Let’s start with the basics. How are your light schedules staged? Do you use an environmental regulation system? Are you hand watering, or using an irrigation system? Have you purchasing product in bulk? Lastly, how are you tracking the costs of all this overhead and applying that cost on a “per item” basis? In short, are you using cost accounting in your business? If you’re wondering how these questions can help you reduce operating costs for cannabis cultivations, you’ll want to read more about each category below.
Lighting Schedule
Many growers are suggesting the switch from High Pressure Sodium lights to LED (Light-emitting diode) lights. This recommendation could be valuable if the grower is willing to make the switch, and the company is willing to invest the cash into new lighting altogether. We however, have a different alternative. If you have multiple rooms flowering (12-12 light schedule), stage each rooms light schedule. What we mean here is, have half of your room lights on while the other half is sleeping. Essentially, you would have lights on 24 hours a day but you will be drawing less power during these hours. This will help with the amount of power drawn at the time the lights turn on, and will reduce energy costs by running rooms during off peak hours. If you utilize this method, it is important to inspect all rooms to ensure no light leaks are visible. If you’re a grower, you’ll know what we mean.
Environmental Regulation System
Choosing the rights environmental regulation system is just as important what the plants are eating. Regulating the humidity, temperature, and VPD (Vapour-pressure deficit) can help promote photosynthesis in the cannabis plant according to the Frontiers in Plant Science article “Minimizing VPD Fluctuations Maintains Higher Stomatal Conductance and Photosynthesis”.
Fertigation Plan
If you are currently hand watering, you may consider installing a fertigation system to reduce labor costs. For instance, as your business grows, employees will spend more time watering plants. This time could be designated to crop work, or other growing duties. If you have an irrigation system currently installed, you may consider reclaiming your water. This will take investing in a water reclaim system however, the investment will pay off in no time. You will not only be saving water, you will also be appeasing public zoning boards such as the planning and zoning committee.
Bulk Purchasing
Let’s talk procurement. If you find yourself purchasing items at the last minute to keep operations going, there is definitely an issue. Consider purchasing items used in day to day operations in bulk so you don’t find yourself purchasing items from third party vendors who often inflate prices to make a quick buck. Soil, nutrients, packaging, and even office supplies such as paper and ink should be bought in bulk. Additionally, you should try to source these items directly from the vendors producing them. There are certain exceptions to this as some vendors will not do business with cannabis cultivations, but often times this will not be an issue. If you decide to purchase in bulk, you may also be eligible for a bulk discount, so don’t forget to ask your representative about those savings as well.
Forecasting
We have covered a lot about how to reduce costs in cannabis cultivations. Lighting schedules, VPD, and fertigation systems are all self explanatory to growers. You might still be wondering, well how do I know how much to purchase? What is considered “bulk”, or what if I over-purchase? Not to worry, we talk forecasting and tracking costs below.
Forecasting is important so you don’t over-purchase but also, you don’t under purchase which is how those last minute must haves lead to increased operating costs. You know how many plants go in each room, and how many times your room will turn in a year, so do some math and plan accordingly. Always remember to give yourself some slack when calculating these numbers. Soil will sometimes spill, or pots may come in cracked so you’ll want to account for those unforeseen instances. Forecasting packaging can be a bit more complicated. Utilizing previous data from room harvests is the best way to estimate the amount of finished product you may get. For ancillary products, utilizing sales data to forecast production needs is the best forecasting method for packaging. Think “How much do I need to make”, “How much have I previously sold”, and “How much do I expect to yield from this harvest?”.
Tracking
Tracking the data is the most important thing you can do with your cannabis business. Previous sales and harvest data can help any business owner make data driven decisions. These decisions can reduce operating costs for cannabis cultivations. You should also be tracking the costs of your operations. How are you tracking overhead and applying it to the plants that are alive? Are you considering your plants to be assets on your balance sheet? How is the value of each plant calculated? These are all questions your accountant could probably answer; right? If not, you may want to look into getting a software that will allow you to track your cannabis from seed to sale that also includes the functionality of cost accounting. An all in one system! Does it exist?
It does, and we have the connections! Let us give you and your accountant a free demo today!
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