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.

Revenue1,863,540
Direct Costs573,161
Material Costs289,012
Cultivation Labor284,149
Gross Profit1,290,379 (69%)
SG&A Expenses524,999
Operating Income (EBITDA)765,380 (41%)
Net Income349,883 (19%)

Greenhouse Scenario

Greenhouse with a total area of 14,250 sq. ft, built; 3 harvests a year.

Revenue1,164,426
Direct Costs317,140
Material Costs196,314
Cultivation Labor120,826
Gross Profit847,286 (73%)
SG&A Expenses308,243
Operating Income (EBITDA)539,043 (46%)
Net Income235,419 (20%)

Outdoor Scenario

Warehouse with a total area of 65,340 sq. ft, rented; 1 harvest a year.

Revenue1,004,165
Direct Costs231,558
Material Costs171,145
Cultivation Labor60,413
Gross Profit772,607 (77%)
SG&A Expenses283,826
Operating Income (EBITDA)488,781 (49%)
Net Income172,556 (17%)

How much does it cost to grow cannabis outdoor?

How much does it cost to grow cannabis in a greenhouse?

How much does it cost to grow cannabis indoor?

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 financial model

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.

Cannabis Cultivation Business Plan Sample

Should you have any questions, please do not hesitate to contact us


Hemp Cultivation Business Plan Templates are available at hempcbdbusinessplans.com.