marketplace for potentially many reasons: Indecision over how to approach the design, questions about liability due to legal uncertainties and uncertainty over whether the market opportunity was worth the required investment to make a new type of product. The cannabis market has had an arguably questionable trajectory until late 2018, with federal adult-use legalization in Canada, so the potential market size for HVAC manufacturers up until that point had been unclear.  

Few manufacturers are offering purpose-built HVAC systems specifically for cannabis growing, due to reluctance to invest in R&D for a new market that was quite small until relatively recently.  

The Limitations of Repurposing

For those who have entered the market, most are repurposing existing products designed for a different application. It’s not necessarily that the solution has to be designed from scratch — there are some applications that bear similarity to grow rooms that can provide a starting point. For example, indoor swimming pools have similar latent loads and operating conditions in terms of temperature and relative humidity levels. This has meant manufacturers of indoor pool dehumidifiers have been well-positioned to provide for the cannabis market — but only to a certain degree. There is still a requirement to further develop their product line specifically for grow rooms and not all have been willing to invest significantly in doing this. 

Then there are applications that are not as compatible with grow rooms. One example is data center air conditioning. At face value, it would appear data centers are quite like grow rooms — they’re both isolated indoor spaces with significant heat loads that originate from equipment that require active air conditioning year-round. For data centers, the heat comes from servers while, for grow rooms, it comes from lamps. But data centers have no need to dehumidify the air — in fact, most add humidity to help reduce static electricity. Meanwhile, grow rooms have a large humidity load due to plant transpiration and evaporation from the watering system. That makes a huge difference from a science and technology application perspective. Therefore, the air conditioning equipment that works well in data centers does not usually apply well to grow rooms.  

Air conditioners for data centers are great for cooling the air but are not usually designed to effectively remove moisture — that’s because data centers typically want slightly humid air to control static electricity, but grow rooms want to control humidity in fine detail to protect the plants. 

Related to misapplication of technology is the poor implementation of it. For example, not all growers are familiar with the modern and high-tech building control systems of today. After all, they have never needed to use these systems before. Some growers are still sorting out their approach to building and equipment controls and not everybody understands how to properly implement them. This requires more involvement from equipment manufacturers and start-up contractors to solve. Building control systems, or specific equipment controls, may require software engineering to tailor their logic to the grower’s needs.

 

 

4 Key Challenges to Scaling Cannabis Cultivation

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Editor’s Note: This article has been adapted from Chapter 2: Grow Rooms Today: A New Dawn from Getting Grow Rooms Right, written by Geoff Brown, Quest’s VP of Technical Solutions, and Dan Dettmers, Quest’s Applications Engineer.

Just as the cannabis industry has grown at a rapid rate over the past five years, the grow room environment has also experienced significant evolution. 

Growers have gone from amateur to pro, seemingly overnight. As they seek to produce massive harvests and secure a place in the market, they’re coming up against several major challenges associated with producing at scale. This is a new frontier for many and a new field that requires different ways of thinking — novel solutions, many of which are unfamiliar to both long-time growers and the new entrants into the industry like engineers and equipment vendors.  

The four key challenges of scaling up in this landscape are:  

  • Lack of experience across multiple domains,
  • market and regulatory pressures,
  • lack of standards,
  • misapplication of traditional equipment. 

These four challenges have combined to put tremendous strain on the new, modern-day cannabis companies. However, before we can hope to solve these problems, we need to first understand what the problems and challenges are and how they came to be. 

 

1. Lack of Experience Across Multiple Domains 

There are severe knowledge gaps in this industry that need to be closed before it can truly progress and mature. 

The issue is not necessarily knowledge related to cultivation. As noted, master growers are experts when it comes to growing cannabis. Some of them were once amateur growers operating out of their basement or small-footprint operations, others have a Ph.D. in related fields — now they’re bringing their world-class knowledge to a newly legitimized market as employees, shareholders, executives or even founders, of new cannabis companies. Naturally, any industry that started in a basement is bound to experience some growing pains.  

We want to talk about the knowledge that is missing or has serious inconsistency as it relates to how best to scale up the production environment. The ideas that applied well to basement grow-ops are not applying well to commercial indoor grow facilities — something the industry is discovering through great pain and expense. 

