Posted on

growing marijuana for profit

Over the course of the next few years, I worked with a variety of outdoor growers in the famous “Emerald Triangle” of pot-growing counties in Northern California. I acquired some good knowledge and made some extra cash, but struggled to find a role beyond seasonal work.

The business isn’t just for gangsters and degenerates anymore.

(Flashy cars, sneakers, and dab-rigs excluded).

The work is hard.

I’ve been a pretty avid pot smoker since I moved to San Francisco from Massachusetts in 2005.

Growing marijuana for profit

In an interview, Crosby said he felt abandoned after he had signed the memorandum with Senter’s partner. And he felt an affinity for Have a Heart’s COO, Ed Mitchell, who grew up in another rough part of the Bay Area. With Have a Heart, Mitchell said Crosby would also receive a payment of an undisclosed amount once they secured the license.

One company, Acreage Holdings, which closed on $119m in investment capital this summer, has enlisted the former Republican speaker of the House John Boehner to help it navigate the market. Boehner has never smoked pot – “he hasn’t felt the need or inclination”, according to a spokesperson – and he declared himself “unalterably opposed” to legalization when he was in office.

Besides the business challenges, America’s legal marijuana industry also has to reckon with an unavoidable moral dimension. The US has been engaged in a “war on drugs” since Richard Nixon declared it in 1971. While white Americans use marijuana and other drugs at roughly equal rates to African Americans and Latinos, in virtually every respect, racial minorities have been disproportionately incarcerated and otherwise punished for involvement with drugs, including selling marijuana.

‘A classic story of gentrification’

In California alone, tens of thousands of farms grow the plant, which is increasingly processed into gorgeously packaged vape pens and edibles marketed to customers outside the core stoner demographic of young men. Today, seniors are the fastest-growing group of marijuana users in the US.

The future looks very green indeed. But since New Year’s Day 2014, when Colorado opened the world’s first regulated recreational marijuana market, the business climate for weed companies has proven immensely difficult for a range of reasons, including high taxes, rapidly changing regulations and a still robust illicit market.

Marijuana farming in California

Of the state legalization experiments, California is, by far, the largest and most complex. For growers who operated in California’s gray and illegal markets and now want to transition into the legal market, the economics can be brutal. In the illegal market, an Emerald Triangle farmer might have sold a pound for $3,000 tax-free. Now the price is more like $600, before taxes and compliance-related costs.

A few weeks later he wrote to Senter’s partner: “I have decided not to work with you. Went another route.” Rather than work with his local partners, Crosby had decided to partner with Have a Heart, a dispensary chain based 800 miles away in Seattle eyeing expansion in Oakland.

Growing marijuana for profit

Annual license expense (with escalation)

When it comes to revenue, yield is king. Grow space will of course be a key component. When it comes to strategically planning your grow in advance, you typically want to stuff your grow with as many plants as possible, while not damaging the potential quality of the product. Naturally, a larger space will allow you to produce a higher yield. The grow space is also the key limiting factor on how much money your grow can produce.

#1) The size of the grow space

The state of your grow is surprisingly important in its potential profitability. The three ways in which the state make the biggest impact on profitability are license expense, revenue from wholesale price per pound and the operating electric bill.

Initial Alarm & Security Set-Up & Other Admin Fees – These would be expenses that could not be capitalized

#2) The state where the grow is located

When it comes to dealing with lighting systems in cannabis, price typically increases linearly with wattage. As we noted, there are a wide variety of opinions when it comes to the optimal setup when growing cannabis. Although higher wattage setups tend to increase yield, it may not be true for every scenario. The lighting system is an important consideration for a new cannabis grows both financially and operationally. For a medium size grow however, we can assume in most cases a higher wattage setup is generally more sophisticated and increases the costs relating to materials. Many small to medium size grows simply don’t have the capital to install and maintain the most advanced lighting systems.