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Staffing in Cannabis - The Impact of Seasonality: Contribution Margins

Despite the cost per unit to produce outdoor cannabis is lower than indoor-, and greenhouse-grown, outdoor flower draws a substantially lower price per pound than its competitors.

Growing and selling wholesale outdoor flower provides the lowest contribution margin of all grow

operations by function, regardless of time of year. Accordingly, the outdoor grower captures only

49 cents per dollar sold during Summer, which it then uses to pay for fixed costs including, but not

limited to, plant, property, and equipment, salaries, insurance, inventory costs, interest, insurance,

depreciation, and property tax.

Worse, as supply floods the market, and demand for labor contracts just after harvest season

(known as Croptober), the contribution margin for outdoor growers plummets to 38 cents on the

dollar, proving outdoor growers are most profoundly impacted by market and operational variance.

Importantly, for states such as New York, in which many licensed grow operations are small

to mid-sized farms, unanticipated seasonal sales price variability amplified by a lack of distribution

can be crippling.

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