Lack of understanding also persists among those who are ancillary to the industry, such as third-party equipment suppliers. Manufacturers are paying serious attention to the grow industry these days, as they hope to provide some much-needed solutions to many of the challenges growers are facing. Doing so successfully means big profits and the possibility of significant repeat business. 

But getting traditional suppliers involved with the cannabis industry has its risks. It’s a mixed bag — you could benefit, or you could lose. They don’t all necessarily understand the growing environment. On top of that, growers — who do understand — are now dealing with products and services they never had to before, or at a scale they never dealt with before. The result is confusion, poor communication and poor implementation of proposed solutions, which often don’t hit the mark. 

“It’s important to select and work with manufacturers who know the industry and offer products that are purpose-built for it.”

The inconsistency of knowledge has led to major harm, especially to growers in new markets who are scaling up to meet the demands of the market and investors looking for outsized returns on investment before commoditization at massive volume. Facilities of a million or more square feet are under construction, and huge amounts of money are being poured into these developments. But with technology and knowledge in its infancy, it’s an open question whether those dollars are being invested intelligently and put toward a facility that will work and deliver value. 

2. Market and Regulatory Pressures 

Pressures related to the market or regulations are a very modern challenge facing growers. Obviously, under the illicit market, someone growing cannabis at home didn’t have to worry about following any government regulations. Additionally, there were very few market pressures for them to worry about, as they most often had a captive customer base — as long as their prices were reasonable, clients were not likely to seek out another supplier. 

The legal market has brought about a new landscape that changes that game dramatically.  

For one, many growers are now large publicly traded companies with regulated facilities. This brings some transparency requirements, including quarterly releases of financial results. Producers are also typically expected to publish in their quarterly reports the grow yields they are achieving. There is  pressure to improve financial results on a quarter-to-quarter basis, and investors want to see that production is being maximized at all facilities as quickly as possible.  

The public nature of these companies means more diversity in the types of investors who hold stocks in them. Many of the new investors on the scene have less patience than the early venture capitalists or angel investors. There is now an expectation among many investors that there will be a certain level of market maturity in the cannabis industry, but that market maturity is still evolving. The industry is simply too new to expect anything else. However, with many growers relying on investors to supply the capital needed to take on the market and build up, falling short of expectations is not an option. 

Cannabis markets are unpredictable and rapidly evolving. Any new markets under development  are experiencing major supply shortages, as few were prepared to meet the tremendous demand among people in areas where cannabis has become legal for adult and medical use. It drives the pace of facility development to dizzying levels as growers, seeing an opportunity to grab market share early on, scale up to fill the demand. By having a large supply and brand recognition in markets where there is little product available, growers improve their chances of gaining large market share at an early stage – which has huge business and strategic value. But the execution must be done properly. For one, they need to be able to consistently produce — so avoiding mistakes that could lose crop or create inconsistent product is necessary. They also need to ensure quality and consistency even as they attempt to grow lots of crop very quickly.

Therefore, it is critical that growers scale up the right way. This is no area for a “rush job.” The idiom “buy once, cry once” applies well here — while it is slower and more expensive at first to take time to do things right, you’ll save more in the long run by way of avoiding headaches and unnecessary ownership costs. 

Adding to this pressure, the varying regulatory environments also challenge growers a lot. 

Some regulatory set-ups may make business less flexible and require different approaches. For example, some may require a full grow to be evaluated before the producer can receive a production permit. To minimize their capital exposure early on, this may motivate the grower to build a small first stage of their facility simply to satisfy this licensing requirement. After they go through the required harvests and receive the permit, the facility can be expanded to accommodate full production. This is a good example of how local regulations can have an impact on all aspects of growing, because it impacts the HVAC system type and design. Some types of HVAC systems are not conducive to incremental expansion. The ideal HVAC solution is one that can cost-effectively scale with additional rooms or square footage. 

Another example of regulatory pressures relates to the economics of growing in a given market. Some markets that have low barrier of entry for growers and don’t limit the number of licenses are having the opposite of a supply shortage – they have an enormous glut. These markets are at or near saturation, causing the market price per gram to drop. This results in even more pressure for growers to cut costs so they can offer cheaper products. In a saturated market, one of the drivers of success for a producer is lower cost.  

