Cannabis Cultivation: Some Facts and Stats
Roughly, there are three options to grow cannabis: outdoor, indoor and greenhouses. Outdoor cultivators produce one harvest per year in the fall, whereas indoor cultivators produce year-round and can generate between 4 and 6 harvests per year or use the perpetual cultivation technique. Greenhouse cultivators combine elements of both – exploiting natural light, while leveraging infrastructure and technology – to produce between 1 and 4 harvests per year, though sophisticated, well-equipped greenhouses can run year-round on schedules analogous to indoor production.
The result of this mix of cultivation methods is that growers approach the market differently at different times of the year. Since outdoor cultivators produce one large harvest in the fall, which drives prices down, they tend to release product into the market in a controlled manner – selling enough in the fall to generate cash flow to cover expenses, but holding back inventory to release later in the year as prices rise. Thus, outdoor cultivators – in general – are price setters in the fall and price takers in late spring and early summer. In June and July, large quantities of greenhouse grown flower from the first light deprived harvests are coming to market, potentially creating an oversupply situation. The average deal size for indoor growers reflects the conventional experience of reduced yields in the late spring and summer, as cooling and humidity control costs increase and growers shutter portions of their operations until conditions for 100% capacity utilization return, generally in September.
Last year’s study reported that 88% of participants cultivate indoors under artificial lighting, 28% in greenhouses under natural and supplemental lighting, 11% in greenhouses with natural light only and 21% outdoors. One in five (20%) grow in facilities 50,000 square feet or more, while almost 50% cultivate canopies less than 10,000 square feet. Vertical farming comprises a significant segment of commercial indoor and greenhouse operations, 37% of participants who use supplemental lighting reported using vertical rack systems for cannabis vegetation and 26% for cannabis flowering.
Why Do You Need a Cannabis Cultivation Business Plan?
A cannabis cultivation business plan will help you obtain a license and financing. As the cannabis industry grows, so does the competition and the investment needed to start, and you will need a solid cannabis cultivation business plan. And it can also increase your profits because it helps you get organized. Most states require an address on the application of where you intend to set up your facility. This allows the licensing committee to verify the location meets all the requirements and restrictions. However, this also means you will need to have the place rented out or purchased before the application is submitted.
A cannabis cultivation business plan is an important tool for running your business and attracting investors.
Cannabis Growing Business Economics
The following three scenarios require an investment of $1 million = long-term debt at 12%. The outdoor scenario has a lower net profit rate taking into account the interest on the loan which, due to one harvest per year and the need for working capital, is repaid in a longer period compared to the other two scenarios; in the case of self-financing, the scenario would have about 25% profitability. As with other financial examples, these figures are examples only to show what a typical result might be. These numbers demonstrate the potential profits from growing marijuana, which largely depend on many factors.
Indoor Scenario
Warehouse with a total area of 7,600 sq. ft, rented; 6 harvests a year.
Revenue | 1,863,540 |
Direct Costs | 573,161 |
Material Costs | 289,012 |
Cultivation Labor | 284,149 |
Gross Profit | 1,290,379 (69%) |
SG&A Expenses | 524,999 |
Operating Income (EBITDA) | 765,380 (41%) |
Net Income | 349,883 (19%) |
Greenhouse Scenario
Greenhouse with a total area of 14,250 sq. ft, built; 3 harvests a year.
Revenue | 1,164,426 |
Direct Costs | 317,140 |
Material Costs | 196,314 |
Cultivation Labor | 120,826 |
Gross Profit | 847,286 (73%) |
SG&A Expenses | 308,243 |
Operating Income (EBITDA) | 539,043 (46%) |
Net Income | 235,419 (20%) |
Outdoor Scenario
Warehouse with a total area of 65,340 sq. ft, rented; 1 harvest a year.
Revenue | 1,004,165 |
Direct Costs | 231,558 |
Material Costs | 171,145 |
Cultivation Labor | 60,413 |
Gross Profit | 772,607 (77%) |
SG&A Expenses | 283,826 |
Operating Income (EBITDA) | 488,781 (49%) |
Net Income | 172,556 (17%) |
How much does it cost to grow cannabis outdoor?
Calculate cannabis growing costs and profits with our pre-populated cannabis cultivation financial model. All you have to do to get started is enter the size of your premises. The model will help you estimate how much it costs to start and operate your own cannabis growing business, build all revenue and cost line-items monthly over a flexible seven year period, and then total the monthly results into quarters and years for an easy view into the various time periods.
Cannabis Cultivation Financial Model Sample
Cannabis Cultivation Business Plan
We also offer Word document and PowerPoint pitch deck templates for your cannabis cultivation business.
EXECUTIVE SUMMARY
Project Scope
Market Opportunities
Start-up Summary
Financial Projections
COMPANY DESCRIPTION
MARKET OVERVIEW
Global Market Overview
North American Cannabis Market
Cannabis Market in the US and Brief State Market Overview
Cannabis Sector Projections and Perspectives
SWOT Analyses
STRATEGY & IMPLEMENTATION
Marketing Plan
Cannabis Directories
Competition
Target Customers
Sales Forecast
OPERATIONAL PLAN
Location/Facilities
Cultivation Method/Equipment
Physical Security Plan
Quality Assurance
Packaging and Labeling
Transportation
Tracking Solution
ORGANISATIONAL STRUCTURE & MANAGEMENT
FINANCIAL PROJECTIONS
Funding Analyses
Direct and Operational Costs
Profit & Loss Forecast
Cash Flow Statement
Balance Sheet
Main Ratios
APPENDICES
Income Statements, monthly
Cash Flow Statements, monthly
Floor Plans
Cannabis Cultivation Business Plan
If you are going to start a Cannabis Growing Business (nursery, indoor, greenhouse, outdoor or mix), the Cannabis Cultivation Business Plan Template will help you create a professional business plan as part of your cannabis grower license application and prepare for a meeting with potential investors.
The Cannabis Business Plan Template includes: Excel financial model that you will be able to edit and customize according to your business needs Word business plan document template, open and editable PowerPoint pitch deck template, open and editable Unlimited support (email)
All products can also be purchased separately or in any combination, e.g. Word document + PowerPoint presentation and so on.
Should you have any questions, please do not hesitate to contact us.
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