We are considering in our article cannabis growing for a business use.
Indoor cultivators produce year-round and can generate between 3 and 12 harvests per year. Main indoor cons include:
- Maintaining proper ventilation is difficult
- Higher energy costs
- Pumped with fertilizers
Cannabis Cultivation Setup Costs
Warehouse 3,600 sq.ft. for about 500 plants with estimated yield of 350 kg yearly.
Indoor from $300,000
- Warehouse renting – $50,000 annual (depends on location)
- Warehouse build-out – $50,000
- Growing Equipment – $80,000
- Lighting System – $55,000
- Alarm&Security, Monitoring Systems – $15,000
- Computer System – $5,000
- 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 using a perpetual technique:
- Cost Electricity – Ontario – 9.0 ¢/kWh
- Number Hours: 1,680 light hours:
Vegetative Stage 720 hours=6570: 40 days of 18/6 schedule
Flowering Stage 960 hours=4380: 80 days of 12/12 schedule
- Wattage: We supposed to use 45,000 W system.
$0.09 kWh x 10,950 hours x 45 kW = $44,347 yearly
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 $33,261.
So, total electricity costs will be $77,608. Water costs will be no more than $1,500.
- High quality seeds – $25,000
- Pots, Grow soil and other direct costs – $15,000
- Labor – 1-2 employees, $19 per hour or 3,293 per person/month
- Cultivation Taxes – $1,000 per kg
Thus, the direct cost of growing the cannabis will be around $1,5 a pound. It doesn’t include testing, marketing and distribution costs, which varies depending on the location.
Gross Profit (annual)
- Revenue + $1,800,000
- Direct costs – $600,000
- Gross Profit = $1,200,000 (67%)
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.