green leaf plants inside greenhouse

The Costs of Growing Cannabis Indoors & Potential Profits

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In this article, we’re going to show you some estimated costs and potential profits and revenues for indoor medical or recreational marijuana cultivation.

If you really want to know how much it’ll cost – down to the penny – the only way to do this is by creating a detailed, professional marijuana cultivation business plan.

. . .

 

Basic Assumptions

Here are the basic assumptions for indoor marijuana cultivation that we’ll use to make estimates:

  • Size of Warehouse – 7,700 sq. ft.
  • Capacity – 1000 plants
  • Estimated Yield – 350 pounds per harvest
  • Number of Harvests in a year – 4
  • Estimated Wholesale Selling Price – $1,250 per pound of medical/recreational grade marijuana

Initial Capital Investment

For a 7,700 sq. ft warehouse, the estimated initial investment would be around $810,700 to get off the ground and running. Here’s the breakdown:

  • Warehouse rent – $50,000 (first quarter)
  • Build out, improvements – $60,000
  • Growing equipment – $150,000
  • Lighting system – $120,000
  • Alarm & Security System – $45,000 (first year)
  • Operating costs (first harvest before profit, listed below) – $180,700
  • Administrative expenses – $50,000 (first quarter)
  • Licensing & legal fees – $55,000 (first quarter)
  • Other expenses, including salaries – $100,000 (first quarter)

Annual Gross Revenue

The 7,700 sq.ft. warehouse will produce around 1,400 pounds a year. If we multiply that by the selling price of $1,250 per pound, the total revenue would be $1,750,000.

Direct & Operating Costs

  • Electricity – $55,000 (for the grow lights, fans, pumps, etc.)
  • Water – $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
  • Labor – 7-8 employees, $50,000
  • Taxes – about $55,000

Thus, the direct cost of growing cannabis will be around $180,700 per harvest or $722,800 in a year since we’re projecting 4 harvests a year.

Summary

Initial Capital Investments – $810,700

Annual Revenue & Costs

  • Revenue – $1,750,000
  • Direct/Operating Costs – $722,800 (41%)
  • Gross Profit – $1,027,200 (59%)
  • Less: Other Operating Expenses
  • Rent – $200,000
  • Administrative expenses – $200,000
  • Licensing & Legal fees – $55,000
  • Other expenses – $400,000
  • Net Profit – $172,200 (10%)

The costs and capital for starting an indoor marijuana cultivation business can be quite large and can also get out of hand if you aren’t diligent about everything required to get this going.

We hope this article was helpful. If you’re serious about starting a marijuana growing business but don’t know where to start, grab a Starter Package so you can see everything you need to know and do, including all these costs, to make this business a reality.

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