How to scale your manufacturing operations [The ultimate guide + expert tips]

Successfully scaling a cannabis operation can be difficult. It requires significant planning, efficient operations, and resource management. This guide will explore scaling in the cannabis industry and the common challenges producers face while trying to expand their businesses.

We’ve partnered with cannabis producers and experienced consultants to bring you insights in this guide.

We’ll dig into the crucial factors that need to be considered before embarking on a scaling journey, share insights into how to set your team up for success and provide a scaling plan checklist. Finally, we’ll provide a summary of useful tools that will help improve operations.

Scaling your cannabis business can be an exciting and challenging journey. With careful planning, the right strategies, and the support of technology and partners, you can achieve sustainable growth and success in this dynamic industry. By following the insights and recommendations provided in this guide, you can position your cannabis operation for scalability and take advantage of the opportunities that lie ahead.

What does scaling mean in the context of the cannabis industry?

Scaling a business involves strategically expanding its operations, resources, and capabilities to accommodate growth, increase market share, and capitalize on new opportunities.

It involves increasing the company's capacity to handle a larger volume of customers, transactions, or production while maintaining or improving efficiency, profitability, and overall performance.

Often, scaling a business involves implementing changes to various aspects such as infrastructure, processes, technology, workforce, distribution channels, and marketing strategies.

In the context of a cannabis operation, scaling can encompass a range of actions, such as expanding the number of SKUs, improving production yields, expanding into a new cannabis product category, or entering new domestic or international markets.

Common operational challenges that cannabis producers face when scaling

Scaling a cannabis business is no small feat, and an unsuccessful scale-up can hurt your current operations, reputation, and financial stability. Here are some of the common mistakes we see in this industry:

Not maintaining quality standards

When scaling your business, it is crucial not to compromise on the quality of your existing products. Shifting your focus to new products shouldn't result in a decline in the quality of your existing offerings. Customers expect consistent quality, and a drop in standards can negatively impact your reputation and discourage repeat business.

Blind pursuit of growth

Growing your company is a common objective, but expanding operations solely for the sake of growth can be detrimental.

Increasing the size of your operation, production capacity, or launching new products should be driven by demand and a careful assessment of costs and potential returns on investment. Otherwise, you risk producing excess inventory or launching unprofitable products.

Setting unrealistic goals

Many scaling goals set by producers are not realistic. The plans are lofty for the allotted time frame, and there are too many competing priorities to make meaningful progress. Realistic goals enable steady growth and prevent frustration or burnout within your team.

Failing to involve or communicate with the team

When planning to scale your business, involving and communicating with your team is vital.

Failing to do so can result in a lack of engagement and understanding among employees. When there is no organizational buy-in for the scaling project, employees may feel unheard and lose trust in leadership, negatively impacting company culture, employee retention and product quality.

Important factors to consider before scaling

So, now that we've talked about possible problems, what can you do to avoid them?

Establish operational stability

Before you consider scaling, ensure your operations are stable and efficient.

As operational consultant and founder of GrowBox Consulting, Tom Smale, puts it, "the best time to scale is when you're almost bored," meaning that your processes are predictable and products are high quality.

If you're not 100% confident in this step, you need to fine-tune your processes and ensure consistent, high-quality outputs before proceeding. This foundation of stability is essential for a successful scaling endeavour.

Know your numbers

Before scaling, understanding your financials is fundamental (we're talking about finance 101). You need to have a strong grasp of your inventory levels, input costs, overhead expenses and product margins.

Not only will this knowledge provide insights into your business's financial health, but it will also help you determine budgets for scaling projects. Return on investment (ROI) should be top of mind when mapping out your scaling projects.

Identify market gaps and opportunities

The cannabis industry is dynamic and fast-paced, with shifting market demands and competitive pressures. It's important to identify the right market gaps and opportunities to gain a competitive edge.

One of the unique aspects of this industry is that a significant portion of the market has been operating outside of public view for many years. Both long-time consumers and new ones comprise the current recreational market, and their needs can vary greatly. Therefore, it's crucial to consider the needs of both legacy consumers and new users and think carefully about which trends to follow.

