Cost to Start a Grow Operation

Cost to Start a Grow Operation

The cost to start a grow operation can be quite high. But it ultimately depends on what you’re willing to invest.

Minimally speaking, the cost to start a grow operation that will turn a massive profit will usually range in the hundreds of thousands of dollars. However, if you’re looking to build out a grow room on a shoestring budget, it’ll ultimately come down to how many square feet you’ll have in your grow operation.

You’ll need to think about all of the variables involved to accurately determine your cannabis grow operation startup costs. In this post, we’ll cover all of the considerations to give you a good idea of the average startup costs associated with indoor grow rooms and outdoor grows.

Interesting in scaling your grow operation? Northstar is ready to help!

Contact us now to speak with one of our experts about how our financial services will grow your operations in this budding space.

growing cannabis in the legal cannabis industry

Growing in the Legal Cannabis Industry

So, how much does it cost to grow cannabis in the legal space? Well, if you want to grow marijuana legally, you’ll need all the equipment, real estate, and cultivation license.

First, let’s cover the licensing fees for a legal cannabis grow.

Application & Licensing Fees for Cannabis Cultivation

A legal cannabis grow operation needs to worry about the application and licensing fees first and foremost. These costs vary from state to state.

For instance, if you were to get a cultivation license in California for a 22,000 square foot canopy grow operation, you’d have to pay $4,945 for the application fee. You’d also need to pay the annual fee of $44,517.

Other states have their own specifications. But it’s important to remember that while you might save money growing cannabis illegally, it’s best to legitimize your operation.

Average Startup Cost Considerations in Cannabis

Think about how much cannabis you plan to grow. Then, consider whether you’ll use a grow room or focus on large-scale cultivation outdoors.

These operating costs will vastly differ from one another.

Here’s a list of average startup cost considerations for startup businesses growing cannabis.

square footage in cannabis grow room

Square Foot

The big question: how many square foot is your operation?

If you’re a master grower, you probably already know the cost per square foot for growing indoors is significantly more expensive than the average cost to grow weed outdoors. But for the new growers, this is still an important consideration.

If you plan to grow a few plants in your closet, this doesn’t apply to you. However, if you plan to use an industrial space, the price per square foot will rise.

The number of square feet in your operation really becomes costly if you’re planning to rent the space. For example, it could cost nearly $20 per square foot just to rent the space.

This is because landlords tend to charge more than four times as much for anyone looking to participate in the green rush. Regardless of whether you focus on outdoor grows or plan to get into a larger facility for an indoor grow, the ideal environment isn’t going to come cheap.

cannabis grow room with lights

Grow Lights

If you’re not using solar power or growing outdoors, you’re probably wondering what grow lights cost. Growing indoors means you’ll have less reliance on outdoor variables. However, you’ll need more equipment to enhance the environment.

So, how much does it cost to set up LED lights for a larger scale indoor grow?

LED lights are the most expensive option at first. However, they save money for your commercial grow. And this means you’ll get to keep more revenue or allocate it towards other business expenses.

The average cost, minimally speaking, it around $1,800. But this is just part of the cost to start a small operation with minimal plants.

Then, you’ll need to factor in the cost of electricity. But there’s more to it than that.

cannabis grow room air circulation with fan

Air Circulation

Grow room air circulation is essential for humidity control. But how much does it cost to get more fans running and humidity control systems in place?

More fans and more ventilation are needed if you have more plants in your grow room. This is how you maintain an ideal growing environment for your cannabis grow.

For a commercial grow, you’ll likely need to spend at least $100 on each fan. And if your commercial grow is massive, you’ll need quite a few fans and a ventilation system.

All of this costs money, of course. And for a decent size commercial grow, you should expect to spend at least $1,000 on the basic equipment you’ll need to produce air circulation that nurtures each plant.

commercial grow room electricity bill

Electricity

Your grow room will need electricity. But what should you expect to spend on it?

That’s like asking how much does it cost for your electric bill each money without knowing the size of your house and how often you run your air conditioner. This will vary from grow room to grow room.

So, how much money should you expect to pay monthly for your power bill? It depends on what you’re running and the equipment efficiency.

If you have a grow room large enough to generate significant profits, your power bill will probably be $1,500 or more.

watering cannabis plants for commercial grow

Water

Water is essential for cannabis cultivation business success. Some growers even choose to use it as their growing medium as an alternative to soil.

But this is something for master growers.

If you’re just starting your marijuana cultivation business, you’re probably only using water to nurture your plants and flush the soil before harvest.

