For most cannabis cultivators, margins are shrinking. Successful efforts to expand legalization has dramatically increased opportunities to grow in a greater number of states across the country. This has resulted in conditions for the industry that have favored greater competition as well as lower prices. And this trend is likely to persist.
Some growers have tried to increase facility footprints with the hope that growing more plants would result in more output and drive more revenue. But with high construction and infrastructure costs and rising energy prices, this is an ineffective approach and poses increased risk for the industry that could result in even smaller margins over time. At the end of the day, infusing more efficiency into existing infrastructure and increasing the quality, quantity and consistency of crop yield from the same number of plants is the only viable path to regaining high margins — the ones that garnered the original appeal of investing in this industry.
While best-in-class vertical farming techniques can help cultivators make incremental improvement to yield, it is really only technological interventions which are able to deliver solutions that provide impact at scale. Air and water are most often to blame for challenges faced in controlled-environment agriculture—with microclimates and drainage issues contributing to sub-optimal plant health and outputs. Dual Draft is the best solution for overcoming both of these challenges simultaneously and at a level that surpasses competitive products and services.
However, transformative technology interventions are an investment — and traditional lending is hard to secure for cannabis cultivators. Regulatory and legal restrictions are often hard to overcome, forcing many in the industry to slow their growth or take on non-traditional partnership models that further pose threats to profitability and long-term business sustainability. Lack of access to capital is the top reason growers delay investing in effective solutions.
Current operators are also faced with the economic reality of price compression during a time of significant operational cost increase, which negatively impacts the ability of cash flow necessary to support strategic, long-term growth. This combination of factors; price compression, need to increase output and gain efficiency, and a looming recession; has created a perfect storm that requires current operators to take action, now. Access to capital to improve efficiency and economic outcomes allows cultivators to take action.
Dual Draft has solved for this by formalizing a new vendor partnership with Sweet Leaf Madison Capital (SLMC), a nationwide provider of tailored debt financing solutions for the middle-market compliant cannabis industry. As a result, Dual Draft customers now have access to direct financing. This is one of many ways that Dual Draft demonstrates its commitment to its customers and the industry more broadly, and further underscores the confidence in our solutions — confidence deeply rooted in our proven track record of delivering measurable results.
“This relationship comes at a pivotal point for Dual Draft and the Industry as a whole”, said Mark Doherty, COO, of Dual Draft. “Working with SLMC allows us to offer the equipment and capital necessary for cultivators to improve efficiency and economic outcomes in a time of severe price compression – when it is needed most.”
Through SLMC’s lending platform, preferred vendors are able to provide their customers with a source of competitive, non-dilutive financing to fund expensive purchases of equipment or facilities, allowing those clients to spread their capital across a broader range of business needs. SLMC’s preferred vendor program helps participating vendors gain a competitive advantage by increasing the velocity of their sales.
“SLMC is pleased to be working with Dual Draft, an innovative cultivation technology company, to support their growth in the cannabis market”, said Andrew Kaye, Chief Commercial Officer. “Our vendor program is a win-win-win proposition for the vendor, who gets increased sales, the borrower, who gets a lower cost of capital, and Sweet Leaf Madison that can originate additional loan volume to targeted equipment buyers.”
This innovative new offering will empower more cultivators to deploy the Dual Draft system in their operations, increasing yield, consistency, quality and plant health. For cultivators looking ahead at price compression issues and searching for strategic, stable growth that will offset market challenges, Dual Draft is the answer. And the partnership between Dual Draft and Sweet Leaf Madison is just one more example of Dual Draft spurring the market toward strategic and aggressive growth.
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