How much money is going in and out of marijuana business

Opening a medical marijuana dispensary is every cannabis enthusiast’s dream. For one’s business plans to come to fruition, it is important to understand the costs that come with the application and startup process. Read on to find out what the procedures are like for people who are interested in owning a medical cannabis dispensary in the US.


How much money can a marijuana grower make?

The following scenario assumes a person sets aside one ten by ten room for growing marijuana, with five lights of 1,000 watts each. As with the other financial examples, these numbers are examples only to demonstrate what might be a typical result. These numbers demonstrate the profit potential in growing marijuana. An “average” grower will earn about $23,000 per year per light. Five lights will produce about $115,000 per year, ten lights will produce about $230,000 per year, and so forth. 

This assumes a grow operation using coco fiber or soil. If advanced methods like hydroponics or aeroponics are used, the production and income numbers could be doubled or tripled.

The initial set up costs for this size operation — not including rent or labor — are about $2,000 to $3,000. As businesses go, this is a quite reasonable cost to set up. Individual results will vary based upon a variety of factors. Total production will depend on the strain selected, the growing method used, and how well growing conditions are controlled. Total revenue will depend upon the weight and the variety of marijuana grown. The most potent marijuana, with the highest retail price, does not necessarily produce the greatest amounts. There are some varieties that produce in huge abundance but are not as potent or as fragrant, so they don’t command the highest price per pound.

This scenarios assumes an output of one-half gram per watt of light — a fairly standard measure. Some skilled growers have reported production of three times this, or about 1.5 grams of trimmed bud per watt of light, in approximately ninety days. This scenario does not assume any use of the “trim” from the plants — the material that is trimmed from the buds, and the leaves.
This material can be converted to hashish and other products, which will increase the potential income.

Note that the numbers do not include any expenses for rent or labor. This example assumes someone using a spare bedroom in their existing home. The labor is assumed to be provided entirely by the grower, with no outside help. For purposes of planning, someone should assume that such an operation might take one to two weeks of dedicated effort (40 hours per week) to initially set up. Ongoing maintenance will require one to two hours per day.

This scenario assumes five lights of 1,000 watts each. A typical 15-amp circuit breaker can only handle one light of this size. It is extremely unwise to overload electrical circuits because it can cause fires. Therefore, growers must either use extension cords to distribute the load to other circuit breakers throughout the house, or install additional circuit breakers.

This scenario also does not include costs of cooling. Five 1,000 watt lights put out a lot of heat. If the temperature in the room gets much above 80 degrees there will be significant problems with growth, potency, and insects. High temperatures greatly reduce the value of the crop. Therefore, there must be adequate ventilation of the room, as well as air conditioning. The air in the room will also become quite humid, due to the wonderful plants, so there must also be some method of dehumidification.  These issues become much easier in winter when the weather is cooler. In the summer, they may make difficult or impossible to grow without significant additional expense for cooling.

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Dispensary Startup Fees

The meticulous application process is designed to separate the serious applicants from those who aren’t fully committed to the business. Because of this, there are numerous requirements to consider before getting into the fun stuff, like selecting which buds to offer at your store or creating an upbeat logo. In states where medical cannabis businesses are legal, the general upfront cost for an application is $5,000 (non-refundable). Licensing fees vary, depending on your location (for example, in Colorado the initial licensing fee is $3,000, while in Louisiana it’s $150, and in New Jersey it’s a whopping $20,000).

“Medical marijuana business license holders say the process to receive state and local medical marijuana certificates is grueling,” said Andrew Jolley, a Las Vegas dispensary owner.

Most applicants fail to meet the startup capital requirements needed to ensure smooth operations. When applying for a permit, individuals must prove that they have substantial amounts of cash on hand. Again, this varies from state to state. In Arizona, $150,000 is needed for startup capital; and in Nevada, $250,000 in liquid assets is the prerequisite. However, for most dispensaries, the actual capitalization costs are higher than the minimum threshold set by the state.

Cannabis Growers and Cultivators

Individuals who want to grow their own weed in addition to opening a dispensary should know that there are separate startup fees on the table. Growers must pay for an application fee and a license that is to be renewed annually. Some states, like Nevada, charge cultivators a yearly growing fee, which for producers residing in the state is $3,000. By comparison, Connecticut demands $25,000 for the grower’s application fee and a staggering $75,000 annual license maintenance fee.

Other Factors to Consider

Indirect costs for opening a marijuana establishment can sometimes be just as costly as the initial startup fees. In most states (like Colorado), applicants have to be a local resident of the area for at least two years, and should not have any controlled substance felony convictions within five years prior to the date of the application. When it comes to financial assistance, the party providing the funds should also have a clean criminal history, based on the standards of the licensing authority.

If the requirements above didn’t faze you, then then you should be good to go in opening up your very own medical dispensary. Although the guidelines are strict, they are there to ensure that cannabis establishments are reliable in offering quality medicine for patients looking for organic treatments.

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