There isn't a grower out there who doesn't enjoy talking about the strains they cultivate, the methods they employ to grow them, and the yields they get. But one key topic that we don't discuss nearly enough is finance. And, let's be honest, this is crucial. So, how much does it cost to produce cannabis?
This post will go over how much you may anticipate paying to get started growing cannabis plants, as well as how much you will need to spend on each harvest after that.1.1:Estimated individual costs and profits
1.2:Estimated commercial costs and profits
2.1: Grow Lights
2.2: Air Circulation (Exhausts, Filters, and Fans)
2.3: Grow Tent
2.5: Purchase or lease the property
2.7: Business license/individual license
2.8: Construction Permit
2.9: Occupancy Certificate
Preparations Between Individual and Commercial Growing
A fundamental aspect of any business is understanding how much your operation costs, how much income your organization generates, and how much profit you will make. Let's talk about individual and commercial cannabis cultivation.
- Estimated individual costs and profits
A 5' x 5' grow space would yield 10.5 pounds at an average cost of $225 per pound, with $75 for power and $150 for miscellaneous additional costs such as creating a watering system, acquiring seeds or clones, or paying for labor.
For instance, suppose your outdoor flower costs $319/lb. If you can sell it for $650, your profit margin will be 51%. Now, for inside, your cost per pound is If your cost is $524 and you sell it for $1,300 all day, your profit margin is 60%.
- Estimated commercial costs and profits
Commercial cannabis cultivation is costly, especially in grow rooms. The average commercial grow room setup costs $75 per square foot. Total setup expenditures can easily exceed millions of dollars, and monthly operational costs can well exceed six figures.
The quantity of produce is determined by the magnitude of the growing activity. Large-scale operations have higher yields and more finished products to deliver to dispensaries. The top 10% of manufacturers have yearly revenues ranging from $20,000,000 to $200,000,000, with an average of around $1,050,000. The remaining 90% of producers earn an average of $260,000 each year.
These figures, however, should not intimidate you as a small producer because you have the opportunity to start small and scale your growing operation to higher levels of production.
Master producers that sell cannabis to dispensaries earn between $50,000 and $145,000 per year. This amount is subject to change depending on quantity, quality, current market supply, and demand, as well as as the marijuana business grows and more states soften their regulations around the medicinal and recreational use of marijuana.
Cost of Every Component
You'll need a grow lamp, an exhaust system, fans, and a grow tent to create a decent indoor grow room. Costs accumulate here, but the best of these goods will save you a lot of money over time. Furthermore, having the best of this equipment would help you maximize your cannabis yield. And ideally, there are several things that you know about how to maximize cannabis yields. But let’s delve into the cost of these components.
The grow lights, also known as hydroponic lights, are the heart of your grow room and will have the most impact on plant growth and, eventually, the size and quality of your harvest. To get the best yields, we recommend giving your plants at least 400–650 watts of light per square meter. You should also ensure that you get 4ft grow lights. Among the different types of lights, we recommend LED grow lights, Smart-8&Spectrum Y Wireless as they would make the cannabis photosynthesize and grow more. If you're dealing with a 2'*2'/2.5'*2.5'/3'*3' grow tent, you'll need an Mini Sun-2.
Medic Grow Mini Sun-2 320 Watts PAR map tested by Coco for Cannabis:
These will cost you between $169 and $224, pending on the watts 150W/240W/320W.
Dr.MJ Coco had just tested the mini sun-2 and releases a new review video:
Air Circulation (Exhausts, Filters, and Fans)
We recommend purchasing a fan to help move air around your indoor garden, regardless of the size of your grow room. Fans are reasonably priced. For example, this 40-cm wall mount fan (ideal for a tiny grow tent) costs less than $42. However, inline fans and exhausts are a little more expensive.
Investing in a grow tent is the simplest way to grow weed at home. They are specifically intended for marijuana cultivation, are simple to build, and will do no damage to your property. A two-by-two-foot (2' x 2') tent will cost around $120 and can accommodate up to three cannabis plants. A 3' by 3' tent may accommodate up to four plants and can cost more than $200. Larger tents might cost more than $300. Choose a tent that allows for the effective hanging of flowering LED lights, which is essential during the flowering stage of your cannabis plants.
