Agrify Is Tackling the Tough Challenge of Cultivating Cannabis Consistently

Exclusive Interview with Agrify President, CEO and Chairman of the Board Raymond Chang

Agrify (NASDAQ: AGFY) serves the cannabis industry with grow solutions designed to maximize yield and improve quality and consistency at the lowest cost of production. President, CEO and Chairman of the Board Raymond Chang spoke with New Cannabis Ventures about his company’s vertical farming units, its total turn-key solution offering and increasing guidance for 2021. The audio of the entire conversation is available at the end of this written summary.

Talent at Agrify

Chang saw a family member benefit from medicinal cannabis, and he has a long history of leveraging data and technology to disrupt industries. He has worked in the telecommunications, retail and automobile industries. He considers indoor agriculture ripe for the next wave of disruption.

The Agrify team also includes executives like CFO Niv Krikov, Chief Science Officer David Kessler and SVP of Marketing Michelle Sitton. Krikov has a history of working with publicly listed companies. Kessler has in-depth plant science experience, and Sitton has worked with some of the largest MSOs in the industry.

Vertical Farming Units

Agrify focuses on high-value plants, working with clients who grow cannabis, hemp and other unique herbal plants. Its system is designed to provide the optimal growing environment.

The company’s vertical farming units (VFUs) are able to help maximize yield by shifting a facility’s capacity from square feet to cubic feet. The system is able to extend capacity by up to six times canopy square footage, according to Chang.

An Agrify VFU

Agrify’s system is also designed to offer the same growing conditions (humidity, light exposure, airflow and temperature) regardless of the level. These consistent conditions help to drive crop consistency.

Additionally, the company’s proprietary VFU design was created with safety in mind. It uses peripheral catwalks, allowing workers a safe environment on each level of the system, according to Chang.

Domestic Footprint and International Opportunities

Currently, Agrify serves customers across eight states in the U.S. It has worked with clients in states like 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. The company’s clients include vertically integrated MSOs and single-state operators, as well as companies focused solely on cultivation.

In addition to domestic growth opportunities, Agrify is considering potential international expansion in 2022 and beyond.

Total Turn-Key Solution

The company has committed up to $50 million to its total turn-key (TTK) solution offering, an anticipated growth driver for the company. Agrify is offering customers a total approach to producing consistent, quality flower. It is offering the solution, funding and dedicated team members on the ground to help TTK customers be successful. Chang describes the offering, an operating lease model, as a “plug and play situation.”

Agrify’s business model is focused on the proliferation of its technology. Increased adoption helps to drive further market penetration, and the company has attractive recurring SaaS revenue, according to Chang. The company is leveraging its balance sheet to go out and increase the adoption of its technology and its market penetration.

Growth Strategy

As a NASDAQ-listed company, Agrify has strong acquisition currency, according to Chang. He expects the company to participate in cannabis industry consolidation.

While the prospect of federal legalization hangs at some point in the future, the Agrify team is working to execute its strategy regardless of when that happens. The company is working to gain the largest market share in the shortest time possible, according to Chang.

NASDAQ IPO and Funding

The company completed its NASDAQ IPO earlier this year. It currently has approximately $135 million in cash and no debt on its balance sheet.

Agrify Completed Its IPO Earlier This Year.

Chang anticipates that proving the TTK model will open the door to a number of alternative financing options. For example, the company could structure some of its TTK partnerships as SPVs for debt financing. As long as the company continues to demonstrate its ability to deliver on higher consistency, quality and yield at the lowest cost of operation, Chang is confident there will be plenty of financing options available to Agrify as it continues to scale.

2021 Guidance

Agrify announced $7 million in Q1 revenue, a 600 percent increase compared to last year. The company has also increased its 2021 top-line guidance from $40 million to $48 to $50 million. Chang expects to see high levels of growth for the foreseeable future.

As the company grows, it looks to metrics like customer reengagement and flower consistency and quality. Chang shared during the company’s first-quarter earnings call that nearly all of its customers had reengaged. That high level of reengagement shows that the company is delivering value, according to Chang.

Right now, the industry is experiencing a 10 to 15 percent swing in cannabinoid profiles from batch to batch, but the Agrify system is able to narrow that gap to less than 1 percent swing, according to Chang.

In the past, the company was handling one installation per quarter, but now, it is ramping up to handle multiple installations happening simultaneously. To keep up with that demand, the company has shifted its small manufacturing and production line in Georgia to a contract manufacturer in Vermont. That manufacturer is capable of doing 10 to 15 times more than Agrify was doing on its own.

The company is taking measures across its business to ensure it can keep up with demand and position Agrify as the right approach to improved quality and consistency.

To learn more, visit the Agrify website. Listen to the entire interview:

Exclusive article by Carrie Pallardy
Carrie Pallardy, a Chicago-based writer and editor, began her career covering the healthcare industry and now writes, edits and interviews subject matter experts across multiple industries. As a published writer, Carrie continues to tell compelling, undiscovered stories to her network of readers. For more information contact us.

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