The economics of growing is discussed more in the next chapter, but the key takeaway is that your choice of HVAC equipment can vary significantly depending on variables like what kind of company you are, where you’re located and what the regulatory landscape looks like. These factors further contribute to challenges in the new frontier of growing at-scale. 

3. Lack of Standards 

One of the main reasons there is lack of consistent knowledge in the grow industry is because there are no standards in place regarding buildings and their systems. It’s seriously hurting the industry right now by contributing to the information vacuum.  

“Standards are important for any industry because they help ensure the right solutions are applied, because those involved in the sector already discussed and agreed on them. The cannabis industry does not yet have any standards for buildings and systems, which makes the design process more challenging.” 

In the mainstream, engineers rely on proven and documented standards in order to properly handle buildings they are not familiar with. An example are codes published by the American Society of Heating, Refrigeration and Air Conditioning Engineers — or ASHRAE. ASHRAE’s codes are used as well-defined standards relating to built environments and are applied in all kinds of buildings across North America, as well as implemented as the basis for countless local building codes. ASHRAE’s handbook has been published for many years with continual updating, with the earliest version dating to the 1920s. 

However, ASHRAE’s codes are geared toward residential and commercial buildings that are primarily designed for humans. There currently are no ASHRAE standards that relate directly to indoor plant environments and few of their standards are sufficient to address the unique needs and demands of these spaces. 

Of particular note in the hyper-competitive grow industry: even the folks who think they have found the answers to these challenges are not inclined to share information or insights. This “secret sauce” mentality has exacerbated the challenges by ensuring no research or data-sharing occurs in the industry. If this secrecy continues, there can be no hope for developing industry standards and best practices. 

As a result, engineers are without guidance as they get involved in the design and construction of modern grow rooms. It forces them to improvise and feel their way along. They wind up inventing solutions based largely on guesswork and the application of best practices from other environments or industries. The result is a bit like trying to put a square peg in a round hole. It doesn’t quite fit.  

Benefits of Standards

Standards in any industry are critical. Countless industries before have faced a similar challenge and wound up developing their own sets of standards. It’s the mark of a maturing industry and has served many useful purposes. 

One key benefit of having standards is that it reduces risk for businesses. As companies in the grow industry navigate their way to market, they need a clear set of guidelines to streamline the process and minimize false moves. Investments can be made with more confidence by knowing there is a body of work that backs up any decisions that have been made. This provides a clear sense of direction for executives and investors, as well as people directly involved in projects, like engineers. It would help all parties involved to learn strategies to repeat success and create consistent and sustainable outcomes — something that’s good for everyone! 

By seeking out the best standards, the grow industry can benefit from improved business economics, better efficiency, better ROI and a reduced environmental footprint. 

Standards also provide a framework for innovation. As the British Standards Institution notes, agreed-upon guidelines establish “rules of the game” by “defining common vocabularies, establishing the essential characteristics of a product or service, and by identifying the best practice within the ecosystems that will ensure successful outcomes.” Most relevant for the grow business is that standards allow everyone to identify what the main issues are and then work together to find solutions. This is especially critical in the early stages of a new business ecosystem, which is exactly where this industry is in the present day.  

While innovation exists to a great degree, the industry would benefit from the kind of scope and direction that comes from having a set of standards in place. That could signal to ancillary manufacturers exactly what the market needs and remove the guesswork involved in providing it by breaking down communication barriers. 

Medical Cannabis

You may think some standards would have been created in the 25 years of medical cannabis. While it’s certainly true that some things have changed since that industry got started, it isn’t necessarily true that the experience of the industry has translated into formalized guidelines. Nor would those standards reflect the extraordinary advancements made in industry technologies just in the past couple of years. The main standards borne out of medical grows are governmental regulations relating to quality of crop and specific chemical contents, such as level of CBD vs. THC, for example. But these are of little help to someone building a new operation today with questions relating to facility design and operation. The medical grows of before are not necessarily similar to what is being built today, especially for adult use grows — which, as a reminder, are expected to be the fastest-growing market segment in cannabis for the next few years.  

