May 21, 2015

The growing legalization of marijuana, a crop that requires narrow growing conditions to be successful, has sparked a resurgence in innovation and capital investment into advances in industrial agriculture and greenhouse technology.

Although greenhouse technology has been in existence for decades, the wave of new marijuana startups across North America has brought with it a sense of urgency, as young companies compete to gain an advantage through ultra-efficient grow lamps, data management technologies, and high efficiency irrigation systems.

“Cannabis is spurring on an agtech revolution,” Troy Dayton, chief executive of the California-based cannabis industry research firm, ArcView Group, tells International Business Times. “This is a boom born entirely out of ending repressive laws. The market is already there, it’s just moving from the shadows into the light.”

In Canada, medical marijuana was legalized in 2001, and recent regulatory changes are sparking the emergence of industrial growing operations in the country. In the U.S., 23 states have legalized medical marijuana, and Alaska, Colorado, and Washington have legalized recreational marijuana sales. Oregon will allow limited personal marijuana use beginning July 1, and numerous other states, including Texas, Ohio, and Nebraska are considering similar policy changes.  Last year, U.S. cannabis sales reached $2.7 billion – an increase of $1.1 billion over 2013, and ArcView Group expects that sales in 2015 could grow by 33% to reach $3.5 billion.

This growth, the wide profit margins that the sector is enjoying compared to other agricultural production sectors, and the strong demand from growers, are attracting the best tech minds and plant biologists, offering them larger budgets with which to work, and a more willing acceptance of experimentation, as operators look years into the future and vie for a competitive advantage.

Granted, this ‘revolution’ is still in its nascent stage, but it is beginning to attract attention from mainstream businesses. In April, Hawthorne Gardening Co., a subsidiary of Scotts Miracle-Gro Co., purchased General Hydroponics Inc. and Bio-Organic Solutions Inc., two companies that make liquid nutrients for the indoor marijuana cultivation industry. The terms of the deal were not disclosed, but the deal clearly demonstrates the ongoing mainstreaming within the sector, and with Scott’s $2.97 billion in yearly revenue – its maturation.

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