Think about opening a marijuana company, and you imagine a dispensary in Colorado or California. Perhaps you picture an edibles manufacturer. But, at the start of the supply chain, marijuana farms are the businesses producing this multi-billion-dollar product.
Becoming a farmer isn’t your typical career move. Yet, it’s open to anyone with the drive and tenacity to learn about the industry. And the benefits can be huge. With legal marijuana sales topping $17.5 billion in 2020 – despite only being legal in 14 states – you could be part of this booming industry.
Indeed, according to Leafly, the retail price for a pound of Californian marijuana was up to $3,400 in October 2020. And demand for the product is only set to increase.
In this article, we’ll explain how to start a marijuana farm business: the costs, the legal work, and the different types of marijuana farms running today.
To learn more about financing for a marijuana farm business, contact Safe Harbor Financial.
In a nutshell – it’s anywhere that involves cannabis cultivation on a large scale. Far from the rustic appeal many brands portray, marijuana farming is a high-tech, industrial industry producing cannabis on a nigh-unfathomable scale.
Despite its street name, “weed”, marijuana is actually a picky plant regarding its growing conditions. It needs the correct temperature, humidity, and water levels to achieve maximum productivity – and, by extension, product.
But, regardless of the exorbitant profits, breaking into large-scale marijuana cultivation is more complicated than it looks.
While there are thousands of different strains, there are only three types of marijuana farms:
Which one you choose will depend on your climate, start-up funds, and business expectations.
By far the cheapest option, outdoor farms benefit from increased space – meaning you can grow marijuana by the acre as compared to the warehouse. In fact, California – America’s largest cannabis producer – grows 60% of its 13.5-million-pound annual harvest outdoors.
Marijuana prefers sunny, warm climates – ruling out much of the Pacific Northwest. Ideally, it needs temperatures between 75°F to 85°F, though it can handle 60°F to 90°F. More extremes temperatures will damage the plant and reduce harvests. You can always use shade covering to reduce the direct heat.
While it’s picky about temperature, it’s not a thirsty plant; watering every few days is sufficient.
Finally, you can grow either in natural soil or pre-made pots full of commercial soil. Cannabis plants will thrive in either. You’ll need fertile soil and long hours of sunshine for optimum THC production. It’s why Mexico, Nepal, Northern India, Australia, and the southern US are the most prominent weed growing regions.
Indoor marijuana farms – distinguished from greenhouses by the lack of natural light – are the most intensive cultivation variety. Plants are grown in soil-like mediums under artificial lights, often using hydroponics systems to regulate the water supply.
Unlike outdoor systems, indoor marijuana farms are a highly controlled environment. Resultantly, plants grow much faster due to 24-hour light, optimized CO2 levels, and controlled humidity.
The downside is the expense of such systems, involving not just equipment but also the detectors, sensors, and software. It’s also hungry for energy – it’s estimated that commercial cannabis cultivation devours more than 1% of all electricity used in the US.
Greenhouse cultivation is the least common of the three options. However, it combines elements of both options. Where outdoor farms produce one harvest a year, indoor cultivators expect annually between 4 to 6 harvests. Greenhouse farms should fall somewhere between the two cultivation strategies.
By relying on natural light, you save significant energy expenditure, though you also benefit from high humidity and temperature. It means you can cultivate marijuana in direct sunlight in a climate otherwise ill-suited to the crop.
Purchasing land in a suitable location, you’ll spend on average between $10 to $17 per square foot, depending on the location. Costs typically average between $20 to $100 per square foot for indoor facilities, depending on your location.
Greenhouses, however, are most difficult to estimate. Some greenhouses may be already built, raising the cost. If you’re building your greenhouse from scratch, factor in the cost of outdoor land plus the price of a greenhouse.
Purchasing fans and blowers can cost $100 to $1,500 per unit – with larger facilities requiring far more units. Commercial dehumidifiers go for $1,000 to $11,500 and are sized relative to the number of pints removed daily. CO2 burners, tanks, and regulators kits sell for $600 to $2,000 in total.
Growing mediums are essential for both greenhouses and indoor marijuana farms. You’ll pay $15 per 1.5 cubic foot of soil. With a 10-gallon pot needing 1.34 cu ft. of soil, you should budget around $13.4 per plant. And you’ll need plant nutrients depending on your cultivation plan (upwards of $1,000 per harvest).
Hydroponics systems likely cost upwards of $100,000 for a complete indoor farm set-up; lighting costs are $120,000 or more.
There are also alarm and security systems, additional construction costs, and the annual cost of electricity and water.
Acquiring a marijuana cultivation license differs by state. In Illinois, for example, the application fee is $25,000; meanwhile, in California, Colorado, and Oregon, your license fee depends on the size and type of grow facility.
You’re legally allowed to cultivate recreational and medicinal marijuana in:
You’ll likely wait months, if not years, to acquire a legal permit to grow marijuana. For further information, please refer to our guide on how to start a marijuana cultivation business.
Do you own a hemp, CBD, dispensary, marijuana, or cannabis business and need a business bank account? We’ve validated over $8 billion dollars in cannabis-related funds since 2015. Bank with confidence. Bank with Safe Harbor Financial today.
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