The Cannabis Industry is Driving Agtech Innovation
Cannabis is currently the world’s most explosive industry, but the boom will not be limited to medicine and hemp. Advances made in technology for growing, tracking and testing cannabis will extend to agriculture as a whole.
Agtech has been a buzzword in Silicon Valley the past few years, with a record $2.7 billion invested in the space in 2015. But so far returns haven’t met expectations. Part of it is tight margins, which make it tough for farmers to invest in R&D and innovation, even if they can demonstrate a positive ROI. But even more so, many farmers are extremely risk-averse, and they don’t want to pilot technologies, but would readily adopt proven systems.
Therefore, a leader has to be found within agriculture to drive innovation, and that leader is cannabis. Cannabis is ideally positioned to be the primary driver of agricultural technology in the coming years, mostly due to its status as the most valuable plant on the face of the earth. Because of this value density, it is much easier to see and measure the economic impact of an innovation investment compared to other crops. It is also one of the hottest investment verticals, so there’s a lot of money coming in to fuel advances.
Here are a few areas where cannabis is moving the ball forward:
- Lighting
While cannabis is incredibly valuable, it is also expensive to grow. The biggest operating cost for cultivators — electricity — can cost up to 18% of the wholesale value of the finished product, so innovations in this area have a huge impact on unit economics. LED lights can reduce this spend substantially. While their initial purchase price is still more expensive than the industry standard high-pressure sodium or metal halide lamps, LED prices are dropping rapidly and should get close to parity with the incumbents within a decade. In fact, in 10 years we expect virtually all indoor crops to be grown exclusively with LEDs.
How it helps Agtech— Any plants that grow indoors or in a greenhouse will benefit tremendously from advances in LED technology. They are significantly more expensive than the alternatives now, but in addition to having much lower operating costs and a longer operational life, you can also tailor the spectrum to optimize it for a specific plant or outcome.
2. Artificial Intelligence
Driven by extremely low-cost sensors and computing power, cannabis grows can now be monitored at the individual plant level. In addition to improving yield outcomes, this granularity lends itself to track and trace regulations, which are becoming the standard regulatory tool in adult use markets. Zooming out from individual plants, AI-based tools also allow growers to get better aggregate data about their entire operation. Using autonomous wheeled vehicles (particularly in the larger grows) and aerial drones for both indoor and outdoor use, growers can have persistent observation and analysis of their crop. They also augment security. Overall, as the system learns from these thousands of data points per day per plant, it will continue to improve itself — improvements which are transferrable across operations.
How it helps Agtech — Just as self-driving cars are taking to the highways, autonomous tractors and other farm equipment are integrating into farming operations worldwide. Additionally, self-learning algorithms, driven by lots and lots of quality data, will improve any crop’s harvest.
3. Big Data Collection and Analysis
The world has been transformed by the ability to collect and process incredibly large amounts of data. We’ve already mentioned one of its effects on cannabis — perpetuating automation and optimization in growing operations. Another exciting place data is showing its power is in genetics (aka “strains”). As the market grows, new strains are constantly being developed, and it is starting to get a quite convoluted. However data can help growers identify which strains are worthwhile to grow, and more importantly, patients can identify the optimal strain for a desired effect, based on other users’ experience, and their own body’s reaction to the substance.
How it helps Agtech — Data leads to efficiency improvements, leading to higher yields, improved supply chains, and higher quality products.
4. Testing and Extracting
The magic of cannabis comes from the vast number of compounds in it which affect the human body. Scientists have identified 66 unique cannabinoids, 120 terpenes and 21 flavinoids in cannabis, all of which contribute to the entourage effect of the medicine. Finding and efficiently extracting these compounds is a key growth driver as the industry starts shifting to vaporizable extractions.
How it helps Agtech — As data in agriculture starts to identify compounds in other plants that can be extracted and used as medicine (to include cannabinoids!) discovering and extracting these compounds can open up entirely new plants as sources of therapeutic benefit.
5. Sustainability
Because of its energy intensity, economics are a major driver of sustainability in the cannabis industry. As we mentioned with LEDs, the operational costs of keeping the lights on, the air clean, and the water flowing are extremely high. As the industry moves towards full legalization, greenhouse technology has advanced substantially to get the best qualities of both indoor and outdoor cultivation. Also, from a cultural perspective, sustainability has grown hand in hand with this industry.
How it helps Agtech — The technology, methods, and data that go into making the Green industry greener apply to all forms of agriculture. Sustainable designs and technology will be essential as farms move closer, and even into, cities — something identified as critical for long-term urban growth.
Thanks for reading! Do you know of any areas or technologies where cannabis is driving agtech innovations, or innovation period? If so, please share!
