Tiny but powerful: microcultivators dominated in 2021
Last year was a huge success for micro-cultivators as the number of licensees across Canada continued to grow. Most licenses are still overall for standard cultivation, but micro-licenses are gaining traction – both in industry and with consumers.
The path of a micro-brand is not easy. Maintaining a successful business with high taxes and operating costs coupled with low prices for their products can be challenging. Despite these difficulties, the passion for the plant prevails, which is noted by larger growers and consumers.
Micro-cultivators like Organnicraft, North 40, MTL Cannabis, Weathered Islands, Origin Coast, and Black Kettle Farms – to name a few – have made waves in the market over the past year with new products that have dominated online reviews on places like Twitter, Youtube, Reddit, Instagram and TikTok.
Smaller batches = better weed?
Grow licenses in Canada allow the growing, harvesting, drying, trimming, and packaging of cannabis for mass sale. In order to be approved as a micro-cultivator, grow rooms must not be larger than 200m² in total.
Of the more than 260 growing licenses issued this year, around 130 were micros, of which 11 were nurseries, making micros the most common license issued in 2021 (albeit by a few).
What makes microphones so popular? The grass.
Micro-growing cannabis is like any other specialty crop, the yield is lower, but the quality is often higher. Led by a master grower, grow teams can spend more hands-on time with the plant at each stage of growth.
According to consumers, microphones grow tastier and more potent cannabis than the larger suppliers.
Micro-producers in Canada are emerging as successful companies and brands with products that will delight connoisseurs and bring more “old” consumers into the growing number of retail stores.
Big brands can be partners instead of competition
The ability to make a higher quality product than many of the larger companies seems like a huge benefit for many micros. In some cases, larger licensed manufacturers turn to working with Micros to bring their products to market under their guidance.
“They said to me, ‘Look, we can make the ketchup, but we can’t grow the tomatoes’. They have connections with provinces, some are even bigger buyers than the provinces. But we are the ones who grow what consumers want. “
Albert Eppinga, BC Cannabis Inc.
That way, micro-businesses can focus on high-quality, low-volume products, while the larger producers can rely on marketing, sales and relationships with distributors and retailers in the provinces, says Logan Dunn of Dunn Cannabis, a micro-grower in British Columbia.
Dunn Cannabis is now partnering with another BC producer, BZAM, which not only operates a handful of its own manufacturing facilities, but also sources products from other producers to sell under their own brands.
Dunn says he found a happy home at BZAM after trying different partners. “They bring huge cost savings when it comes to packaging and distribution costs,” he explains.
“That goes a long way. They allow us to really focus on making really good products and they bring a sales team with them that help distribute our craft products across the country. And that is of inestimable value for a microphone. ”
BZAM isn’t the only major manufacturer that works with a micro. Aurora Cannabis began a partnership with Saskatchewan’s North 40 Cannabis, a micro-grower and processor, earlier this year.
Aurora first began supplying North 40 with genetics from their own extensive genetics library last year to ensure their world-class genetics have the chance to be bred with the specialized care of a micro-breeder.
Delta 9, a major licensed manufacturer based in Manitoba, has also provided sales and logistics assistance to a dozen licensed manufacturers, assisting them through the licensing phase, even supplying equipment and genetics, and then purchasing their products for distribution in their own networks and retail stores.
High-THC genetics are still in demand
Micros may have brought their interesting and unique genetics with them when they were licensed, but these breeders are not always able to achieve the high levels of THC that provinces and consumers continue to demand.
Strong industry relationships and partnerships are essential to ensure that consumers are demanding the kind of genetics, Dunn says. Something that is especially important for micros.
Albert Eppinga, owner of BC Cannabis Inc, a microcultivator on Vancouver Island, agrees that one of the big challenges small producers face is making sure they have a high THC harvest and finding distribution agreements that allow for timely payment .
“If you don’t grow top quality stuff with the right genetics, it can be difficult. THC is currently the key in the industry and needs to be at least 22-23% to get above $ 3 per gram. It’s a good job finding good genetics and producing a good high-THC flower. ”
Eppinga currently works in partnership with a larger conglomerate of micro-producers in Sooke, BC, on Vancouver Island, who will then sell under a joint brand in several provinces including BC, Alberta, Saskatchewan and Manitoba.
Like Dunn and several other Mikros, he says he’s also in talks with some larger manufacturers who are interested in selling his products.
“They said to me, ‘Look, we can make the ketchup, but we can’t grow the tomatoes’. They have connections with provinces, some are even bigger buyers than the provinces. But we are the ones who grow what consumers want. “
High-THC buds could cost more than $ 3 or 4 per gram in wholesale, Eppinga explains, but smaller buds could cost as little as about $ 1 or may be rejected outright. It can be a good living after the cost of ownership, but it still requires a lot of hard work.
Will microphones continue to thrive in 2022?
As flower prices continue to fall, micro-businesses will have to offset operating costs with an MRSP that is still enticing to consumers. Maintaining a tight business model will be critical to surviving this ongoing price pressure and increased competition.
“I think 2022 will continue to be a challenge for micro-businesses as we all try to find our place in the market,” said Michael Fong, owner of Origin Coast, a Nova Scotia micro-cultivator and processor.
“Large LPs will continue to source unique genetics and high quality dried flowers from [micros] but with higher specifications as the market continues to chase high levels of THC, ”explains Fong.
“Our operating margins will decrease due to dried flower prices [due to] the increased supply of high quality products on the market and excessive costs due to supply chain challenges related to COVID. “
That view is borne out by Kyp Rowe, director of cannabis at Shelter, a distributor who works with numerous micro-producers for sale through provincial channels and their own medical platform.
“At the moment, micros are in a saturated state,” says Rowe. “With over 200 across Canada, the opportunities to get products on store shelves are bogged down by competition.”
“In 2022, farmers will have to grapple with low gram prices, the need to constantly change varieties in a volatile market, and build strategic partnerships with processors and traders.”
“The key to navigating these waters is to first ask yourself: Are we a brand or are we just farmers?”
Kieley Beaudry, owner of micro-grow and processor Parkland Flower in Alberta and president of the Alberta Cannabis Micro License Association (ACMLA), is optimistic about micro-growing in the coming year.
“This will be the sales license year for many micros, if they survive the first two years that microlenses were allowed,” she says.
“Tenured micros will start processing for other micros, and I think we’ll see smaller businesses working together to fill SKUs for larger craft operators. Microprocessors will bring more unique handicraft products to market, which in my opinion is a void that has still not been closed or developed. “
David Brown
David Brown has been working in and writing about the cannabis industry in Canada since 2012. He was previously the editor-in-chief and communications director of Lift Cannabis and Lift News, senior policy advisor for the cannabis legalization division of Health Canada, and is the founder of StratCann Services Inc.
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