Growers, vintners and cannabis enthusiasts have long known the benefits of growing and harvesting a wild harvest. Trusting your crops to Mother Nature has its benefits, but if you want a crop that has even more productivity and resiliency, then an advanced breeding program may be just what you’re looking for. Agrify is a new breed of cannabis startup that is taking on the task of growing one of the most sought after crops in the world, and they’re not going to let anything stand in their way.
Agrify is a suite of software tools that enables growers to automate the cultivation of cannabis. We believe that a modern and automated system of cultivation is essential to the future success of the cannabis industry. We believe that the current system of cultivation, in which the buds are hand-planted, is largely unsuitable to the needs of the modern cannabis industry.
It seems like a lot of people have a similar mindset when it comes to marijuana: that it is simply a recreational or medicinal drug and should be treated as such. However, medical marijuana is actually a $2.7 billion industry with over half of states having legalized its use in some form.
Exclusive interview with Raymond Chang, President, CEO and Chairman of the Board of Agrify. Agrify (NASDAQ: AGFY) serves the cannabis industry with cultivation solutions designed to maximize yield, improve quality and consistency while minimizing production costs. President, CEO and Chairman Raymond Chang spoke with New Cannabis Ventures about his company’s vertical cultivation facilities, complete turnkey solution offerings and growth plans for 2021. An audio recording of the entire interview is available at the end of this written summary. Talents at Agrify Chang has seen a family member benefit from medicinal cannabis, and he has extensive experience using data and technology to transform industries. He has worked in telecommunications, retail and the automotive industry. He believes indoor agriculture is ripe for the next wave of destruction. Agrify’s team also includes executives such as CFO Niamh Krikov, Chief Scientific Officer David Kessler and Vice President of Marketing Michelle Sitton. Krikov has experience working with publicly traded companies. Mr. Kessler has extensive experience in crop production and Mr. Sitton has worked with some of the largest MSOs in the industry. Vertical farming systems Agrify specializes in high quality plants and works with customers who grow hemp, cannabis and other unique medicinal plants. The system is designed to provide optimal growing conditions. The company’s Vertical Farming Units (VFUs) maximize yield by moving from square footage to cubic footage. According to Chang, the system can increase capacity sixfold due to the covered area. A VFU Agrify The Agrify system is also designed to ensure the same growing conditions (humidity, light, airflow and temperature) regardless of height. These stable conditions contribute to higher yields. In addition, the patented design of the VFU was developed with safety in mind. It uses peripheral gateways to provide a secure environment for employees at all levels of the system, Chang said. National presence and international capabilities Agrify currently serves customers in eight states. She has worked with clients in states such as Washington, Nevada, Colorado, Massachusetts and Rhode Island. The company is interested in new and existing markets such as New York, New Jersey, Illinois, Michigan and Oklahoma. Its customers include vertically integrated MSOs and single-country operators, as well as independent producers. In addition to growth opportunities in the domestic market, Agrify is looking at international expansion in 2022 and beyond. A complete turnkey solution The company has allocated up to $50 million to develop a turnkey solution (TTK), which is an expected growth driver for the company. Agrify offers its customers a total approach to producing flowers of consistent quality. It provides a solution, funding and dedicated field staff to help TTC clients succeed. Chang describes the offering, the operating leasing model, as a turnkey situation. Agrify’s business model is based on selling its technology. Chang said the growing adoption of the technology is driving market penetration and the company has attractive recurring SaaS revenue. The company uses its balance sheet to enter the market and increase its technology and market penetration. Growth strategy NASDAQ-listed Agrify has strong currency for the acquisition, Chang said. He expects the company to be part of the consolidation of the cannabis industry. Although the prospect of nationwide legalization lies in the future, the Agrify team is working to implement its strategy regardless of when that happens. According to Chang, the company’s goal is to capture the largest market share in the shortest possible time. IPO and NASDAQ financing Earlier this year, the company completed an initial public offering on NASDAQ. The company currently has approximately $135 million in cash and no debt on its balance sheet. Agrify completed an initial public offering earlier this year. Chang hopes the TTC model test will open the door to a range of other funding opportunities. For example, the Company may structure some of its TTC partnerships as SPVs to obtain debt financing. As long as the company continues to demonstrate its ability to deliver consistency, quality and increased revenues with minimal operating costs, Mr. Chang is confident that Agrify will have many funding opportunities to continue its expansion. Manual 2021 Agrify reported first quarter revenue of $7 million, up 600% from the prior year. The company also raised its revenue forecast for 2021 from $40 million to $48-50 million. Chang expects high growth rates in the near future. As the company grows, it pays attention to parameters such as customer loyalty, consistency and flour quality. During the first quarter interview, Chang said almost all of the company’s customers had been reconnected. Chang says this high level of re-engagement demonstrates that the company is delivering value. Currently, the industry sees a 10-15% variation in cannabinoid profiles from batch to batch, but the Agrify system is able to reduce that to less than 1%, Chang said. While the company used to do one installation per quarter, it now does several at once. To meet this demand, the company moved its small factory and production line in Georgia to a contract manufacturer in Vermont. This manufacturer is capable of 10 to 15 times more than Agrify itself. The company is taking company-wide measures to ensure that demand is met and that Agrify is positioned as the right approach to improve quality and consistency. For more information, visit the Agrify website. Listen to the interview in its entirety: Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. Carrie Pallardi, a Chicago-based writer and editor, began her career in health care. Today she writes, edits and interviews subject matter experts in various sectors. As a published author, Carrie continues to tell compelling new stories to her network of readers. Please contact us for more information.