BUSINESS

Kale vs. Weed: Which Is the More Lucrative Green?

BUSINESS
Jan 29, 2014 at 12:27 PM ET

This year’s Super Bowl, an American ritual in which average folk gather around the television to gorge on chicken wings and cheap beer, will feature an unlikely addition to the menu for stadium-goers: kale.

“Kale is so trendy right now,” says Eric Borgia, the chef overseeing this year’s game, who has created a delicious-sounding chicken-sausage and Tuscan kale sandwich to be sold at MetLife stadium. “Every book you open up, it’s all about kale and kale chips.”

He’s right—there’s now even a National Kale Day. But before kale reached its apex of popularity, the leafy green was a relatively inconsequential vegetable, at least in the cultural zeitgeist. In 1997, for instance, the biggest buyer of kale was not a supermarket chain. It was Pizza Hut, which used the leafy green as a garnish on its salad bar.

Perhaps the only other leafy green to capture the public’s imagination as deeply as kale is something that has been around for generations: weed. And with weed becoming legal in more and more states, the profits from growing it are increasingly ripe for the pickings.

So if you’re a green-thumbed entrepreneur who’s considering heading into either industry (or you’re just generally curious), what are the numbers you need to crunch?

Recreational weed is currently legal in two states—Washington and Colorado. For medicinal purposes, weed is legal in 21 states. That number is likely to grow. Given that many more states will likely begin the process of decriminalization or outright legalization in the next decade or so, Vocativ created a helpful map to see which states will be the next ones to smoke you out, legally speaking. (We’re looking at you, California. Sup, brah?)

With kale on our plates and weed in our brains, we wondered: Which is the more lucrative business?*

That’s a complicated question to answer.

I spoke with experts on either side: Drew Ramsey, one of the founders of National Kale Day who has written a book on the subject, 50 Shades of Kale; and Ellis Smith, a horticulturist, dispensary owner and co-founder of American Cannabis Consulting, a company that helps weed farmers and entrepreneurs open up shop.

On one hand, kale is a relatively simple crop to grow.

“You literally put seeds in the ground and wait for the kale to grow,” says Ramsey.

Kale does fine in low-nitrogen soil, and it’s a generally a hardy plant—one that can even survive a winter’s frost. The reason producers like kale, he says, is that they can get multiple harvests from one plant. Unlike broccoli (where you get one head), kale gives you many harvests per plant, since you’re just picking the leaves and waiting for them to re-grow.

The market for kale is certainly growing, though it’s difficult to tell exactly how big the market will become. The USDA tracks the consumption of kale in terms of pounds consumed per person, per year, but it doesn’t track the overall market size, so we did a little back-of-the-envelope calculation to figure it out.

In 2012, the USDA recorded 0.4 pounds of kale consumed per person in the U.S. Since that number does not take into account the 8,144 farmers markets in America, we rounded up to 0.5 pounds per person. Multiplying out the total population with the average retail price for kale ($2.19), we arrived at market size of $345 million. That number will likely grow.

According to Nielsen, which now tracks perishables, the year-over-year growth for kale surged more than 600 percent from October 2012 to October 2013.

The takeaway for you kale-farming-hopefuls is this: Kale farming is a good but low-margin business. If you have a couple of acres, you might want to give it a try, but don’t expect to be raking in the green, at least metaphorically.

Weed, on the hand, is more involved—and certainly more expensive, which can make it harder to find backing to start up a pot-related business.

“Colorado is still what I call a bro-brah market,” says Smith, the pot-grower. “But in the new market, it’s all smart businessmen who are very well funded. All they’re looking at is ROI.”

Smith says a serious weed-grower would need at least $3 million to $5 million in startup capital to get going in the weed business—whether that’s for a recreational shop in Colorado or a medicinal dispensary elsewhere.

Most entrepreneurs, he says, are paying about $15 per square foot just for the warehouse growing facility. It’s an additional $50 to $100 to build out the facilities. Then there are legal costs, which drive the entry costs way, way up.

“This is a serious game now,” he says. “It’s not attainable for the guy who thinks he just wants to go and quit his job and work in the market.”

Then again, the rewards are huge. It’s a market currently valued at $1.44 billion that’s growing at 64 percent—faster than the global market for smartphones.

*Note: No reporters got stoned for the making of this story…but I did eat kale yesterday.