Cannabis seeds are typically sold in packs of 10 or 12 seeds, with prices starting at about $40 and rising from there. Some premium genetics might cost between $200 and $500 for each bundle. Feminized and auto-flowering seeds are more expensive because more breeding work was required to generate them, and they require the grower to produce buds in less time.
Purchase or lease the property
Lease-buy agreements function on a rent-to-own basis. Rent-to-own indicates that the prospective buyer rents the property before eventually purchasing it. The rent on a rent-to-own property is usually more than the fair market price. This additional share of the rent is applied to the down payment for the house. This down payment can be utilized to purchase the home at the end of the lease.
For example, if you rent a home for $1500 per month, with $300 going toward the down payment, you will have $7200 saved after 24 months. If the house is worth $200,000, you will have 3.6% saved up.
A professional design-build business will maximize the arrangement so that even a small space with restricted square footage has all the needs met without feeling crowded. A smaller dispensary will normally cost between $350,000 and $500,000. A mid-size dispensary will cost between $500,000 and $750,000.
Business license/individual license
For application fees, $5,000 is a decent approximate estimate, however, these prices vary greatly by state. The charge in Washington is simply $250. You must pay a non-refundable $6000 fee in both Missouri and Michigan. In Illinois, current medical dispensary license holders will have to pay a stunning $30,000 to petition for early approval of a recreational cannabis business license. Permitting and licensing fees are typically higher than application fees, and there may be other expenses as well. More information on application and dispensary license fees for California, Colorado, Oklahoma, Washington, Missouri, and Michigan can be found here.
A construction permit is required, whether you are doing a minor home improvement project or erecting a new structure. A building permit can range in price from $50 to $2,000, depending on the project and your town. Larger projects will typically cost more.
It's critical to understand that certificate of occupancy regulations vary between cities, towns, and rural locations. In general, the most important certificate of occupancy requirement is that all building codes be followed. You must also pay all applicable fees and pass the final inspection. Except for fire, each mandatory inspection costs $30.00. However, it differs depending on whatever county you are from.
Indoor commercial cannabis production (also known as cannabis grow rooms) can use up to 3,000 kWh of energy per pound of product. 3,000 kWh will cost you around $484 (3,000 *.1614). Ensure that when choosing professional LED lights for your cannabis plants, you buy adjustable LED grow lights, as they could help you save more energy and cut your costs. These should also be full spectrum lights.
Other Common Questions
What are the labor costs?
How much time do you devote to caring for your marijuana plants? Consider how much you are paid per hour of work. Even if it works out to be around $20 per day, that equates to $1,400 over the course of a 10-week growing season. However, depending on the size of the growing operation, labor costs can range from negligible to significant.
Are there any additional costs associated with cannabis cultivation?
Yes, there may be additional costs such as licensing fees, electricity, water, nutrients, and labor.
How many marijuana plants should I grow to save money?
You don't need to grow a lot of marijuana, especially if you're not a commercial grower. Six plants are recommended, especially when growing indoors. Six plants are also much easier to manage and much less expensive.
How much does it cost to grow marijuana indoors?
If you're a first-time indoor marijuana grower, your growing costs will be higher because you'll need to set up the farm and purchase the necessary tools, such as grow lights (especially dimmable grow lights), filters, timers, and exhaust fans, all of which are expensive. You'll also need to buy pots, soil, watering cans, and other gardening supplies. The total cost can be in the hundreds of dollars. Once the indoor farm is operational, you can expect to spend an additional $2,000 per year growing 6 marijuana plants due to other costs such as lighting, ventilation, water, fertilizers, and so on.
What can I do to reduce the cost of marijuana cultivation?
There are several cost-cutting measures you can take to reduce the cost of marijuana cultivation. For example, you can buy a marijuana indoor growing kit to save money on soil, pots, watering cans, and other supplies. When possible, grow outside in the sun. When and where sunlight is not available, use LED lights instead of energy-intensive compact fluorescent lights (CFL). Adjustable LED grow lights can help you save money on your energy bills.