Alexandre Gauthier, VP of R&D, Director of Production & Sales Analyst, at Origine Nature, explains.

“Imagine you notice a growing demand for a cannabis strain called Blue Dream, and you decide to capitalize on this trend by bringing it to the market quickly. However, you soon realize that many others are doing the same thing, resulting in an overabundance of Blue Dream in stores, making it difficult for you to get your product listed.”

To avoid these situations and identify the right scaling projects, consider partnering with people who deeply understand the cannabis industry and its customers. This can help you identify new opportunities that give you an advantage instead of just following the latest trends.

Set up your team for success

Having a strong team is crucial for the success of a scaling project. One of the main challenges businesses face when implementing change is getting everyone on board.

To overcome this, Management Consultant, Sarah Seale recommends trusting and empowering your team by seeking their input and advice when defining your scaling strategy. Secure their buy-in by clearly communicating the "why" behind the project and involving them in the decision-making process.

Transparent and consistent communication throughout the project fosters adoption and ensures employees feel involved, invested and enthusiastic about the plan.

Scale strategically (like walking up steps)

To ensure that your scaling project is manageable, it's best to break it down into small, achievable steps. This will prevent overwhelming your current operations and allow you to take a stepwise approach.

Tom Smale, COO of Klonectics & Founder of Growbox Consulting, compares scaling to walking up steps with short increments of progress that help you read the final scaling goal.

For instance, if you plan to introduce a new cannabis product, your first priority should be setting up the space for the new process. Afterward, you need to bring in the necessary equipment, validate it, and create procedures during the R&D phase. You take your overall goal and break it into management chunks.

It is also essential to define roles, regularly check in with your team, and address any issues that arise to maintain progress and avoid taking on too much at once.

By approaching scaling with an organized and thoughtful mindset and considering these strategies, you can increase the likelihood of a successful scaling process while maintaining the stability and integrity of your business.

How to scale your cannabis operations: Best practices for sustainable growth [Webinar]

What you'll learn about:

• How to understand demand and identify the right time to scale your cannabis operation
• The most common challenges producers face when scaling and how to avoid them
• Scaling best practices, including critical considerations before scaling and how to develop a plan
• Proven tools, resources and strategies to help your organization scale

Panelists:

Alexandre Gauthier, VP of R&D, Director of Production & Sales Analyst, Origine Nature.

Alexandre is the VP of R&D, Director of Production & Sales Analyst, at Origine Nature, a Licensed Producer in Quebec. He has been involved in the industry since cannabis was first legalized for medical use in a wide range of roles including Master Grower, Director of Cultivation, VP of R&D and Sales Analyst.
Alexandre has expert knowledge and understanding of the workings of successful cannabis businesses as well as the rules and regulations surrounding the industry.

Sarah Seale, CEO of Sarah Seale Inc.

Sarah is the founder and CEO of Sarah Seale Inc. a specialist consultancy firm for the cannabis industry. A veteran of de-risking early, middle, and late-stage cannabis businesses to ensure a company's organizational strategy enables sustainable growth and repeatable and scalable processes.
Having worked with over 50 cannabis companies, in areas including transportation, cultivation, processing and ancillary businesses, Sarah brings a wealth of knowledge to this panel, and expert advice to cannabis businesses of all shapes and sizes.

Tom Smale, COO of Klonectics & Founder of Growbox

Tom is the COO of Klonetics, a leader in the industrial-scale tissue culture production of cannabis clones and Ready to Flower plants. He is responsible for operational efficiency, team management, compliance, and overall growth strategy.

In addition, he is the Founder and CEO of Growbox Consulting. He has worked with multiple brands and facilities across Canada to bring high-quality craft cannabis to market while providing facility operations and compliance support.

Austin Bell, Implementation Specialist, Elevated Signals

Austin works on the Customer Success team at Elevated Signals, helping cannabis operators implement software to optimize their operations and improve their products.

He has been working with the cannabis plant for the last 15 years in both the legacy and licensed markets. His experience is based around leading teams and operations in the production space, with an emphasis on extraction and cultivation. Austin brings a passion for the plant and its potential for healing to all of his cannabis work.