The game is different now. A lot of medical cannabis operations from before were at a lower scale than what growers want to accomplish today with adult use crops and medical crops. While the plant is similar, and the facility operates in much the same ways, we know the scale is a lot bigger and that presents its own challenges. 

As well, the nature of medical grows is quite different than adult-use grows. It’s important to recognize this difference, because it can have consequences in the cost of designing and operating a grow room. For example, medical cannabis operations and products are typically regulated very tightly by both the grower and government. There are a different set of regulatory requirements to follow, and there may potentially be more stringent testing required. Medical crops must be very consistent, because successful patient outcomes depend on it. People usually choose their medical product based on trial and error. Once a good solution is found, they stick with it and expect that it will be regularly available and provide the same results every time. This is obviously important for both the patient’s health and consistency of medicinal benefits as well as the grower’s business success.  

Adult-use cannabis grown at scale similarly must be consistent, but its needs are driven more by the brand and its target market rather than certain regulations. A facility for adult-use grows may have different requirements in terms of its design than one intended for medical cultivation. What works for medical may not be the best or most cost-effective solution for adult use.  

Standards In Progress

Clearly, the grow industry is missing out on a lot by not having building standards in place. So, what kind of work is underway now to create them? 

The American Society of Agricultural and Biological Engineers (ASABE) has taken notice of the vacuum that exists today and has partnered with ASHRAE to create a new guideline for indoor growing environments: ASABE X653 guideline “Heating, Ventilating, and Air Conditioning (HVAC) for Indoor Plant Environments without Sunlight.” The author of this book is a contributing member on the developing committee. This guideline is intended to provide clarity for engineers regarding the design and operation of isolated indoor plant environments — in other words, warehouses that do not have windows and totally rely on high-performance HVAC systems to control the environment. 

Certainly, one reason engineers may be prone to make mistakes in this context is because grow rooms are so different from other indoor environments. For example, unlike most other types of facilities, grow room HVAC systems normally don’t introduce any outdoor air. They are typically 100% recirculation with CO2 added, to the tune of about three times the normal ambient concentration. This is just one of many examples, all of which contribute to significantly different requirements for the design of grow room HVAC systems that engineers who are unfamiliar with this space may not realize. Not having any standards certainly does not help. 

4. Misapplication of Traditional Equipment 

In many cases with new grow rooms, certain solutions have been used simply because they’ve worked before in other applications. As noted, the unique nature of the cannabis growing environment means different approaches need to be taken. Many of the solutions proposed in the recent past for grow rooms are simply not sufficient and deliver poor value for growers.  

There are potentially many approaches to HVAC that could be applied to this space. But some of them would be a misapplication of technology. One example is standard commercial air conditioners. These types of air conditioners been a typical choice because they’re cheap and are often used in similar large facilities. The setup is quite simple, and many engineers are familiar with how they work, so they feel comfortable applying them here. 

But ordinary air conditioners are not necessarily well-suited to the grow space. This is because they have some technical limitations that may cause them to be poor performers on the metrics that growers care about, like control of humidity and ability to cool the indoor space when it’s cold outside, not to mention energy efficiency and optimal room control. 

This has led to some growers to spend  a lot of money on new projects that involved equipment that doesn’t work for what they need. This results in underperforming grows that cost even more money in terms of reduced yield to the company and higher operating expenses. 

As a result, the predominant technologies applied are actually band-aid solutions meant to mitigate the limitations of existing equipment that was already installed. For example, supplemental dehumidification has exploded as of late. These only have a moisture removal capacity in the hundreds of pints and typically include no outdoor heat rejection device because they’re so small. This means they have no capacity to do air conditioning — only dehumidification, and any heat generated by the compressor goes back into the space. It solves the biggest challenge with air conditioners — lack of latent capacity — but this comes at the cost of adding more sensible heat to the space and thus requiring more air conditioning, which reduces efficiency.  

This may not always be the best solution and is often used as a quick fix for the grower in a jam. In the long-term, more growers need to look at unitary HVAC solutions instead, particularly for large-scale operations where installing a large number of separate, low-capacity dehumidification units, paired with traditional air conditioners, is likely to represent a larger installation and maintenance cost than fewer high-capacity unitary systems. It would require hanging multiple small units inside a space, all with separate electrical and condensate lines, along with related maintenance costs due to filter changes and repairs.  

