February 3, 2022

The Rise of Agribusiness

Have you heard about the “green rush”? The legal cannabis industry smashed sales records in 2020 and 2021, thanks in large part to the decriminalization of cannabis in many parts of the United States and Canada. That lucrative revenue stream has caught the eye of investors, leading to a boom in the agribusiness industry.

The number of legal cannabis farms grew by 58% between 2012 to 2016, while cannabis plants increased by 183%. According to Grand View Research, the global legal cannabis industry will be worth more than $70 billion by 2028, with nearly 80% of that business in North America alone.

With increased investments from outside firms, we’re seeing more interest in streamlining indoor grow operations to maximize efficiencies and outputs. Production must continue to expand for agribusiness investors to see a strong ROI, even in areas where environmental regulations have slowed growth in the agribusiness industry in the past.

Overcoming these regulatory obstacles requires strategic planning. One of the biggest growth areas within the agribusiness sector in 2021 involved energy consumption and finding ways for cannabis growers to lower their usage and to use what they buy in a much more efficient manner. One approach, transitioning from industrial and pharmaceutical to manufacturing, is the application of CHP, or Combined Heat and Power technologies. By upgrading their facilities with the latest CHP systems, and producing electricity and thermal energy on-site, cannabis growers are increasing energy security and significantly reducing energy consumption.

As the legal cannabis industry matures, outdoor operations are being replaced by sophisticated indoor farms. Although outdoor cannabis production is still quite popular in some rural areas, indoor operations are more financially lucrative for agribusiness investors. Indoor growing operations are also less reliant on favorable weather conditions. Growers have more control over soil health, and their crops are less likely to be threatened by wildfire smoke, pest infestation or other climate concerns.

While medically-licensed cannabis growers work to cultivate plants with the greatest potency and efficacy, financial investors are taking a closer look at profitability. Numerous advances in growing technology have been achieved since the legal cannabis industry first blossomed in the United States, leading to a better understanding of grow practices and medical uses for traditional plants.

Many of today’s most successful growers have struck a balance between efficiency and efficacy — cultivating the most potent strains available within the confines of indoor growing facilities. However, we know that prospecting for plants is not without its challenges. Outside investments from venture capital firms have increased the pressure on cannabis growers to streamline their facilities to maximize profitability.

Engineers are often brought in to assess, consult, and design indoor growing facilities to meet specific power requirements for cannabis investors. For a 10,000 square foot indoor facility to run efficiently, growers should expect to use as much as 787 kW, including 160 kW for lights alone. Now look at facilities that are 50K, 100K or even 125K square feet and you can see where problems may arise.

Does your growing facility have that much power available? If you don’t know the answer, then an engineering design firm should be brought in to help.

Supplementing the electricity provided by local utilities with electricity and thermal energy that is produced on-site is one of the most effective ways to streamline an agribusiness operation. Rather than relying on heat and power that have been generated at a distant power plant and delivered through separate processes, cannabis growers are combining those processes with a comprehensive, integrated system known as combined heat and power.

With CHP, licensed growers can meet highly-specific electrical demands with minimal energy waste. CHP is available primarily for commercial applications, with the ability to be deployed quickly and cost-effectively using either fossil or renewable-based fuels, or a combination of both.

When it comes to designing and developing successful indoor growing operations, commercial infrastructure is just as important as plant biology. Agribusiness investors must be familiar with the elements that are required to successfully grow plants indoors, including the electrical needs and water requirements to allow photosynthesis to occur. In some cases, engineering designers may even recommend moving plants or reconfiguring indoor growing operations to promote longer growth cycles and greater yield.

HVAC considerations shouldn’t be ignored during the design process. To ensure an indoor growing operation is fully optimized, growers need to customize their spaces for temperature, humidity, agricultural needs, airflow design, and more. Specialty equipment may also need to be brought in to handle the loads that occur within the indoor grow environment throughout the plant lifecycle. With proper facility design, legal growers can maximize equipment performance and output.

In order for indoor growing to remain cost effective, agribusiness investors are soliciting full-service engineering solutions providers, like KMB. Our experience allows us to make indoor farming more cost-effective and energy-efficient for legal cannabis growers. With decreased reliance on commercial utilities, our design process remains cost effective for those in the agribusiness industry.

As the industry booms, legal cannabis growers are facing tougher competition. Proper design decreases reliance on pesticides and fertilizers, which damages the purity of plants. To maximize indoor growing output and efficiencies, companies should seek out the advice of a full-service engineering design firm.

Custom design solutions can be setup to fit any indoor growing space. Energy-efficient equipment can be mounted inside or outside of the facility, with technology that is specifically made to aid in heat recovery and dehumidification. Growing environments and soil health are just the beginning. With expert design, legal cannabis growers can maintain more control over security, confidentiality, and budget.

The primary benefits of working with an engineering firm to design a commercial indoor growing operation are:

  • Increased cultivation yield and quality
  • Reduction in cost of goods sold increasing profitability
  • Tighter control of the grow environment resulting in healthier and more profitable production
  • Partnership with experienced consultants

At KMB, our team of agribusiness experts can evaluate your energy strategy and provide custom recommendations to enhance the value of your legal cannabis project. We work directly with licensed growers and agribusiness investors. With thousands of projects nationwide, we are an industry leader in the agribusiness space.

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