How a Family Business Turned Annual Flowers into Perennial Cannabis

An interview with Dykstra Greenhouses

Hello! Who are you and what business did you start?

We are a family-owned and operated Licensed Producer located in St. Catharines, Ontario. We received our federal license to cultivate, process, and sell cannabis on November 8, 2019. Our (25 person) company has been in business for over 30 years. We grew into two greenhouse operations and then took the step into the cannabis industry. After establishing and confirming our federal sales license, we entered into the provincial and territorial markets and are currently supplying a number of provinces and three territories. We are currently growing within 40,000 square feet of our 105,000 square feet total grow-space area. We have about 2,600 square feet of processing and packaging space as well. Our growing process is listed below to provide a brief overview of what we do to produce our flowers.

We introduced close to three dozen original strains into the facility the day we received our license and we have been growing approximately 10 of the strains thus far. Our initial goal has been to focus on growing and harvesting above average flower, consistently. We have been selling flower and pre-rolls to five provinces and three territories over the past two years. We have some strong legacy strains and some newer hybrids. Whether it is indica, sativa, or hybrid, we have varying degrees of all three. We continue to grow the amount of business we do on a weekly and monthly basis, and believe our story and our brand is uncommon in the Canadian cannabis space. By continuing to improve our growing system and product, we are going to expand our area of growth and work toward the introduction of our 2.0 products. The Federal Ministry of Health just recently approved our 2.0 application and we are excited about the opportunity to introduce both our vape cartridge and our infused pre-rolls as a starting point for our 2.0 products.

It is an exciting time for us as we are seeing significant growth in our provincial and territorial sales. We are committed to only packaging once we have received a purchase order to keep the product as fresh as possible.

What's your backstory and how did you come up with the idea?

Our rational and decision-making process for the transfer from growing annual and holiday floral products, to cannabis, was not an easy decision for us. As a family business that has been around for close to four decades, the process to transfer our business model was not a decision taken lightly. We had established a number of strong partnerships both in the commercial landscape business sector and in the annual and perennial flower industry.

We did, however, believe that as a family business, we needed to offer a different business model for our next generation of ownership. Therefore, succession planning began. In September 2018 we submitted our ACMPR license application to Health Canada. Our goal was to achieve a cannabis license in both the production and processing of cannabis. On November 8, 2019, we were confirmed by Health Canada that we had achieved both licenses.

Our next step was to grow out our two crops in order to be approved to grow and sell within the industry. We achieved that in February of 2020 and immediately began to work with Health Canada to achieve our retail sales amendment for flower and pre-rolls. As we worked through our amendment with Health Canada we began the process with a number of provinces and territories in order to sell into the retail market. We currently have agreements in Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, Northwest Territories, Nunavut, and the Yukon Territories.

More recently we have been approved by Health Canada to receive our 2.0 amendment and we are currently working to add to our sales availability, a number of 2.0 products. It has been exciting and tireless work to get us on the path to full integration into the cannabis industry. Our family is fully intertwined in all aspects of growing, producing, harvesting, drying, trimming, packaging, distribution, and quality assurance.

We feel positive about our future and with the partners in the mid-fifties, the transition of the family business into a cross-country corporation continues.

Describe the process of launching the business.

Our launch into the industry has been a methodical one. Even though the industry is barely five years old, we have done our best to take our time and learn about all aspects of the industry. It is a daily challenge with the relative newness of retail cannabis in Canada, we wanted to ensure we continue to grow and improve our flower output and our product as well.

We have stayed focused on our ability to grow great products, and maintain a focus on getting really good at a couple of parts of the industry before expanding both the quantity of what we grow and the volume growth of our products, on a month-over-month basis.

We pride ourselves on being a vertically integrated small business that is engaged in all aspects of production from seed to sale. It has not been an easy road although it has moved in a rapid and fast-paced way. We have witnessed what has transpired within the industry and because of the speed of change and a cannabis company’s ability to react, we learned something very important. We saw firsthand how borrowing or leveraging huge sums of capital would quickly become a company’s biggest and most difficult liability. We determined we would not do any capital financing and would finance projects and capital investments through our operating revenue.

We were fortunate in that our greenhouse facility, small office space, and growing infrastructure were already in place and paid for. Our expansion included lighting, processing, and quality assurance. Our start-up growing operations took place largely within the first six months of operation. However, we continue to invest in areas such as humidity and heat control, fan cooling, air movement, lighting, and expanded drying facilities as we move forward and continue to grow.