Fundamentally, the misapplication of technology is largely due to lack of knowledge and understanding of the products available on the part of many different stakeholders in the industry. This goes back to engineers, but also contributing to this information vacuum are traditional HVAC suppliers and contractors.  

On the side of manufacturers, one issue has been the lack of purpose-built HVAC equipment for grow rooms. Traditional large-scale manufacturers have been reluctant to invest R&D capital into producing a dedicated product for this marketplace for potentially many reasons: Indecision over how to approach the design, questions about liability due to legal uncertainties and uncertainty over whether the market opportunity was worth the required investment to make a new type of product. The cannabis market has had an arguably questionable trajectory until late 2018, with federal adult-use legalization in Canada, so the potential market size for HVAC manufacturers up until that point had been unclear.  

Few manufacturers are offering purpose-built HVAC systems specifically for cannabis growing, due to reluctance to invest in R&D for a new market that was quite small until relatively recently.  

The Limitations of Repurposing

For those who have entered the market, most are repurposing existing products designed for a different application. It’s not necessarily that the solution has to be designed from scratch — there are some applications that bear similarity to grow rooms that can provide a starting point. For example, indoor swimming pools have similar latent loads and operating conditions in terms of temperature and relative humidity levels. This has meant manufacturers of indoor pool dehumidifiers have been well-positioned to provide for the cannabis market — but only to a certain degree. There is still a requirement to further develop their product line specifically for grow rooms and not all have been willing to invest significantly in doing this. 

Then there are applications that are not as compatible with grow rooms. One example is data center air conditioning. At face value, it would appear data centers are quite like grow rooms — they’re both isolated indoor spaces with significant heat loads that originate from equipment that require active air conditioning year-round. For data centers, the heat comes from servers while, for grow rooms, it comes from lamps. But data centers have no need to dehumidify the air — in fact, most add humidity to help reduce static electricity. Meanwhile, grow rooms have a large humidity load due to plant transpiration and evaporation from the watering system. That makes a huge difference from a science and technology application perspective. Therefore, the air conditioning equipment that works well in data centers does not usually apply well to grow rooms.  

Air conditioners for data centers are great for cooling the air but are not usually designed to effectively remove moisture — that’s because data centers typically want slightly humid air to control static electricity, but grow rooms want to control humidity in fine detail to protect the plants. 

Related to misapplication of technology is the poor implementation of it. For example, not all growers are familiar with the modern and high-tech building control systems of today. After all, they have never needed to use these systems before. Some growers are still sorting out their approach to building and equipment controls and not everybody understands how to properly implement them. This requires more involvement from equipment manufacturers and start-up contractors to solve. Building control systems, or specific equipment controls, may require software engineering to tailor their logic to the grower’s needs.

 

 

Advances in Edible Nanoemulsions – CBD Health and Wellness

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Nanotechnology has been a powerful source of innovation in the cannabis industry and has removed one of the greatest barriers to the realized potential of cannabinoids – their hydrophobic nature and their low bioavailability.

An overview of the advances in this niche was published in the journal Advances in lipid research and highlights nanotechnology in relation to food and nanoemulsions.

Advantages of nanoemulsions

The two most common types of nanoemulsions are oil-in-water (O / W) and water-in-oil (W / O). O / W nanoemulsions consist of small oil droplets that are dispersed in water, while W / O nanoemulsions have the reverse structure, with small water droplets dispersed in oil.[1] Nanoemulsions are in the middle of the emulsion size spectrum between emulsions and microemulsions and as such form a happy medium.

From a kinetic point of view, because of their smaller size, nanoemulsions are much more stable than emulsions, which “reduces the tendency towards gravitational separation”.[1] This quality extends the shelf life. The smaller the droplets, the faster and more completely they are digested in the gastrointestinal tract, which increases and decreases the onset time.

Conversely, their larger size offers several advantages over microemulsions. They can be formulated from a much wider range of ingredients, and most importantly from natural emulsifiers, as opposed to the synthetic surfactants which are a driving force behind microemulsions.

