From Soil To Insurance: How Some Companies See Opportunities in Cannabis

Jun 13, 2017

The cannabis industry is projected to surge dramatically with the legalization of recreational pot in several states, including Nevada. But it’s not just the dispensaries who stand to benefit.

As Reno Public Radio’s Noah Glick reports, there’s potential for several types of indirect businesses to bloom.

“So this is freshly, freshly made finished compost. We call this our base compost or soil essence.”

Cody Witt of Full Circle Compost inspects a large windrow of topsoil, made from organic materials gathered from around Lake Tahoe.
Credit Noah Glick

Trekking over three-foot high piles of what looks like everyday dirt is Cody Witt of Full Circle Compost. His official title is Strategic Everything, which means he manages operations, seeks new business, and sometimes, shows reporters how to judge compost quality.

“Number one, you smell it,” he says, taking a deep breath. “That smells just like walking on the forest floor in Lake Tahoe.”

On this day, he’s showing off the company’s 40-acre outdoor composting site, nestled behind the Northern Nevada Corrections Center in Carson City. Among freshly-mixed rows of topsoil sit large mounds of organic materials, like pine needles, limestone, and grass clippings—basically a giant pantry full of composting ingredients.

“This is our Soar potting mix, what we’re walking up to now,” Witt says. “So this is a potting mix that we specifically designed for rooftop gardening. Some guys picked this stuff up and started growing cannabis in it.”

Witt says while the company hasn’t been specifically targeting the cannabis industry, that hasn’t stopped growers from using the product.

“We’ve probably had over the last 20 years, I’d say probably over 200,000-300,000 cannabis plants in this mix,” he says.

Large mounds, some as tall as ten feet, made up of organic materials like pine needles, grass clippings or food scraps make up a portion of Full Circle Compost's 40-acre site.
Credit Noah Glick

The marijuana industry is expected to expand significantly over the next several years, with some estimates projecting sales of more than $24 billion nationwide by 2025. That’s good for dispensaries and cultivators, but it also opens the door for several types of supplementary businesses, like LED-light manufacturers or in this case, composters.

But Witt says, there’s still one major obstacle.

“It’s getting very competitive very fast,” he says. “So if you get into the soil market online for cannabis, you have a lot of companies coming out. And if you go to any hydroponics shop, you’ll see fifty different bags of this mix and this mix.”

One place to find that variety locally is a store aptly-named The Grow Shop in Reno.

“These are mostly like soils, but they’re not technically actual dirt. So this is a soil and a peatmoss mix,” says General Manager Brandon Heller.

The Grow Shop General Manager Brandon Heller shows how big a plant could grow inside the store's growing medium. Gardeners plant the seed in the pre-dug hole and feed it nutrients, as part of a hydroponic system.
Credit Noah Glick

He walks past aisles of lights, potting baskets and pest control products, until we reach a seemingly unimposing water tank with small plant clippings.

“So this is actually a cloner,” he says. “What this will do, is you’ll actually take a snipping of the plant and then put it in here with a rooting hormone, and it will actually start to root itself and become its own plant.”

The shop also offers several products under their private Green Rooster label. Heller says that equipment, along with soils and nutrients, could drive future revenues among large-scale growers.

“We work with a lot of large clients, cultivators here locally. A lot of them are gearing up for recreational and stuff, so they’re getting more and more equipment,” he says. “So that’s pretty good.”

Heller says the company has been working with the cannabis industry since opening its first shop in Colorado back in 2009, and has plans to open more in northern Nevada and California in the coming years.

“We’re basically selling them the picks and shovels to the gold rush,” he says. “We’ll always be around.”

The Grow Shop also offers products, like this grow light, under its Green Rooster label, named after the store owner's nickname.
Credit Noah Glick

Protecting this cash crop offers another opportunity for entrepreneurs.

Jayze Duplanti is an agent with New Growth Insurance, which links cannabis companies to insurance providers. She says as more states move toward legalization, demand for her company’s services will increase.

“Most states are going to require general liability, which is your basic,” she says. “But then we have crop coverage for cultivators, product liability for cultivators and manufacturers, so that’s going to be a big thing that you’ll see.”

Duplanti says public perceptions are changing, and more and more people are starting to see cannabis as a viable investment opportunity. But that can change in an instant.

“I don’t know if it’s going to be legal here in a year, or in certain states. I mean, anything can change,” Duplanti says. “We’re not selling girl scout cookies. Hopefully it thrives and we can have a growing industry that creates a lot of jobs.”

No matter how safe or compliant companies are with state laws, some things—like uncertainty around the federal government’s role in the industry—can’t be covered under an insurance policy.