Each year since 2016, Cannabis Business Times has published its “State of the Cannabis Cultivation Industry” report, based on third-party research that tracks changes and trends occurring among cannabis cultivation businesses throughout North America. The 2021 “State of the Cannabis Cultivation Industry” report revealed key findings worth noting as you head into the new year.
1. More larger cultivators and more smaller cultivators.
With the proliferation of multistate operators (MSO’s) and continued emergence of larger cannabis enterprises in the market, it’s not surprising that the number of cultivators with 80,000 square feet or more of cannabis production space has increased over the past 5 years; that number climbed 11 percentage points, from 7% in 2016 to 18% in 2021. The number of cultivators with 50,000-79,999 square feet of cannabis production space also grew 4 percentage points from 3% in 2016 to 7% in 2021.
At the same time, the number of cultivators whose production areas spanned less than 5,000 square feet increased by 5 percentage points–from 34% in 2016 to 39% in 2021.
2. Small growers continue to dominate the industry.
Despite the greater increase in the number of larger cultivators compared to the rise in smaller cultivators, small cultivators continue to comprise the lion’s share of the North American cannabis marketplace. Nearly 40% of cultivators reported cannabis production areas of less than 5,000 square feet. Less than 20% reported cultivation production spaces of 80,000 square feet or more.
3. Average cannabis production area square footage on the rise
The greater increase in the number of larger cultivators compared to the increase in smaller cultivators, however, has impacted the average square footage of cannabis production space. In 2021, that number grew to 33,900 square feet, from 25,600 in 2018 (the first time this data point was reported).
4. Majority of cultivation businesses operate one facility.
Nearly two-thirds of cannabis cultivators reported operating just one cultivation facility in 2021. This number (63%), however, represents a 3 percentage-point drop from the 2016 data, where 66% of growers reported operating one cultivation facility. When comparing 2016 data to 2021 data, the number of growers operating two, three, and four facilities each climbed 1 or 2 percentage points; however, these growers comprise a significantly smaller percentage of the market. Cultivators operating two facilities increased from 15% in 2016 to 17% in 2021; the number operating three facilities increased from 7% (2016) to 8% (2021); and the number operating four facilities was up from 4% (2016) to 6% (2021).
There was no change in the number of cultivators (6%) who reported operating five facilities or more.
5. Growers plan to grow—in size.
Nearly three-fourths (73%) of currently operating cultivation businesses in 2021 reported plans to add indoor, greenhouse, or outdoor space, or a combination of those, in the next two years. A quarter had no plans to add cultivation space.
6. Majority of growers (and counting) are controlling part of their supply chain.
This year’s research showed that more than half (54%) of cannabis cultivators also operate retail or extraction/processing labs (unchanged from 2020, the first year this data was reported). A quarter of cultivators also operate retail businesses (either medical or adult-use); a slightly larger portion (28%) indicated also operating extraction/processing laboratories.
In addition, 17% of current cultivators who participated in the study indicated they had plans to add extraction capabilities to their operations, demonstrating the growing interest certain groups have in controlling their vertical.