Agrify: Leading Cannabis Company | Growth & Innovation

Agrify: Building a Comprehensive Cannabis Industry Solution

Agrify currently provides computer-controlled vertical farming units specifically designed for cannabis cultivation. However, this represents only the initial phase of the company’s ambitious growth strategy.

The Value of the Cannabis Crop

Cannabis ranks among the most economically significant crops grown in the United States. Leafy’s Cannabis Harvest Report 2021 estimates its value at $6.2 billion, based on figures from the 11 states where adult retail sales are permitted.

Addressing Fragmentation in the Cannabis Tech Landscape

Cannabis cultivators, mirroring other commercial agricultural operations, utilize numerous systems to enhance yields and optimize product characteristics. Frequently, these farmers rely on multiple platforms sourced from various vendors. This fragmented approach, while common, is one Agrify intends to disrupt.

Agrify’s Integrated Platform Approach

Agrify strives to become a single-source solution for growers, offering a platform with exceptional control over the entire cultivation process. Recent acquisitions have expanded the company’s capabilities to include extraction systems, enabling customers to manage growth, harvesting, and processing within a unified framework.

Rapid Growth and Vertical Integration

CEO Raymond Chang envisions Agrify becoming a leader in the cannabis space, characterized by rapid expansion and a high degree of vertical integration.

From Startup to Public Company

Founded in 2016 by Raymond Chang, the company initially secured $4.5 million in funding across two rounds. Rather than pursuing further venture capital, Chang opted to take the company public in January 2021.

Navigating Regulatory Challenges

Agrify is listed on the Nasdaq because it does not directly handle the cannabis plant itself. This classification as an ancillary company allows it to avoid the stringent regulatory obstacles faced by plant-touching cannabis businesses, including limitations on banking and fundraising.

The Benefits of Going Public

Chang affirms that taking Agrify public was a strategic decision. While acknowledging increased demands for discipline and transparency, the IPO generated a substantial influx of capital.

Strategic Acquisitions Fuel Expansion

“We were able to acquire Precision Extraction Solutions and Cascade Sciences, in part due to our public status,” Chang stated. “This allowed us to utilize cash and company stock for these acquisitions.” The company aims for two-thirds of its growth to be organic, with the remaining third driven by strategic acquisitions, continuing industry consolidation.

Optimizing Growth Through Controlled Variables

The Agrify platform begins with carefully selected genetics. Growers choose from pre-approved strains compatible with the Agrify system. This controlled environment allows the platform to maximize yield by precisely managing critical variables like lighting, watering, and humidity.

High-Tech Vertical Farming Units

The company’s vertical farming units (VFUs) are central to its operations. These stacked growing racks efficiently cultivate high-value plants, including cannabis, hemp, and various herbs. The stacking design doubles growing capacity within the same footprint.

Addressing Inconsistencies in Cannabis Production

“I see consistent consistency issues around cultivation, and it’s even worse around cannabis 2.0 products,” Chang explained, highlighting a key problem the company aims to solve.

Expanding into Extraction and Processing

Agrify recognizes that customers have a choice: outsource processing or handle it in-house. The company actively encourages growers to adopt the latter approach.

Acquisition of Extraction Leaders

Agrify recently invested $50 million in acquiring Precision Extraction Solutions and Cascade Sciences, prominent companies in cannabis and hemp extraction and processing. These acquisitions extend Agrify’s reach to over 1,000 cannabis and hemp customers, including 30 multi-state operators, and establish a physical presence in seven states.

Future Growth and Investment

“We have a couple more companies we need to acquire,” Chang said. “Our focus is on helping customers maximize their return on investment through improved space utilization, higher yields, lower costs, and increased automation.”