Grow Lights: Why Cannabis Grows Need a Change
September 7th, 2017
Exclusive, News, Top News
The global cannabis grow light market is anticipated to reach $8.64 billion by 2025, according to Grand View Research, growing at a 14.1% compound annual growth rate. Artificial lighting, such as high-pressure sodium lighting, LED lighting, and plasma lighting, extends the hours of natural daylight to increase the health, growth rate, and yield of crops, particularly during times of the year when daylight may be limited or outdoor growing may be impossible.
Solis Tek Inc. (OTCQB: SLTK) is a vertically-integrated developer of cannabis grow lights and related products, with a focus on ballast, reflector, and lamp products. Its focus on an all-in-one solutions leveraging a scientific approach sets it apart from competitors in the space. With nearly $2.5 million in sales last quarter alone, the rapidly growing company is a compelling pure-play in the cannabis grow light industry.
In this article, we will look take a detailed look at the grow light industry, why CMH and LED lighting is quickly becoming a necessity, and how investors can capitalize on these dynamics.
Grow Lights 101- Old School
There are many different types of artificial lighting solutions, but high-pressure sodium (HPS) lighting, LED lighting, and plasma lighting are the most popular. All of these lighting solutions emit photons within the photosynthetic waveband (400nm to 700nm) and are equally capable of driving photosynthesis and plant growth, according to MSU. But, there are important differences in light intensity, spectrum control, and efficiency that will impact quality, yield, and other factors.
Here’s a quick review on each type of lighting solution:
- HPS Lighting – The lowest cost and most ubiquitous form of artificial lighting for the cannabis industry. The drawback is that these solutions are energy inefficient and generate a lot of excess heat that, at times, must be mitigated.
- LED Lighting – The fastest growing form of artificial lighting for the cannabis industry, which is more energy efficient, generates less heat, and can be fine-tuned to produce crops with desirable characteristics like compact plugs and liners. The drawback is that LED lighting solutions tend to be about four to six times more expensive and they do not provide the intensity of light that HPS lighting solutions do, which can result in lower yields.
- Plasma Lighting – A new spin on an old technology that do not offer significant economic advantages over LED lighting. The key difference is that they are powered by a solid state source rather than a ballast, like HPS lighting.
Solis Tek is focused on a fourth lighting technology known as ceramic metal halide – or CMH – lighting. Unlike HPS lighting, they operate with a high level of efficiency of up to 111 lm/W with a highly controllable point source. Unlike LEDs, they have much greater intensity that can help improve yields. CMH lamps represent the “best of both worlds” in that they bridge the divide between HPS lighting solutions and LED lighting solutions.
Why Cannabis Needs a Change
Indoor cannabis production results in energy expenditures of $6 billion each year – six times that of the pharmaceutical industry – with electricity use equivalent to that of 1.7 million homes, according to recent studies. In fact, researchers estimate that the cannabis industry already accounts for about 1% of national electricity consumption, despite the fact that the drug hasn’t been legalized on a national level or across all states.
In addition to the financial costs, researchers estimate processed cannabis results in 4,600-times its weight in carbon dioxide emissions. Off-grid production requires 70 gallons of diesel fuel to produce a single indoor cannabis plant, or 140 gallons with smaller, less-efficient gasoline generators. Put another way, a single cannabis cigarette represents about ten pounds of carbon dioxide emissions. These are clear problems facing the industry.
Lighting represents a big part of the problem. Most grow operations use a 600W-MH (37.5 W/sf) MH lighting solution for the vegetative stage and a 1000W-HPS (62.5W/sf) HPS lighting solution for the flower stage. In addition to the cost of running the lights, HPS lights tend to generate a significant amount of heat. This means that grow rooms must also power air conditioning, fans, and other solutions to mitigate the heat issues.
Solis Tek Powers that Change
There are many different providers of LED and CMH lighting solutions, but only a handful are active within the burgeoning cannabis industry.
Solis Tek Inc. (OTCQB: SLTK) is credited with rolling out many innovations in the cannabis lighting sector. For instance, it’s digital ballasts are designed with ignition control™ sequential lamp ignition and self-diagnostic safety systems to ensure everything is running smoothly.
The company has pioneered a full-spectrum lighting solution comprised of a four-light system to facilitate the growth of healthier plants throughout the entire growth cycle. In addition, the company’s Ignition Control technology prevents surges and breaker overloads by igniting lamps one at a time based on load stability, while its SmartSense™ technology is a pre-ignition diagnostic check of lights to ensure that the system is safe and operating correctly.
In addition to these lighting technologies, the company launched its terpene-enhancing nutrient line – Terpenez™ – which uses all-natural ingredients to increase yield, lower cost, and grow healthier plants.
Strong Investment Opportunity
Investors may want to consider Solis Tek Inc. (OTCQB: SLTK) for its strong top- and bottom-line growth rates in recent quarters. Last quarter, the company reported revenue that grew 15% to $2.44 million and gross profit that jumped 15% to $920,000 with a 37.7% gross margin. Management continues to see strong demand across the cannabis industry as California gears up for legalization and the cannabis industry continues to experience state driven growth.
“We are pleased with our second quarter results, showing solid growth from our core operations, highlighted by 15% year-over-year Q2 revenue growth from our lighting equipment vertical,” said Solis Tek CEO Dennis G. Forchic in the press release announcing the results. “We believe demand trends centered around terpene profile and strain desirability based on terpene profiles will support the launch of our heavy-metal-free nutrient line.”
The company’s fully-integrated business brings design, manufacturing, and distribution under one roof to ensure the highest quality and the security of its intellectual property. Its focus on innovation has led it to create technologies that have become the standard for cannabis grow lighting systems within cultivation facilities, with customers like GB Sciences Inc., Kyle Kushman, and Colin Gordon from Ethos Genetics.
Solis TEk is the only pure-play cannabis company with a national brand focused on lighting, nutrients, and other products without “touching the plant”. With the broader industry projected to reach $44 billion by 2020, the company is well positioned to capitalize on the estimated 20% growth in the grow light market in the United States. Investors interested in the sector should consider the stock as a part of their diversified portfolios.
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