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This guest column is from Colin Decker, owner and founder of 7 SEAZ, New York’s first legacy-to-legal adult-use cannabis brand, and owner of Hudson Valley-based Sensei Growth Consulting. He is also in the December license queue for a distributor license. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.
Many of New York State’s licensed cannabis farmers who are currently cultivating crops outdoors, along with a few growing in greenhouses, will undoubtedly be looking to offload their grows for cash come October – since many are choosing the bulk transaction route instead of branding their own product and selling it to stores.
This is hunting season for licensed processors across the state, with an unlimited number of tags to use. Many of these processors are looking to stockpile as much raw material as they can to secure their piece of the market share — an unsustainable business model, to say the least — and something the Office of Cannabis Management has had a large part in creating by limiting the number of processors that have been able to operate since day one.
The new wave for the New York industry is for farmers to sell their harvest as “fresh frozen.” This isn’t new to the industry as a whole, as it has been going on in California, Oregon, and many other legal states for quite some time.
However, here in New York, the demand from processors, brands and consumers for resin, rosin, and other concentrates is increasing, and that need must be satisfied. Farmers can also avoid having to dry, trim and sort their flowers by going this route, and they can sell everything all in one shot.
Different concentrates fetch different prices, either in bulk wholesale form or as a final packaged good. Concentrates extracted from properly grown and harvested fresh frozen flower material with their terpene profiles intact lead to a much greater taste and smoking experience and provide a different high. They also sell for much higher price points.
Price differences currently on the market for reference show a liter of cannabis distillate made via ethanol or CO2 extraction sitting around $5,000 – $12,000. The wide pricing gap is due to an existing “river of distillate” currently on the open market. Much of that was made possible over the last few years by farmers selling crops for cheap to processors, and those processors doing “split”-style deals with cultivators that offered them a 60/40, 70/30, etc. return on distillate concentrate yields in favor of the processors, for example.
However, current wholesale pricing on a kilo of live resin sits around $30,000 – $32,000 wholesale, with Solventless Food Grade Rosin going for $15,000 – $18,000 per kilo, all made from fresh frozen flower material.
A farmer will grow their crops all summer long, and come this October, one of the state’s processors will possibly show up to their farm with multiple refrigerated trucks, or drop off a refrigerated cargo container for them to fill with frozen material. The processor will either provide the employees to harvest, de-leaf fan leaves (sun-catching larger leaves with no trichomes), pack, weigh, seal, and freeze the cannabis flowers, or perhaps the farmer will do all the harvest work themselves.
This sounds simple on paper but is extremely labor-intensive and must be done with speed and accuracy. If done correctly, it theoretically will capture the essence of the flowers harvested, prevent molding from occurring during the fresh-to-frozen process, freeze flowers in time, be turned into liquid gold by processors, and allow farmers to hopefully get paid.
“Make hay while the sun shines” is the farmer’s way of life. There are no two ways about it. Many of those farming to sell fresh frozen material are unfortunately growing blindly. They do not know what the material they are going to give to a processor will actually yield. With dried cannabis biomass being a mixture of stem, flower, and leaf, a cultivator can expect around 30 pounds of outdoor biomass with an aggregate THC percentage of 15% to yield a liter of 70%+ distillate, giving them a benchmark to work off of to hold the processor accountable in the case of a discrepancy.
With fresh frozen material, if the farmer does a split deal on the back end based upon the final yields of what the processor turns the material into, they have no clue what to expect for yields and are setting themselves up to be freshly fleeced.
Processors are offering to purchase the outdoor fresh frozen material “wet” for $65+/- per pound at this time, with prices varying based upon the quantity of pounds harvested and the deal as a whole. However, if a cultivator is prepared and armed with the knowledge of how well their material will actually yield, they then have pricing power.
One way to go about this is to work with local companies offering onsite testing services for this exact reason, giving farmers the knowledge that they need to make a good deal. This also allows the farmer to see what they should grow next year or if they have to go back to the drawing board entirely.
One of the first local companies I have seen do this is Hippo Hydroponics, based out of the Hudson Valley where many of these commercial growers are located. They have been testing farmers’ crops, performing “wash” or yield tests, while also consulting on proper genetic selections for farmers, educating them on the importance of why growing genetics that actually yield high returns on end product concentrates consistently matters, and how this can make or break a farm.
If you are farming and looking to go the fresh frozen route because you feel it makes sense business-wise, start learning about how to do this properly and set yourself up for success so that you get what your crop is worth.
Processors will only lower prices year over year, and farmers will continue to get the short end of the stick, but if you learn how to play the game and set yourself up for success, you won’t be the one getting fleeced year after year. They say “fire in, fire out” when making concentrates; don’t be the one getting burned.