Indoor cultivators produce year-round and can generate between 1 and 12 harvests per year. Main indoor cons include:
- Maintaining proper ventilation is difficult
- Higher household energy costs
- Pumped with fertilizers
Cannabis Cultivation Business Setup, sample
Warehouse 7,700 sq.ft. for about 1,000 plants with estimated yield of 350 lbs., 4 harvests a year.
Cannabis Cultivation Initial investments:
- Warehouse rent – $50,000
- Build out, improvements – $60,000
- Growing equipment – $150,000
- Lighting system – $120,000
- Alarm & Security System – $45,000
- Licensing & legal fees – $55,000
- Direct costs (first months before profit) – $200,000
- Administrative expenses – $50,000
- Other expenses, incl. salaries – $100,000
Total = $830,000.
Cannabis Cultivation Direct & 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 1.3-1.5 gram per watt of light.
Lets try to calculate how much electricity does it take to grow cannabis indoors for our scenario:
- Cost Electricity – $0.147/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 125,000 W system.
$0.147 kWh x 1,680 hours x 125 kW = $30,870
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 about $23,150.
So, total electricity costs will be about $55,000. Water costs will be no more than $700.
- Growing solutions, including nutrients – $7,000
- Cloning – $1,500 (excl. labor and electricity)
- Lab testing – $5,250
- Packaging, transport & storage – $3,000
- Grow Light Bulbs – $1,500
- Other Supplies – $1,750
- Direct labor – 7-8 employees, $50,000
- Taxes – about $55,000
Thus, the direct cost of growing the cannabis will be around $180,700 or $516 a pound (42% of wholesale price). It doesn’t include administrative, marketing, distribution costs and taxes, which varies depending on the location.
Cannabis Cultivation Annual Gross Profit, sample
Sales are about 1,400 lbs. per year:
- Revenue + $1,750,000
- Direct costs – $750,000 (42.8%)
- Gross Profit = $1,000,000 (57.2%)
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.