We are considering in our article cannabis growing for a business use. The cannabis growing for a personal use requires only seeds, soil, pots, CFL lights, and a small fan, which may be cost around $100.
Indoor cultivators produce year-round and can generate between 4 and 6 harvests per year. Main indoor cons include:
- Maintaining proper ventilation is difficult
- Higher household energy costs
- Pumped with fertilizers
Cannabis Cultivation Setup Costs
Warehouse 3,600 sq.ft. for about 144 plants with estimated yield of 250 pounds.
Indoor from $55,000 (excluding land purchase)
- Warehouse – $50,000 (depends on location)
- 7,000 watt sun system – $2,500
- Exhaust fan system with controller – $735
- Carbon filter system – $560
- Time switch – $50
- Legal Fees & Licensing
- Administrative Expenses
Cannabis Cultivation Operating Costs
Direct expenses include electricity, water, labor and packaging costs.
Good lights are one of the most important factors when growing cannabis indoors. You can achieve yields of around 1 gram (0.035 ounces) per watt of light.
Lets try to calculate how much electricity does it take to grow cannabis indoors for our scenario:
- Cost Electricity – $0.10/kWh (Colorado – 9.83 cents per kWh)
- Number Hours: 1,680 light hours:
Vegetative Stage 720 hours: 40 days of 18/6 schedule
Flowering Stage 960 hours: 80 days of 12/12 schedule
- Wattage: We supposed to use 7,000 W system.
$0.10 kWh x 1,680 hours x 7 kW = $8,232
However, one thing that’s very important to remember when doing any estimations is that although your grow light may account for a lot of your electricity bill, fans and pumps and other things in your grow room also take electricity. These other items cost 3/4 as much electricity as the grow light. It will be plus $6,174.
So, total electricity costs will be $14,406. Water costs will be no more than $500.
- Pots – $300
- Grow soil – $400
- High quality seeds – $1,100
- Labor – 1-2 employees, $5,000 per person/month
Thus, the direct cost of growing the cannabis will be around $1,5 a pound. It doesn’t include marketing, distribution costs and taxes, which varies depending on the location.
Gross Profit (Colorado example)
According to data from the online wholesale marketplace Cannabase, the average monthly asking price per pound for recreational flower dropped to an average of $1,402 in June from $2,106 in January. The lowest monthly asking price on the Denver-based site plunged even more, to $750 last month from $1,800 in January.
Cannabis Gross Profit:
- Revenue + $187,500
- Taxes (30%) – $56,250
- Direct costs – $36,706
- Gross Profit = $94,544
We offer The Cannabis Cultivation Financial Model which is a fully-functioning financial model for Excel and other spreadsheet programs for cannabis cultivation startups and growth. The model uses a mix of assumptions to estimate cannabis yields, all revenue and cost line-items monthly over a flexible seven year period, and then sums the monthly results into years for an easy view into the various time periods.
We also offer The Cannabis Cultivation Business Plan Template which will help you to create professional cannabis business plan for indoor, outdoor or green-housing cultivation facilities to break down your costs, so you know how much it will take to get into the cannabis business.