The Case for Cultivation Expertise: Why You Need a Trusted Advisor More Than You Think – Cannabis Business Executive

Working with a trusted advisor in any industry makes good business sense.

But many cultivation start-ups are reticent to hire a consultant before they have a license to grow.

Some companies view cultivation expertise as a nicety that can’t be afforded until they’ve received a license and completed a big raise.

Ironically, this pre-start-up phase is precisely when advisors can be most valuable to a budding cultivation business.

Lawyers, accountants, and other professional services are brought into play early, but industry-specific expertise is usually not. In my experience, this thinking can prove to be penny wise and pound foolish.

Here are four reasons why new cultivation businesses should involve industry expertise as early as possible:

1. To help get your numbers right.

Determining CapEx and OpEx requirements is essential to understand how much money a company needs to raise to build and operate its production site.

Several factors can influence these numbers, as well as a group’s timeline to profitability.

Is the site a new build or a retrofit? Will cultivation occur in a greenhouse or indoors? Will you start from seed or hire a tissue culture lab to produce your starter plants? These decisions can mean a difference of millions of dollars in CapEx and a timeline to market that can fluctuate by 18 months or more.

If you’re raising serious money for a project, it warrants serious help with the numbers. An advisor can help you to confidently pursue investments, knowing that your calculations are rock solid.

2. To help you focus on what’s important.

Entrepreneurs new to cannabis tend to focus on the wrong things at the wrong time.

Early in the process, the focus is often too granular (which grow light to buy) when it should be much more broad (which cultivation strategy to select).

Focusing on the granular too early is putting the cart before the horse, and it can overcomplicate the process down the road. The planning and design process should follow a logical flow, where strategic decisions made early on inform the more granular decisions later.

Advisors also help bring your attention to what you should be worrying about but are not.

I knew a group in Colombia that cut CapEx costs by eliminating all fans and shade curtains in their new greenhouse. What they ended up building wasn’t a greenhouse—it was a plant oven! They could have used an advisor to help them focus on something that they weren’t concerned about but should have been.

3. To tell you “no” when you need to hear it.

If a start-up is comprised of founders with no horticulture experience, and they’re pitching their business to investors that aren’t from the plant world either, it’s possible to develop a dream that’s not based in reality.

I have witnessed many situations where money was committed for projects with a very low likelihood of success. The risks were glaringly apparent to me but seemed like business-as-usual to everyone else. The investors were excited to invest, and the start-up was excited to collect. These projects were doomed from the start because early on, no one told them “no.”

I once met a start-up that raised millions of dollars to grow cannabis outdoors on a tropical island where it rained every day, and relative humidity averaged 90%. I met a different start-up that raised money to implement an advanced method of hydroponics inside of a rudimentary greenhouse. They couldn’t control greenhouse temperatures or even properly circulate the irrigation water. As a result, they killed their first crop.

These problems could have been prevented by engaging a trusted advisor early in the process. Having a consultant tell you “This is a bad idea” is much better than hearing an investor tell you, “I want my money back.”

4. Because you can’t replace decades of experience with a weekend of Google searches.

Some groups don’t see the value of paying for advice when there’s already so much of it out there. Why pay an expert to answer questions when you can just Google it?

True, the internet is saturated with information and advice for launching a cultivation business, but this plethora of data can be its downfall, too. Patching together free advice from the internet will result in exactly that: a patchwork project.

There are many ways of growing cannabis on a commercial scale, but not every cultivation strategy, grow technique, or piece of equipment is compatible or interchangeable.

This would not be obvious to an entrepreneur that does not have prior experience designing or operating a grow facility. Incompatible equipment or contradictory cultivation methods will result in a delayed entry to market and additional expenses to fix the problem.

Skipping a trusted advisor and “going it alone” with the help of the internet can end up costing the entrepreneur dearly—much more than the cost of hiring a trusted advisor in the first place.