Approaches to the production of nanoemulsions

There are two main approaches to making nanoemulsions: low-energy and high-energy.

Low energy processes rely on a spontaneous emulsion triggered by a specific change in the composition or temperature of a system containing oil, water and surfactant.

In contrast, high-energy processes use intense mechanical forces to set the emulsion in motion.

Nanoemulsions based on natural ingredients

This is an increasing demand and an increasing scientific interest in nanoemulsions that are made entirely from natural food ingredients and especially vegetable rather than animal based, such as oils, phospholipids, proteins, polysaccharides, biosurfactants or saponins from vegetable materials.

This is very difficult with low energy methods because these natural ingredients alone are not soluble enough to spontaneously emulsify. However, high energy methods work with a wide variety of emulsifiers.

“Typically, vegetable-based emulsifiers must be highly water-soluble, surface-active, rapidly adsorbing, and present in a concentration high enough to cover all of the oil droplet surfaces formed during homogenization,” the review authors say.[1] “Nanoemulsions are highly effective in increasing the bioavailability and bioactivity of orally administered hydrophobic bioactive agents.”

More research in this area can lead to products with a higher bioavailability of cannabinoids and thus a faster noticeable effect.

Credit: Wikipedia

Image source: https://upload.wikimedia.org/wikipedia/commons/e/ec/Nanob.jpg

reference

  1. McClements, DJ. Advances in Edible Nanoemulsions: Digestion, Bioavailability, and Potential Toxicity. Advances in Lipid Research. 2021; 81: 101081.

Recommendations on cannabinoid dosage and opioid rejuvenation for chronic pain

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In the United States, opioid overuse and abuse has skyrocketed in recent years, as tens of thousands of Americans die from opioid-related overdoses each year. According to the National Institute on Drug AbuseApproximately 21% to 29% of patients prescribed opioids for pain management abuse them, and between 8% and 12% develop an opioid use disorder.

To address the ongoing problem of opioid addiction, many patients and physicians are increasingly turning to medicinal cannabis to curb opioid use while relieving chronic pain. However, there are currently no guidelines on how to get rid of opioids or use cannabinoids effectively to properly relieve pain.

In a recently in the International journal of clinical practiceResearchers used a five-step Delphi procedure to develop recommendations on how and when to use cannabinoids in the presence of opioids to control chronic pain, and ultimately limit opioid use using cannabinoid titration.[1] The Delphi process is a technique of reviewing and summarizing the opinions of various experts to develop a consensus guide.

Regardless of the physical or psychological intervention, the researchers agreed that cannabinoids could be a viable option for patients with chronic pain who do not experience adequate pain relief from opioid use, especially those who experience complications related to opioid use occur. There are no age restrictions on eligibility.

Instructions for using cannabinoids:[1]

  • Cannabinoids should be avoided in pregnant / breastfeeding individuals or in the presence of cannabinoid side effects
  • During the day, an oral extract consisting primarily of cannabidiol (CBD) should be used
  • Patients may be able to add tetrahydrocannabinol (THC) as needed with a starting dose of 0.5 mg to 3 mg. The dose can be increased once or twice a week to 1 mg to 2 mg to a maximum of 30 to 40 mg per day
  • Smoking was discouraged and vaporization was recommended instead for breakthrough pain

Instructions for Opioid Rejuvenation:[1]

  • With an improvement in function and less need for medication to combat pain, opioid rejuvenation can be initiated by 5-10% every 1 to 4 weeks
  • The aim is to reduce pain intensity by at least 30% and the opioid dose by at least 25% and to achieve a significant improvement in function and quality of life

Healthcare providers should monitor the patient’s progress once or twice a month and every 3 months after stabilization. You should also evaluate other medications or recreational substances the patient is taking to minimize side effects or interactions.

This review can help healthcare providers and patients optimize their outcomes by providing guidance on how to properly administer cannabinoids and tapered opioids for safe pain relief.

Credit: Brent Barnett

Image source: https://pixabay.com/photos/cannabis-pot-weed-marijuana-drug-2152602/

reference

  1. Sihota A et al. Consensus-based recommendations on cannabinoid titration and opioid rejuvenation for chronic pain control. Int J Clin Pract. 2020; e13871.

