Lindsey Renner on Surviving the Downturn

Most of the cannabis industry is facing its most challenging time to date.

As macroeconomic conditions continue to present various challenges in select markets, operators are engaging in several cost-cutting measures to streamline operations and to stay afloat.

Lindsey Renner, owner of Native Humboldt Farms, a vertically integrated cannabis company in Humboldt County, Calif., shares strategies she's implemented to lower production and post-harvest costs and improve efficiency, as well as advice she has for other growers during these challenging times.

Editor’s note: Lindsey Renner will speak at Cannabis Conference at the VIP Cultivation Roundtable. She will speak on the Roundtable discussion: “Surviving the Downturn,” which will run from 11:05 a.m. to 12:00 p.m. on Tuesday, Aug. 15. In this session, attendees are encouraged to share anything they have done to lower the cost of production/cost per gram and compete in a lower-margin flower market. This event is limited to cultivators only. Visit www.CannabisConference.com for more information and to register.

Andriana Ruscitto: Can you share specific strategies or initiatives you have implemented to lower the cost of production or cost per gram in your cultivation operations?

Lindsey Renner: I think that the most notable thing that I do to cut costs is natural farming. With natural farming practices, you are using what's already on your land to create your nutrients and things like that. So, nutrients in general can be really expensive. If I do end up buying them, I make sure that I go to agriculture stores. We are growing an agricultural product, and we need to be utilizing the agriculture stores more instead of the grow stores. You can get bulk there and kind of create your own blends and things like that. Instead of buying the pre [made] stuff, which tends to be expensive, with natural farming you're using what's already around the landscape.

We make a fish amino acid and literally it's just fish, brown sugar and water. It makes this super pure and super concentrated fish amino acid. You could do that for about $50 and that will do our entire nitrogen for the entire year. ... It extracts all the nitrogen from the fish, and so it's just this super concentrated liquid nitrogen basically. It is super pure and easy to make. It takes a little bit of planning. It takes about three to six months for it to break down into liquid. But with a little bit of planning upfront, there's really ways that you can save thousands [of dollars].

I'm not sure if people think that it's a little bit harder than it is or that it's more labor intensive, or if they just don't know [about it], but I do know that up here [in Humboldt] when the licensing came about, when we had all of these extra costs, a lot of farmers actually moved to natural farming. I think it's important to get the word out there. Not only is it way cheaper, but it's natural, it's already broken down and it's easier for the uptake.

AR: How have you approached the challenge of competing in a lower-margin flower market? What steps have you taken to maintain profitability in such a market?

LR: One of the things is vertical integration. At any point in time that you can try to be as vertically integrated as possible, you're going to save margins on all those other licenses. And not only that, but it’s also to be able to maintain more control of the supply, making sure you're getting paid. One thing is that regardless of what state you're in, there's a lot of cultivators that aren't being paid by the other licensees. So, distribution is the main one: if you can control that to some aspect and make sure that you're getting paid. Not getting paid one time can really make a difference for cultivators. So vertical integration has helped.

As far as competing, clearly prices are down. I focus on marketing a lot. Marketing is something that I can do myself. Social media, speaking, engagement. I really think LinkedIn is a fantastic platform. I try to post on there as much as possible and just engage with my community [and] get my brand out there. I think those are all things that are inexpensive. They take your time and clearly our time is very valuable, but we have to really be doing everything that we can to market ourselves and set ourselves apart because not only are prices low and it's hard to get shelf space, but there’s also just a lot of competition. So, we have to really try to do what we can. The free things like marketing, social media, everything like that to make sure that we're getting to our consumers … and that they're gravitating more towards us than other competitors and things like that.

AR: Have you employed automation or streamlined production processes to reduce costs?