Most of the time, you’ll spend the same amount on the water as you do on electricity. With this in mind, you’ll likely spend at least $1,000 per month on your water bill if you have a sizable business.

cannabis growing medium costs

Growing Medium

Think about the growing medium you plan to use. If you want to cultivate premium marijuana plants, you can’t go wrong with organic soil. Organic living soil, to be exact.

Organic living soil has all of the nutrients your marijuana plants want and need. And this is something you can’t usually get from hydroponics systems.

However, organic soil isn’t perfect for every type of commercial grow operation. If you plan to use a hydroponics system or some other growing medium like coco coir, you’ll pay less for your initial setup and ongoing costs.

The medium you choose will affect your initial and ongoing costs. So, these can vary depending on your situation.

Consider Rockwool, hydroponics, organic growing soil, and other options. They all range in price, but you can expect to spend between $15 and $30 per plant on the medium.

cannabis nutrients cost

Nutrients

Keeping marijuana plants healthy involves giving them the right nutrition. This is true, regardless of the medium you use for your grow.

The most common type of commercial cannabis fertilizer is a premixed blend that contains various nutrients, vitamins, and other chemicals your plants need to stay strong and resist disease.

Fertilizer costs will vary depending on the brand you choose and how often you plan to fertilize your grow. But, depending on how many plants you’re cultivating, you should expect to spend around $1,000 or more per harvest.

feminized cannabis seeds image

Feminized Seeds

Feminized seeds take the guesswork out of growing marijuana. Rather than risking growing male cannabis plants, you’ll know you have female plants growing.

This is essential to avoid wasting resources on growing male cannabis plants.

Most of the time, you can expect to spend between $30 and $60 on each pack. But ultimately, the cost for feminized seeds is related to the strains you plan on growing.

Indoor Grow Room Costs

An indoor commercial grow produces throughout the year. However, this requires expensive equipment, so expect an indoor operation to cost more money.

Even with this being the case, an indoor marijuana grow has the potential to generate between one and twelve harvests annually. But the initial expenses could exceed what you’re willing to spend on your new cannabis grow operation.

Here’s what you can expect to spend on large scale indoor grows:

Warehouse rental – $50,000+

Build out, improvements – $50,000+

Growing equipment – $100,000+

Lighting system – $100,000+

Alarm & Security System – $25,000+

Licensing & legal fees – $55,000+

Direct costs (first months before profit) – $200,000+

Administrative expenses – $50,000+

Other expenses – $100,000+

Total = $730,000+

Concluding on Grow Operation Costs

Your grow operation will cost more than just seeds and nutrients. You’ll find yourself spending on electricity, water, and other supplies to get your grow started.

You can cut down some of your expenses, but ultimately, you’ll need to account for everything you spend on. This is something that can be handled with financial services.

Looking to scale your grow? Northstar is ready to help.

Contact us now for insight into how our financial services will expand your grow in this budding space.

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Cannabis Dispensary Profit Margin Insight

Cannabis Dispensary Profit Margin Insight

Operating a cannabis dispensary? Thinking about dipping your toes in the cannabis industry as a dispensary owner?

In this post, we cover everything you should know about operating a successful cannabis dispensary from a financial perspective.

Looking for expert assistance managing your legal cannabis business’s financials? Northstar is ready to increase your dispensary’s profitability!

Contact us now to learn more about how we’ll enhance your weed profits with the right financial services.

average dispensary profit margin example

What is the Average Dispensary Profit Margin?

Whether you’re operating in medical or recreational marijuana, your average profit margin is important. Besides the cost of opening a dispensary, other expenses exist – and these will impact your profit margin.

Medical and recreational marijuana cannabis dispensaries usually operate with an average net profit margin between 15 and 21 percent after accounting for taxes. However, equally important to note is that this percentage varies in accordance with state or provincial regulations.

The cannabis dispensaries distributing medical marijuana and recreational cannabis usually have the best net profit margin. However, creative recreational dispensaries can dominate the dispensary space, too.

Cannabis Industry Banking Fees

Operating Expenses

After your initial investment to open your doors, you’re ready to operate. But ongoing expenses can affect profitability.

Here’s a list of the expenses likely to affect your operating profit margin:

Operating Expenses cannabis dispensary jars of buds

Cannabis Real Estate

Besides the initial licensing fees for cannabis businesses, dispensaries should expect to spend at least $100,000 annually in rent. But if you find real estate for cannabis that requires renovations, this could increase the initial cost to $50,000 or more.

However, if the cannabis dispensaries locations are purchased outright, dispensary owners mainly have to worry about property taxes impacting their net profit margin. For additional insight, make sure to check out our post on buying commercial cannabis property.

Cannabis Industry Banking Fees

Part of your estimated annual revenue will go towards banking fees. It costs money to have your own growing business, but the cost of banking is higher in this grey-area space.

