Calculating break even and ROI when investing in sensors

Cannabis is a rapidly growing industry in the United States.  As more states legalize the cultivation and sale of cannabis the supply will increase in the market.  This increase will push down prices making it increasingly difficult for a grower to make a profit.  In order to improve profitability a grower must significantly reduce labor inputs and increase cannabis flower outputs.  The key to achieving this is through the integration of sensors and climate technologies to better control growing conditions.

Upgrading to an automated system is expensive but the payback can be quick.  The purpose of this paper is to help a reader understand what technology can be used to improve profits, the cost to implement such a solution and the estimated payback period based on cannabis prices and labor costs.  Data in this paper was gathered in the same way a manager at a cannabis grower might research - using Google.

SIMULATION DESIGN

Indoor growers use commercial-grade heating and cooling systems and do not rely on regional weather patterns.  This setup mimics ideal growing conditions year-round.  This allows for multiple grow cycles each year within the confines of the building to maximize revenues.

Room sizes vary.  Plant sizes vary.  As a result, the variables in real-world applications will be wide.  Setting up this simulation involves deciding which size room to create, how many plants can reasonably fit into that space, and what efforts are required to maintain the climate in that area.

In this case a single grow facility is setup.  Within each of the 4 grow rooms there is enough space and equipment to grow 100 plants at a time and is derived through the following:

ˇ       A 20 foot by 20 foot growing space is 400 square feet

ˇ       Standard 5-gallon pots are used to grow a cannabis plant

ˇ       Each pot has a maximum diameter of 12 inches (1 foot)

ˇ       Growth outside the pot circumference is estimated at 6 inches (0.5 feet)

ˇ       Based on this, each plant will require an estimated 4 square feet of space

ˇ       400 square feet available in the room divided over 4 square feet required per plant results in 100 plants in the room

For the remainder of this white paper, this setup of these rooms and 100 cannabis plants per room will be used to calculate revenues and costs.  All calculations will be shown in full and utilize publicly available information with citations.

ENVIRONMENTAL AUTOMATION AND CONTROL OVERVIEW

Like all plants, cannabis responds positively when in ideal conditions by producing more flower.  These flowers are the centerpiece of the plant as they turned into the saleable product.  These products include cigarettes, extract, edibles and more. The goal of any grower is to maximize the amount of flowers produced by each plant.

Greenhouses and indoor rooms create an ideal environment for the plant.  Artificial lighting is used to simulate sunlight.  Heating, ventilation and air conditioning (HVAC) systems are used to control the temperature, relative humidity and air circulation within each room.  Mastery of these elements can improve the overall yield of the plant.

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Source: Agritech Tomorrow