Two things stand out when discussing or thinking about lessons learned. The first lesson is that cannabis is a very difficult product to grow consistently and with higher THC. To support this part of the business, our R&D has become a significant part of our growing and production strategy. The second lesson is financials. We have literally watched the wholesale and retail pricing market reduce significantly in terms of the price per gram. Companies who financed or borrowed funds to begin operations, construction and growing cannabis did so based on a $4 per gram market.  A number are now faced with some tough decisions within a market that is based on a plus (or minus) $1 per gram price. The critical decision we made not to capital finance our operation turned out to be a positive lesson learned. The second part of this lesson was how critical vertical integration has been for us as a family and small businesses. In this industry, it is clear that having control over each part of the vertical integration steps of your business at least gives you more control of expenses and hopefully, revenues.

Since launch, what has worked to attract and retain customers?

Our relationship with retail customers has been the toughest part of our entry into the retail market. While every province and territory is different in terms of how it approaches the relationship with a given LP, none have us dealing directly with the purchasing public. Our “retail” client relationship is with the stores that are licensed by the province or territory they operate within.

We have worked extremely hard to build direct relationships with the store owners or managers in order to build our reputation and our brand. We have seen overall success in the strategy based on our monthly numbers and their growth. Where we have seen specific growth is with stores that like both our story and our brand.

Our steps to increase traffic regarding both our brand and our product has been two-phased in terms of building direct relationships with the stores and their staff, and a social media strategy to reach out directly to the public. We are beginning to see the results based on our sales throughout the country over the past number of months.

The introduction of our newsletter one year ago has allowed us to build some awareness within the retail store community. We send the newsletter to all of the stores in the provinces we are authorized to sell within. The newsletter includes an up-to-date inventory of our products, industry updates, trivia, and a section about which music you should listen to, depending on what product you are experiencing.  We also send an update or information email directly to stores during the week. It lets stores know about harvests we have just had and includes an interview with a staff member or the latest trivia questions about the industry itself or our facility specifically.

How are you doing today and what does the future look like?

It is an incredibly fast-moving industry to be involved in. Other industries may move in yearly increments whereas the cannabis industry seems to change on a daily and weekly basis. Where we are today and where we were three years ago are significantly different.

Originally we were selling B to B or Licensed Producer to Licensed Producer. Once we received our federal amendment to sell directly to provinces, things moved quickly for us. Establishing ourselves in those provinces and territories becomes the next monumental task. Think about introducing yourself to every potential cannabis user across the country - it is and continues to be rapidly changing and accelerating on a weekly basis.

When we started, we originated our business plan with a 20-30% profit margin. Based on where pricing was at in 2019 allowed us to factor in that type of margin. Fast forward to 2022 and those percentages have been reduced significantly in order to stay competitive with other producers selling within the retail space.

Our year-over-year growth is hard to define based on only three years of business and taking into account that our first year was literally our “growing year”. However, our overall gross yearly revenue has grown by 50% in 2022 as compared to 2019. Our sales are in three areas, (1) retail to the provinces, (2) Licensed Producer to Licensed Producer, and (3) medical online sales directly through our website portal.

When we first received our license, we were growing in approximately 2,500 square feet of grow space - today we are growing in over 40,000 square feet, with the potential of a full grow space of 100.500 square feet. We have taken the approach that we will increase our growing area as we increase our monthly sales. So far, it is working out for us. After our initial approval of the 2,500 square feet, we applied for and received a 20,000-square-foot expansion. Once we hit that capacity we applied for the full expansion to 105,000 square feet which was approved in May of 2021. We continue to work to our full capacity over the next couple of years.

We were recently approved by Health Canada for our federal 2.0 amendment. We are now fully licensed to sell.2.0 products and are registering with all of our current provinces in order to offer them our products. Our first two 2.0 offerings will be vape cartridges and infused pre-rolls. We are making these products from the flower and trim grown here at the facility. We are determined to ensure our end product consists of 100% DG flower and trim. It will be turned into oil, distillate, or isolate in order to blend into a 2.0 product.

Through starting the business, have you learned anything particularly helpful or advantageous?

The industry is like the proverbial fire hose of water shooting directly into your face. The toughest part of the industry is ensuring consistent flower and a consistent harvest. Higher THC and upper percentages of terpenes which need to be ever-present are important as well. We are learning how to address the change of seasons and the impact it has on the product and how important it is to retain the information for the next harvest in that time-of-year cycle.