LR: I haven’t. I think one of the reasons why I am still here is because it is a very small operation that's not automated. I think that everyone thought that the cannabis industry was going to stabilize quicker and that we were all going to be able to make more money and support these companies the way we should be able to. But the simple fact is that everywhere in the United States, it just hasn't stabilized yet and it's not to that point. I feel like we're seeing the people that are really scaling back and not outsourcing as much and just really [scaling] down and doing as much as you can yourself. I think that's what we kind of must do right now, just to hold on. If we can do that, and we can just hold on, because we're profitable this year, but this is our first year that we're profitable. So, it's kind of buckle down, do everything you possibly can, stay very, very slow or very small if you have to and not cultivate as much for a couple years just to stay in the market until it stabilizes, that's what I think. That's the name of the game right now. It's just very small. Everything you could possibly do yourself [do it] until it stabilizes, then you'll still be here and then you can start to scale and grow.

AR: In terms of post-harvest operations, what measures have you taken to reduce costs and improve efficiency?

LR: I think the thing that is most imperative is I'm clearly curing, harvesting, making sure that everything is delicately harvested, everything like that. We do cold storage and that has literally made all the difference. We do extremely cold storage. We store it in freezers, and it literally stops the degradation. So even if we're waiting until May to sell a product that we've harvested in September or August, it literally stays the same. So, I mean, with cultivation, a lot of the time, especially if you're just starting in the market, you're just starting to get shelf space, you won't sell a lot of that product until six months later, nine months later, something like that. So anyway you can preserve that, and that's really going to be the difference because you want to make sure nothing oxidizes, and you want to make sure it's as fresh as possible. We do super cold storage and that seems to work for us pretty well.

AR: What is one thing you would like cultivators to take back to their businesses after attending your Cultivation Roundtable discussion this year?

LR: I think one of the most important things for cultivators right now is making sure that you follow market trends. It’s important in every aspect of the industry right now, every license type, but I would say specifically cultivation. The reason why is supply and demand changes throughout the year, and it changes year by year, regardless of what state you're in. Cultivation, it changes more than anything else. For instance, if there's a high supply, clearly the prices are going to be lower. So say in California, we had all these farms online, there was so much, definitely too much product, and that dropped the prices down way low. Then [prices] were so low, they stopped growing. Right now, particularly prices have risen in the last three months, probably about $300 a count. It's the first time in a couple years that we've kind of seen the upswing.

We're assuming that more people will start planting again. Why it's rising is because people stopped planting because the prices were too low. So you really just have to follow supply and demand and see what that is in your state when you're planting. Because if there's an oversupply, you may want to scale back and only fallow a little bit, only plant three-fourths of your canopy or something like that. Then when supply is low, you want to know when that happens so that you can ramp up. Along with supply and demand, bulk prices will change. So when there's a high supply, if you're selling bulk, it's going to be lower. If you are selling or when the supply is low, it's going to be higher. Following those market trends of: When should I sell bulk? When should I package branded products and sell them? You really have to stay ahead of market trends and try to predict what's going to happen in the market so that you can make sound decisions for your [operation] that day.

AR: Is there anything I missed that you think would be beneficial to include?

LR: The one thing that I really like to talk about with people is partnerships. I think partnerships are key right now. A lot of people have fallen out of the industry, but the ones that are left, I think it's important that we find those partnerships. I am hoping that at this Roundtable we can form some of those partnerships.

The other thing is being open to all opportunities, partnering with MSOs and things like that. A lot of times as cultivators, we're kind of closed off. The thing is, you want to at least vet out every opportunity. It may not be perfect for you, it may not be right for you, but we need to keep an open mind because it's really hard times [and] it's lean times right now. Just because you look into an opportunity, just because you look into partnering with the MSO or licensing genetics from a corporate company or anything like that, it doesn't mean you commit to doing that if it doesn't fit your ethos. If it doesn't fit your values, if you think that it's not a good fit for you, you don't have to do it, but at least you know that you looked into it. You know you were open to betting on the opportunity and saying what could come up. Partnerships are going to be huge, I think, as we move forward.