Since cannabis is still technically federally illegal in the US, many banks still refuse to work with dispensaries. However, it’s still possible to work with credit unions and private marijuana banks in some regions. Even with this being the case, some of these organizations will charge holding fees as high as $2,000 per month.

cctv and cannabis image

Electronics

Cannabis businesses need electronics to operate successfully. Each square foot of space could be holding thousands or even tens of thousands of dollars worth of inventory. So, you’ll need a security system and a fully compliant POS system to manage your inventory.

cannabis advertising

Advertising Budget

Advertising budgets in cannabis vary, of course. But, depending on your location, you may need to invest more than a quarter of your annual revenues in an advertising budget to compete.

cannabis lawyer attorney

Attorney on Retainer

While a dispensary makes money, these earnings don’t always come without risk. This is why it’s a good idea to have an attorney on retainer.

Dispensaries are especially vulnerable to lawsuits. Thus, having an attorney ready for a worst-case scenario situation is always ideal in this space. This could cost up to $50,000 annually.

cannabis dispensary employees staff

Employees

Even a smaller dispensary serving the adult market will need a team to operate successfully. Depending on the size of your cannabis operation, your annual payroll could be $250,000 or more!

Operating Expenses

How Much Does a Dispensary Owner Make?

How much a dispensary owner makes depends on several variables. For example, medicinal weed sales might earn more in one cannabis market than it does in another. However, in some spaces, medical marijuana might not be as popular as adult use.

Furthermore, your cannabis business might grow its own marijuana indoors. This would minimize your inventory cost while allocating some of your operating income towards elevated utility costs.

The money dispensaries or cannabis retailers spend on inventory varies. Some might spend more to supply stores with special medical-grade strains while others need to focus on stocking other cannabis products like extracts or edibles.

Operating dispensaries isn’t an exact science. But you can learn a lot from your sales data and use this to increase your annual revenue and average profit margins.

But how much money should you expect as a dispensary operator? If your business generates over $5 million annually, you could expect to pay yourself an annual salary of $500,000+.

how much does a cannabis dispensary in sales

How Much Does a Dispensary Make in Sales?

Dispensary sales are much like coffee shops; annual sales depend on several factors.

Think about the market competition. Dispensaries focusing on patient access to marijuana can run a profitable company. But they miss the adult-use market.

However, entrepreneurs interested in operating a dispensary in the recreational marijuana space will need a strong marketing campaign to acquire customers. Medical dispensary businesses will also need marketing, but the operation can become profitable based solely on word of mouth if they’re in the right location.

If a location is saturated, running a profitable marijuana business becomes more difficult. Business opportunities become more profitable with less competition, and this holds true in cannabis, too.

cannabis and money

Tips for Maximizing Dispensary Profit Margins

Find Your Break-Even Point

Use the break-even formula to determine your break-even point. This is the point at which marijuana dispensaries break even, meaning this is the minimum dispensaries must earn to continue operating.

Check each month’s revenue receipts to determine whether you’re within the threshold of breaking even. Marijuana dispensaries are notorious for having high inventory costs. But if you’re selling enough product to cover all costs and then some, your cannabis supply store could be running at a profit.

Research Your Competition

Marijuana prices have been dropping throughout the US. As more competition enters the space, more marijuana is available, and this drives the price down.

Look at your competition. They likely use professional packaging, sales, and digital marketing to increase their market share. See what you can do and how you can improve upon what your competition is doing.

Improve Your Product Offerings

Whether you operate a recreational cannabis supply store or a dispensary focused on medical marijuana, you’ll need to offer more than just cannabis.

You need unique and preferred dispensary products to stock your shelves.

You might even go the extra mile for your customers by offering their favorite infused snacks or drinks. You can win over customers by analyzing what the market demands.

For example, your average supermarket might notice that more customers are looking for organic items. To compete with the local Whole Foods Store, it might begin offering more organic options.

For a dispensary, you might notice that more people are looking for quality concentrates. If this is the case, sourcing these products from top producers could be a good idea. While you might need to charge a premium, you could maximize your profit margins by offering products no one else is offering.

The same goes for impressive flower strains, edibles, and other product offerings.

Offer Promotions

Doing promotions on a limited-time basis is a good way to increase dispensary sales. And if it’s something you can purchase in bulk at a great price, you could increase your profit margins tremendously with the right promotion.

For example, you can run a promotion offering a first-time discount on concentrates on first visits. You could even try implementing a loyalty program that offers customers high-quantity discounts for purchasing regularly from your dispensary.

You might also consider providing a daily deal. You could offer 50% off a single item or a free gram with a purchase of an ounce.