Cannabidiol and its effects on cerebral blood flow

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Now that cannabidiol (CBD) is readily and legally available for research purposes, more and more studies are being conducted into the medicinal properties of the cannabinoid. The results of many of these studies have shown that CBD offers a wide variety of health benefits for treating a wide variety of diseases.

In a 2020 study funded by the British Medical Association Foundation’s Margaret Temple Award for Medical Research, a team of researchers examined the effects of CBD on cerebral blood flow (CBF) and its relationship with memory.[1]

Healthy and strong CBF is important to human health. A decrease in CBF in the hippocampus, a key region in the brain that supports learning and memory, has been linked to a variety of diseases.[1] If CBD affects CBF in certain regions of the brain that are important to memory, it could have a number of useful uses.

In this study, the researchers recruited 15 participants for a placebo-controlled, double-blind, randomized study, including nine women and six men.[1] The subjects received either 600 mg of oral CBD or a placebo (inactive substance) in gelatin capsules on different days.

Three hours after taking CBD or placebo, the researchers measured the regional CBF at rest. They also tested working memory using the digit tension and N-back tasks and episodic memory with a prose recall task. These are common tests used to clinically assess learning and memory function.

Although the memory tasks showed no significant drug effect, the researchers found that CBD increased CBF in the hippocampus.[1] Many diseases are made worse or caused by decreased blood flow to the hippocampus, including Alzheimer’s and neuropsychiatric disorders.

It is important to note that these results contradict the results of other studies. While measuring CBF is an important way of looking at brain function, there are many different factors that affect CBF levels and so it is not directly related to function as CBD does not affect memory performance.

Credit: Anna Shvets

Image source: https://www.pexels.com/photo/person-holding-white-and-black-wall-decor-4226139/

reference

  1. Bloomfield M et al. The Effects of Acute Cannabidiol on Cerebral Blood Flow and Its Relationship to Memory: A Magnetic Resonance Imaging Study Using Arterial Spin Marking. Journal of Psychopharmacology. 2020; 34 (9): 981- 989

Canopy Growth is suing GW Pharma

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Two cannabis industry powerhouses are on trial after Canopy Growth Corporation filed a lawsuit against GW Pharmaceuticals, the company that makes cannabidiol (CBD) -based drug Epidiolex®, last December. Canopy claims it has exclusive rights used to the extraction process to make the drug.

Larry Sandell, a patent attorney in Washington DC, said Forbes that the Canopy patent “largely covers CO2 Extraction, the most widely used and perhaps the most important extraction technique. “

Canopy supports his claim with hers patent Granted in 2020 to protect his right to control a certain type of cannabinoid extraction in the United States. The company’s original patent, issued in 2014was significantly narrower in scope. If the lawsuit is successful, it could have far-reaching consequences for cannabis companies outside of GW.

“It could really be a huge threat to the extraction industry… Although there are steps that can be taken to reduce the risk of liability for breaches, CO2 With extractors, this anvil can essentially hang over your head if business goes on. ” said Sandel.

If Canopy wins its suit, it will have a huge advantage over its competitors. Many CBD companies use the proprietary extraction method. Canopy could potentially decide to defend its patent by filing a series of lawsuits following its GW case.

Epidiolex® is currently the only cannabis-based drug (that is not a synthetic drug) approved by the U.S. Food and Drug Administration (FDA). However, GW has also developed other cannabinoid therapies that are currently being tested in trials.

And GW isn’t the only company taking this path. Several other pharmaceutical companies are currently conducting clinical trials for their own cannabinoid-based drugs, which will also be submitted for approval if tests show positive results.

In the Canopy lawsuit specified“This case is not about restricting patient access to Epidiolex®. Rather, Canopy is doing this to stop GW’s knowledge and unauthorized use of Canopy’s intellectual property.”

Unfortunately, if Canopy wins the suit, it could restrict patient access.

“For political reasons, we do not comment on pending legal disputes, except that we are convinced of our position based on our preliminary examination of the complaint and will vigorously defend ourselves against this lawsuit,” said a GW spokesman said.

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