Scaling Up a Boutique Grow Operation

This section was prepared by Growers Network as a preface to our interview with Veritas.

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Here are a few of the factors that need to be considered when scaling up. Each individual point has multiple facets to it. Legal Considerations

1. State licensing and restrictions
2. City permits and restrictions
3. Building permits and building codes

Economic Considerations

1. Budgetary limitations
2. Time limitations
3. Are you growing to meet demand?
4. What is your business model?

Operations Management

1. New equipment
2. New personnel and training
3. New technology and implementation
4. Pest management regimen

Technical Considerations

1. Electrical systems and power consumption
2. Plumbing and irrigation
3. HVAC

Administrative Management

1. Scheduling during construction
2. Oversight during construction
3. Coordination of communication

We started as a white label company because Colorado’s market was saturated with generally low to medium-quality cannabis. We knew we were doing something unique compared to other growers because our end results, our yields and our quality, stood out. Our growing methodology differed greatly from a lot of large or medium-scale growers in Colorado, and we wanted to keep it that way.

Initially, we occupied half of a 24,000 sq ft building. We were attracted to it because it had small rooms where we could employ our small, boutique style of growing. We were able to maximize our environmental control and cycle our harvests. The modularity of multiple small rooms meant that we could make a cleanroom, a planting room, a harvest room, and scale it up by building out more rooms. We eventually started to gain popularity. Our initial company, Care Harvest, became so popular that dispensary owners would pay us for plants that hadn’t even been harvested yet. The Colorado market was saturated and overcrowded, but our product really stood out. We decided we needed to step up and do more. We created a brand (Veritas Cannabis) that rocketed into the popularity we’re enjoying now. We wanted to focus on quality, and that’s why we white-labeled it.

We cultivate indoors and prefer to use a coco base as our growing medium. Coco fiber is like a combination of a really heavy soil with a lightweight fiber that allows the plant to grow. In my experience, coco has lots of micronutrients in it. Because we have a boutique style, we try to stay away from the automated systems that most hydro growers rely on. We treat every plant individually. We set up each pot individually because all plants absorb water and nutrients differently. We hand-water them to meet their individual needs.

A year ago we signed a lease for the other half of our 24,000 square foot building. We completed renovation and construction in November of 2016. Currently we have 15 flowering rooms, and each room contains approximately 24 lights. Every room has roughly 600 square feet of space in it.

As for environmental controls, we’re obviously using a thermostat and a humidistat to monitor humidity and temperature. We have sensors to monitor our CO₂. We can set the parameters for each individual room. We also monitor every aspect by hand, which is the best way to be confident. We have a check where an employee comes into each room a minimum of twice a day to check environmental factors. In our new expansion, we decided to use a computer system to automatically collect analytical data. Now we get alerts when we have high temperature shutoffs from things like an air conditioner going down. These technical factors really help, but we still grow by hand because that is the sure thing for our success.

Let me give you some context. For many years in Colorado, there were no restrictions on pesticide use. We were allowed to use the same products that were commonly used in outdoor agriculture. About 2 years ago, a fireman got sick from an improperly fumigated room, and the state changed the laws drastically. Now, you can only use pesticides from a small, constantly updated list produced by the Colorado Department of Agriculture. We had to revamp our pest mitigation strategy. Related Articles: Pesticides in Washington and Oregon Consumer Protection We started using pesticides that were never intended for use in an emergency, which we had previously only used in a maintenance role. Because of this, we primarily use the allowed pesticides in a preventative maintenance schedule. These products require more labor than what we used previously. We’re spreading rosemary oil, cayenne peppers, and more, all of which degrades faster. It’s labor-intensive and expensive because they require more frequent application.

We’re seasoned cultivators and we’ve always stayed on top of it, so it hasn’t been a huge deal. But the game changed a few years ago, and we had to adapt. It’s up to cultivators to use pesticides properly. Cultivators should take classes and courses so that everyone understands the proper ways to use them, handle them, and dispose of them.

We planned it out internally for months. We designed our grow houses and the whole growing process. We knew exactly how we wanted to build, how we wanted to focus our efforts, how we wanted to scale up, and it was all very natural.

Our current warehouse is probably the 7th commercial cultivation facility I’ve helped set up. It was a lot of guesswork when we started building our first facility in 2010. There was a lot to learn, such as air conditioning needs or how to maneuver lights into place. Each build has gotten easier with time though.

Speaking of which, ramping up to a full-scale environment requires a significant amount of time as you grow. It’s not like a normal job. You have a much tighter schedule. Luckily, one of my business partners is an incredibly bright, meticulous fellow who has run our facility like a military outfit. When we designed the 16 boutique small rooms we have, we had to maintain a rigorous schedule to not fall behind or let plants spoil and die. That’s where we’ve really excelled. I would say one of our best attributes as commercial cannabis cultivators is our ability to schedule.

Finding People

Colorado is a relatively small industry. Despite how fast it’s grown, everybody knows each other. We generally find new hires through word of mouth. We’re also doing some local hiring in our community.

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The Right People

Anybody can cook. It’s easy to throw an egg on a stove and cook it. But it’s challenging to cook a perfect omelet. We feel the same way about cultivating marijuana. It’s easy. You can grow weed, get a harvest, smoke it, and get high. But to grow great cannabis is a very time-consuming, labor-intensive project.

