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(Here’s a hint: cheap labour can help you, but political instability can sink you)
The days where you had to grow in your own backyard is well over. With legislation all over the world opening up around cannabis crops, it is time to think wider and bigger and the possibilities are endless. We made a checklist for you of things to watch out for before you make that decision about where you want to grow.
Political stability
A crisis in a country can be caused by a variety of reasons: government incompetence, high crime rates and economic problems. These crises can usually be overcome. However, there is another aspect of political stability that becomes more problematic for cannabis producers and this is the stability of the government. There are certain countries that are legalising the cultivation of cannabis, either medical or recreational, under huge resistance from church, society or opposition leaders. If there is a change in government, these laws may change again. This may adversely affect your harvest or your ability to cultivate and export it. Be sure to check how long these laws have been in effect, how solid they are and if there is a chance that it may change. Certain things that are legal today, may not be so tomorrow. The foundation on which you are growing needs to be solid.
Government support
Certain governments are not only legalising cannabis cultivation, but they are actively supporting it in the form of grants. Some governments going through this process are seeing cannabis as a way for rural communities, in a lot of cases the legacy growers, to uplift themselves, create wealth and job opportunities. The governments are also putting money into small farming and by partnering up with a local, you can find yourself as the beneficiary of government handouts, while at the same time helping social upliftment and skill sharing. Not a bad position to find yourself in.
Natural resources
How accessible and abundant are the natural resources? Will the increased usage of water affect the availability of it or possibly even the local communities’ access to it? Cultivation needs water and without water there is no crop. There needs to be a steady and good supply of it. If there are going to be problems with it, it’s most definitely a warning sign that you should look somewhere else. Other factors that may play a role in your decision is the availability of fertile land and sunlight, depending on what you are interested in cultivating.
Weather conditions
Even if you are cultivating indoors, it is important to look at weather conditions. Severe cold or heat will affect your electricity bill and may have an influence on the health of your plants. If of course you are cultivating outside or half and half, weather plays an even bigger role. Generally, if you cultivate outside you can harvest once per year and it is important to maximise that crop. Good weather conditions will play a huge role in achieving this goal.
Cost of Production
Unless you are cultivating in Uruguay, your cost of production will be influenced on where you cultivate and the price of doing business in that region. This is a variable cost, but there are certain fixed costs. The price of labour is very important and can vary hugely from country to country. The minimum wage in South Africa is €1.20/hour. In Germany it’s €12/hour. Weighing up the pros and cons of producing in different countries, this can play a huge role in your cost of production.
Skilled workers
When producing in a country that only recently allowed the cultivation of cannabis, there may be a shortage of knowledge of people who have a history of successful cultivation and exporting to the European Union (if this is your goal). There is a huge difference between growing for the local recreational market and cultivating for the EU medicinal market. And even inside the EU there are different laws from country to country. Tapping into existing knowledge is important, especially if this is a newish venture for you as well. Make sure that the skill set is there before committing to a certain territory.
Cultivation expertise
Over and above the “skilled workers” concept mentioned above, you also have countries with an institutional knowledge of farming that has been carried over from generation to generation. This means that they know what weather conditions lie ahead and how to plan for it. They know the soil and they know conditions best needed for opitimising growth. These are people that come in very handy when it comes to the nitty gritty and country specific decisions made while producing.
Corruption
This is an unfortunate by product of operating in certain countries, but it’s a reality that needs to be dealt with. No matter what licenses you have in your possession, there may be expectation or even requirements from certain officials in the country that you are cultivating, to make certain contributions to their children’s school fund. And some of these school seem to be very expensive. It would be a good idea before you settle into cultivating in a place, to make sure how these unwritten rules work and to familiarise yourself with what is expected of you off the books. This may make you decide to move on or to adhere to the “when in Rome…” adage.
Infrastructure
It doesn’t help that you have found paradise and your place under the sun, but there’s no roads or electricity. This will add a lot of money to your expenses and a lot of headaches to your problems. Basic infrastructure is a non-negotiable when it comes to cultivation of cannabis. It is not a problem that can be sorted out later or ignored because some local politician has made a promise. This is a basic need and without it you cannot cultivate or have a financially successful result to your experiment.
Input costs
Cultivation costs money and like labour costs, this is a variable that changes from country to country. What is the price of fuel? What is the price of fertiliser? What is the price of seeds? Do not just take other people’s word for “this is how much it costs to grow per gram”. Do the math and take into consideration that in certain countries fuel costs differ from region to region and that the further you are from the depot, the more expensive it will be to get the fertiliser to your production site. These are small costs that add up and will influence the profit margin.
Competition from other countries
This place where you are producing may be cheap, but how does it compete with other countries for the market? There is only so much cannabis that can be bought and sold. There is a continuous overstock. Clients tend to have favourite countries or regions to buy from. Does the place where you cultivate count as one of these regions? There is no use in cultivating something that you cannot sell. Remember that, at the moment at least, you are still selling a luxury product, not a necessity. There are no guarantees that someone will definitely buy your product. Your accessibility to a market, both geographically and connection-wise, is important.
Land ownership
In a lot of countries land ownership is a contentious issue. Who owns what and what can be repossessed is not cast in stone in a lot of places. The person who owns the tribal land that you are renting, may or may not have permission to do so, or they may die or fall out of favour. It’s not like you can pack up and move some place else with your crop. Once you have sown your seeds you are there and if you are not protected it makes you vulnerable and you may be expected to dance to certain tunes even if you cannot hear the music properly.
Strength of the currency you are cultivating in
Cultivating under a weak currency can be both a plus and a minus. When the money is going out, it is a drawback but when the money is coming in it’s a plus. A fluctuating currency can make financial planning a nightmare but at the same time it can help when the money is coming in and you decide at what point it gets paid over. Generally speaking a weak currency also means cheap labour – both of which you can make work for you if you look at the bigger picture.
Domestic recreational market
If all else fails will there be a way for me to get rid of stock without losing it all? A domestic recreational market is a huge plus in a case like that.
Ease of setting up a company or co-op
Most countries, if you are not a citizen, at least expect of you to have a locally registered company if you want to produce there, including a local partner. This means that you will take your first step with the local bureaucracy. This may or may not be a pleasant and/or smooth experience. We suggest a local specialist in these issues to help you along. In some countries the government is also encouraging legacy growers to form co-ops which can then go into a partnership with international companies. A lot of these situations are bureaucratic nightmares that even the locals complain about. Before venturing here, we suggest that you do proper research.
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