Want to learn how to start a cultivation business? To say the cannabis industry is booming is something of an understatement.
In two short decades, the industry has gone from being a pariah to a multi-billion-dollar sector employing tens of thousands of people. However, much of the focus on cannabis entrepreneurs are around the public-facing businesses: dispensaries and edibles producers. After all, these are the brands people know.
What’s less well-publicized is where those businesses get their product. Learning how to start a cultivation business is perhaps one of the best ways to break into the cannabis sector. Sure, significant capital investments are required, but those also limit potential competition.
Unlike other marijuana businesses, starting a cultivation business involves significant initial capital. You need large premises, lighting, pots, employees, and more. Such companies don’t just grow overnight; like the plants themselves, they need care and attention.
Knowing how to start a cultivation business begins with developing a marijuana cultivation business plan. In this article, we’ll delve into the details of everything you need to include.
To cultivate means to grow – and we’re not just talking about plants. But how to start a cultivation business? One of the simplest solutions is to combine it with a dispensary. Running a cultivation business over a retail storefront means you can supply the product (increasing your profits) and reduce the logistical burden. Think of it like a microbrewery with a bottle shop.
This isn’t always a possibility, however. For instance, there are restrictions in many state laws prohibiting producers from opening cultivation sites near public schools, transit centers, parks, libraries, and arcades catering to minors.
Moreover, you cannot grow cannabis outdoors in Colorado. The law states that it needs to be in a secured, enclosed location. However, in the Pacific Northwest, the climate is optimal and outdoor harvests significantly reduce overheads and lead to far greater yields.
More plants mean more profits. However, your ambition will be constrained by your budget when initially starting your business. You’ll also have to sell your product. Determine how much demand there is in the local area and how much you can feasibly grow. Break the figures down into plants – using reliable estimates for harvest – and try to get solid numbers on each of these metrics. The space of your facilities will also limit your production capacity.
These figures will form the bedrock of your initial marijuana cultivation business plan.
Learning how to start a cultivation business is one thing; funding it is another. Almost all aspects of a cultivation business require significant investment. Where is that money coming from? You can start small with a couple of grow tents and continually reinvest your profits. However, if you want to grow big quickly, you’ll need more capital.
Here are a few options:
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You’ll need to plan how you’ll get your marijuana growing license. There are likely to be significantly more licenses and paperwork that need to be completed before proceeding with your business. Always guarantee you’ve got these aspects sorted before investing significant money into your marijuana cultivation business plan.
What do you need to get started? Outside producers won’t need lights and HVAC units, for example. Based on your estimates for the number of plants required, extrapolate to the appropriate equipment. You can grow a small number of plants in a grow tent – but you’re unlikely to generate a significant amount of profit.
Calculate the number of lights, HVAC units, and ventilation you’ll need to maximize your profits and growth rate. You’ll also need to purchase pots, soil, and more. Because cannabis roots expand rapidly, grow bags are often used on tables with trays to collect water run-off.
Think about how to optimize your infrastructure to increase your efficiency. Any waste – be it water, soil or product – is profit lost.
Indoor cannabis cultivation eats energy like few other businesses. Investing in solar energy is perhaps the best way to offset this cost. Solar energy is increasingly affordable – and despite the costly initial investment, the reduced energy bills can boost your business (especially given current energy price fluctuations).
Water recycling and rainwater collection are other ways to save money. In the Pacific Northwest, the rainy climate lends itself to rainwater collection. Cannabis plants don’t just eat energy; they also gulp water by the gallon. Your cultivation business plan should account for water usage and efficiency savings. (A single cannabis plant consumes over 22 liters of water a day.)
Cultivation businesses built around an existing dispensary can simply sell their products in-store. Otherwise, you need to find buyers and a reliable distribution network. Contact existing dispensaries and ask if they’re always open to new suppliers – this is especially useful for new dispensaries. You’ll also be able to target the strains you produce to their demand.
You should then create a distribution strategy. When will you harvest and deliver the product? Who will transport the product? And are there any special requirements needed for transit?
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