It’s been a challenge finding the caliber of people we’re looking for. A growing job can be perceived as boring or challenging and exciting. We’re looking for people who see it as challenging and exciting and have a passion for the plant. I look for passionate people, often younger people, who know they’re going to do very hard work for a long time because they love the challenge. They love taking a small plant and watching it form into a beautiful, gorgeous, full-leafed, bud-crystallized plant. That’s what motivated me when I worked in a garden for 5-6 years. We’re passionate about what we do. That passion supersedes the hard work and long hours we’ve put in.

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Training

We have a very hands-on approach to employee training as well. We actually almost prefer people with zero or little cultivation experience, because they can be malleable. Our process has a mentor watching over you, giving you tasks, and checking up on you. We don’t throw a book at people and tell them to learn. We are very hands-on.

We switched from single-ended 1000W HPS bulbs to the new HID DE HPS bulbs, which allow more coverage. They showed up in the industry a while back. We’ve used both Gavita and Phantoms for fixtures and bulbs. Phantom is the company we use in our warehouse for HID bulbs. Each room is its own growing atmosphere:

1. We have a dedicated air conditioning unit for each room. Per room with 24 lights, we have one dedicated ten-ton air conditioner.
2. We monitor the CO₂ in each room. There’s a CO₂ control deck that allows us to monitor the CO₂ intake.
3. In each room, we have an exhaust fan, as well. We exhaust air during the night cycle to reduce humidity.
4. In certain rooms we have dehumidifiers, and placement varies according to where each plant is during flowering. We dehumidify mostly towards the end of the flowering cycle. Within the last month of flower, the bud gets denser and creates more humidity.

We hired an architect, electricians, HVAC companies, and a construction company to design and build our facility. However, the initial planning and legal work was all done internally, as our team has a wide array of skills and experience.

This was my 7th build out, so I knew most of the problems that can arise. That said, it’s impossible to make a perfect plan because there are a large number of factors at play, such as the government agencies you’re working with and construction delays. Agencies and regulations can hamper your growth. When you work in the cannabis industry in Denver, you have to deal with a pool of regulators: the City of Denver, the Fire Department, the State of Colorado, and the Marijuana Enforcement Division (MED). Some of these agencies and departments have overlapping rules that contradict each other. For example, the MED may want secure locks that open in a specific way, and the fire department wants the doors to open another way. Sometimes it gets crazy, but it always ends up working out.

You will also run into unexpected timing issues, which lead to increased costs and lost profits. For example, you’ll be waiting for a bunch of lights and when they get installed, you’ll realize you need a power upgrade. Then you have to wait for the power company, and they’re on their own schedule. Their electricians, of course, will take longer than predicted. Throughout the whole process, the cost of equipment is changing, the engineers are going back and forth, and there are small, constant interruptions. To be completely honest, we could not have done it better on this last buildout. We’ve been through the process of building out several times, and we know what we’re doing now. We could not be happier with the results we’re having.

When you have a new room that you’ve never grown in, you don’t know if anything will work at first. The experience drives you crazy. Scaling up quickly and maintaining the plants are much more difficult than you might believe. In our case, we’ve occupied our new place for only a month and 75% of it already contains plants. The coordination between our timing and our growing has been a great success.

Another success we’re experiencing is that we’re picking up a lot of organic traction. We formed Veritas to showcase the quality of what we do, and nearly every day I’m doing another interview. People are starting to recognize the quality of our brand and our consistent style and packaging. It’s humbling to watch our hard work paying off.

Setting Expectations

I would advise any business owner to curb their expectations. You will need to explore the needs of growing and balance them against your budget. Expect delays. Expect price increases. Expect to spend more than you have budgeted. Hope for the best, but prepare for the worst.

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Communication

Throughout the whole process, communication is critical. As the commercial cannabis industry has evolved, uncertainty and unpredictability have become the status quo. That’s why Veritas conducts regular, biweekly meetings. We’re constantly making sure we’re growing properly and correcting mistakes.

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Planning

You should start the scaling process by asking yourself some questions: What is your business like? Where are you located? What is your business model? Do you want to grow as much weed as possible as fast as possible, or do you want to grow quality cannabis? Do you want to do both? Your budget and your preferences change how you grow your business. Most importantly, what is everybody else doing? For example, if you have one of 10 licenses in Massachusetts, you don’t have a lot of competition. You can focus on quantity over quality and be successful.

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Learning Curve

If you’ve never expanded before, take the time to learn how to build a grow. You’re going to have a lot of trials and errors. If you don’t have the time or money to learn and make mistakes, then hire a consultant. Editor’s Note: Mike is offering Veritas’ services as a consultant! See below for more details.

As you know, we have a new president and a new government coming in. We’re all hoping and praying that the pro-legalization states like Massachusetts and California will propel the industry as a whole. If the government doesn’t interfere and allows us to continue, I’m excited for the future. I’m excited about growing our brand. We love our strains. Our end products are revered as some of the best in a very competitive market. We want to continue what we’re doing, strive to get better, and hope that we’re not limited by the new federal administration.