This is an industry that has had a very difficult time learning to work with and trust each other. The reputation of the industry has suffered because of this. Our belief is that we need to work in a far more collaborative way. To that end we have joined forces with a number of partnering LPs to create the “Ontario Cannabis Association.” As LPs here in Ontario, we are in the early stages but we are finding that an association has helped us learn of others “best practices”, business partnerships, collaborative efforts and how to better work with, for example, the Ontario Cannabis Stores. We have set the association up under the banner of six pillars representing six objectives. Each pillar is being created, worked, and managed through a working committee which brings their efforts and recommendations back to the collective group. One of the pillars is establishing a quality assurance ranking for Ontario-made cannabis. The strategy would be similar to what can be seen in the Ontario Wine Industry through their VQA (Vintner’s Quality Assurance).

What platform/tools do you use for your business?

There are a number of platforms and tools that we use, but a few that stand out are Canva, WooCommerce, and MooSend.

Canva is used for almost every bit of marketing we do as a company. It is really easy to learn how to use and has lots of built-in tools that help make creating graphics efficient and professional looking. It has also been great for the marketing team to be able to share designs with its built-in team function. This has made scheduling social media posts and newsletters much easier and more organized for our marketing team. Our favorite function is probably the one-click background removal.

WooCommerce is a WordPress website extension that allows you to integrate an eCommerce store within your website. We are licensed to sell medical cannabis directly to patients, so all our medical sales run through WooCommerce. WooCommerce has a bunch of features that have been helpful with this process. For example, we can set maximum order limits per customer based on weight to match their prescribed maximum amount of cannabis. This allows customers to purchase from our website without worrying about exceeding their limit.

MooSend is an email marketing software that allows us to send mass emails to customers, partners, and clients. We use this to send inventory updates, weekly stories around the industry, and what’s going on at DG. This has been very easy to use, especially in combination with Canva.

What have been the most influential books, podcasts, or other resources?

One of the more influential podcasts is called, “How I Built This” hosted by Guy Raz. The focus of the show is to interview successful entrepreneurs and determine if their success is based on skill or luck.  It also focuses on entrepreneurs and their mission to succeed in the modern era. It has helped inspire how we can grow the family business.

We also spend a lot of time using Potguide.com as a big help in identifying stores and locations for sales and direct contact with them. It has assisted us a great deal in terms of outreach and introducing ourselves and our brand.

As mentioned, we have also helped organize a new Ontario Cannabis Association (OCA). The membership consists of any Licensed Producer in Ontario who wants to join. It has proved to be a great resource for sales, sourcing of products, issues with the OCS, partnerships, and overall outreach with each other.

Advice for other entrepreneurs who want to get started or are just starting out?

  1. Start small in terms of what your business plan should accomplish. Growth will happen based on the quality of your product and brand awareness. Trying to be too big, too quickly will backfire, both in terms of the quality of the product and revenue in, (or not in) your bank account.
  2. Remember that growing a quality product is the most important part of your success
  3. Do not try to produce too many products. It has been this industry’s Achilles heel. Focus on one or two or three at the most. Once you are producing a quality product and producing regular revenue, move on to the one or two additional products which both complement and build off your first initial offerings.
  4. Build your story and build your brand. The legacy market was built on trusting your supplier to deliver a regular supply of good products. It is this part of the legacy industry which is the main carry-over into today’s recreational market. When cannabis was illegal, trust was critical, now that it is legal, trust remains critical with respect to product quality and product delivery.

Are you looking to hire for certain positions right now?

We are always looking for potential help. Whether it is growing, sales, marketing, branding, or quality assurance, we are looking for people with experience or education in the field. We have had great success with Niagara College, Brock University, and Mohawk College Cooperative programs. We have had a number of students working here and it has turned into full-time employment for some of those graduates.

Where can we go to learn more?

You can find all of our social media via the link below. It also provides a signup page for our mailing lists. You can stay up to date regarding our products, cannabis news, and any future Dykstra Greenhouses updates.

Link: Dykstra Greenhouses | Twitter, Instagram, Facebook | Linktree

You can also contact the Dykstra team at the following emails:

- nathan@dykstragreenhouses.com

- kayla@dykstragreenhouses.com

- rick@dykstragreenhouses.com

- randy@dykstragreenhouses.com

- cathy@dykstragreenhouses.com

We wanted to provide a few reviews we have received over the past months as the recent support we’ve gotten has been phenomenal! See the reviews below:

“Great and friendly company to work with. Always a pleasure to visit.” - Jacob Saffer-Spiro
“Friendly staff and excellent experience.” - Brandon Kirkwood
“...New strains are always fun! Definitely looking forward to trying new things. Keep up the great work! - Kevin from Cowbuds Cannabis

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