How much does a weed plant cost
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 – $0.1478/kWh
- Number Hours: 1,440 light hours:
Vegetative Stage 720 hours: 40 days of 18/6 schedule
Flowering Stage 720 hours: 60 days of 12/12 schedule
- Wattage: We supposed to use 145,000 W system.
$0.1478 kWh x 1,440 hours x 145 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 Excel financial model that 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.The following example demonstartes How much does it cost to grow cannabis indoor if you intend to start a cannabis cultivation business
How much does cannabis cost?
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- Factors that determine the cost of cannabis
- Bottom line
As legalization has spread across the country, consumers have been seeking out all sorts of cannabis products for both medicinal and recreational purposes.
Market demand for cannabis is pretty consistent across the board. But what’s not as consistent? Pricing. There’s no one-size-fits-all approach to cannabis pricing. But there are several factors that come into play when determining the prices of different cannabis products.
There are several factors that come into play when determining the prices of different cannabis products. Photo by: Gina Coleman/Weedmaps
Factors that determine the cost of cannabis
The first consideration is where the cannabis is grown, manufactured, and sold.
“The regulatory framework in any state or community will determine the market and the price,” says Andrew DeAngelo, cannabis industry consultant and strategic advisor and co-founder of California-based dispensary Harborside.
Every state (and, in some cases, individual cities) has its own set of laws and regulations, all of which impact the way cannabis is grown, manufactured, and sold, impacting in turn how cannabis products are priced. Cannabis pricing from state-to-state can vary widely. For example, according to LeafLink’s Wholesale Cannabis Pricing Guide, the average wholesale price for a pound of flower is $3,260. But in Oregon it’s just $915.
“The variables that most impact cannabis pricing are licensing regulatory frameworks, and by extension, state and local tax rates levied on both businesses and consumers,” says Colin Earl, cannabis consultant and CEO of SISU Consulting. “For example, with markets that have under 30 total licensed cultivators, the low supply will drive pricing more so than potency [or] perceived quality. For markets such as Colorado and Oregon that have ‘open’ licensing frameworks, wholesale pricing will be primarily dictated by the current supply, whereas retail pricing can vary based on locality due to local retail licensing limits.”
Taxes can also drive up costs for cannabis producers, which ultimately drives up both wholesale and retail prices. “This is most aptly demonstrated in the California market, where steadily increasing cultivation and excise taxes have left most businesses in a precarious position,” says Earl.
The way cannabis is grown can also factor into how the final product is priced.
“Overall the pricing for flower will mostly be categorized by growing method. with indoor being the most expensive, outdoor being the cheapest, and greenhouse in between,” says Earl.
For cannabis that’s grown outdoors, prices can also vary throughout the year, particularly during harvest time.
Indoor and greenhouse flower can be consistently harvested year-round, so the pricing is relatively stable. Photo by: Gina Coleman/Weedmaps
“As indoor and greenhouse flower can be consistently harvested year-round, the pricing for those are relatively stable,” says Earl. “Outdoor flower is harvested once per year, which will generally lower prices around harvest time—depending on the microclimate from July-October.”
Not all cannabis is created equal. As such, not all cannabis products are going to be priced the same. Generally speaking, the higher the quality, the higher the price.
“Cannabis, each batch, each plant even. could turn out a little bit differently,” says DeAngelo. “So, after everything’s dried and cured, you go through a grading process of each batch and that grading process will determine the wholesale price for the batch generally.”
“There may be a large difference between the pricing of ‘low end’ and ‘top shelf’ flower to cater to multiple consumer segments,” says Earl. “Demand for specific genetics, cannabinoid, and terpene testing results. will greatly impact the price.”
There are a huge variety of cannabis products on the market and different products are priced in different ways.
As mentioned, flower is typically priced strictly on quality or demand.
When it comes to extracts the properties of the flower also play a large part in the pricing, “with a heavy emphasis on the cannabinoid and terpene testing results,” says Earl. “After that the specific method of extraction’s respective yield and demand will largely dictate wholesale and retail pricing.”
“Ethanol extraction is going to have a different cost than steam distillation, which is going to have a different cost than water extraction, which is going to have a different cost than extracting in plant fats and oils,” says DeAngelo. Labor- and time-intensive processes can drive up the price of the end product. The equipment needed for extraction can also drive up prices. For example, according to cannabusiness consulting firm Cannabusiness Plans, a high-quality CO2 extraction machine can cost up to $450,000.
With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price. Photo by: Gina Coleman/Weedmaps
Packaging, which is standard for a variety of cannabis products, including edibles, topicals, and tinctures, can also have an impact on price. “Many state markets have mandated that cultivators, extractors, and product manufacturers utilize ‘child safe’ packaging, which establishes a consistent cost for all businesses,” says Earl. “With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price.”
From a consumer standpoint, retail markups can also vary widely by product type. According to LeafLink’s Wholesale Cannabis Pricing Guide, the average price difference nationwide between wholesale and retail prices for edibles is 42%, but it’s 72% for flower.
There are so many variables involved in cannabis pricing that the real answer to the cost of cannabis is “it depends.” Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs.
Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs. Photo by: Gina Coleman/Weedmaps
And while cannabis pricing is, for the most part, out of consumer control, if you want to make sure you’re getting a good deal, the best thing you can do is research your local market, get a sense of retail pricing, and shop at a reputable dispensary that offers reasonable prices.How much does cannabis cost? Copy article link to clipboard. Link copied to clipboard. Contents Factors that determine the cost of cannabis Bottom line As legalization ]]>