Streamline Your Operations

One of the simplest most direct ways to optimize a dispensary’s profitability is to make it more efficient. Identify your operation’s daily functions and look for ways to reduce costs. With the right system of checks and balances in place, you can ensure your business is operating as cost-effectively as possible.

Business owners should also make every effort to only carry the products they need. Being selective about inventory will help save on monthly carrying costs while minimizing costs related to these risks.

For example, if you’re already paying rent for space, using that space effectively can increase dispensary revenue and profits. What’s more, adding storage shelves or cabinets to that space can help you store more product, allowing you to purchase in bulk at a discounted rate.

Manage Your Inventory

Inventory control is one of the most critical aspects of operating a marijuana dispensary. Government regulatory requirements in the US demand dispensaries closely monitor their inventory. Without a POS system in place to manage inventory data in real-time, inventory audits and discrepancy reporting are nearly impossible, and this can result in costly compliance violations that put dispensaries out of business.

Also, if you lose track of what you have, you could find yourself with excess products and nowhere to store them. Or worse, if your records aren’t accurate, you could run out and jeopardize the health and well-being of your customers.

You can avoid these issues by ensuring that your inventory records are organized and up-to-date. This can also help you make better purchasing decisions moving forward.

Consider Costs

Staying mindful of dispensary costs is essential for success in this competitive industry. Profitability depends on bringing money in. But if costs become too excessive, this can become a serious problem.

Regularly monitor your dispensary expenses and make adjustments as needed. Focus on the expenses that have the most significant impact on the business’s profitability, and outsource critical non-retail operations to experienced professionals.

Think about your marketing activities and how you can enhance them. Use your sales data insight to get the most out of your marketing budget, as well.

Dominating the Cannabis Industry with Northstar

The marijuana industry is growing exponentially every year, and attracting more people to the market means that there’s room for many dispensaries to do well in spite of competition from larger businesses.

Looking to increase your dispensary’s profitability? Northstar scales dispensary profit margins successfully with the right financial guidance.

Contact us now to learn more about how we’ll grow your dispensary in this budding space.

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Fractional CFO Services for Cannabis

Fractional CFO Services for Cannabis

An experienced CFO is critical for ensuring compliance with the many rules, laws, and regulations that govern all aspects of legal cannabis.

As the legal cannabis industry continues to grow, so does the demand for professional business-to-business services such as finding an experienced and passionate chief financial officer or a bookkeeper that understands your unique challenges. And in the cannabis space, these services are essential for success.

But the option to hire a full-time business advisor or chief of financial operations isn’t always available. Whether it’s because of budgetary limitations or it’s too early to justify bringing full-time financial professionals into your business, a cannabis company doesn’t always need a full-time CFO.

Fractional CFO for Your Cannabusiness

So, how can cannabis operations obtain the business accounting, strategic planning, long-term CFO partner they need?

northstar financial consulting group cannabis fractional cfo services

Northstar’s Fractional CFO Service for Cannabis

Keep reading to learn more about what we do as fractional CFOs and how we’re accelerating growth for business operators in the cannabis space.

Looking for an extraordinary outsourced CFO firm? Northstar has the financial professionals you need.

Contact us now to learn how our fractional CFO services save your business money while we scale your operation with services specifically for the cannabis space.

Northstar’s Fractional CFO Model

save money

Save Money

You don’t need to hire a full-time bookkeeper or CFO. In-house CFOs demand high salaries estimated up to $578,054 annually with benefits. And let’s not forget the added cost for overtime.

This is just one of the benefits of hiring a fractional CFO for cannabis.

A fractional Chief Financial Officer will handle your operation’s needs at a fraction of the price. Rather than paying for a bunch of services you don’t need, you get what you need when you need it, with expert precision from Northstar.

save time

Save Time

You don’t have to spend hours looking for finance professionals. The interview process is long and challenging; in some cases, you might have to try multiple candidates to find the right fit.

So, should you outsource your CFO service? A fractional option is usually better and here’s why.

With fractional CFOs, you can try before you buy. Rather than going through the entire hiring process, you’ll be able to make a quick hire for the services you need.

If it doesn’t work out, you don’t have to start that long process all over again. Simply move on to the next fractional candidate until you find the right fit.

scale up cannabis trimming

Scale Up or Down Quickly

It’s easy and affordable to scale your operation with our fractional CFO model. This is the entry point cannabis businesses need to begin scaling.

Some seasons are busy. This is when you’ll want to scale fast with more services.

However, there will be times you’ll need to scale down. For example, your business might have other financial demands it needs to fulfill. By scaling back these services, you can allocate those funds appropriately to support your operation.

Immediacy to Cut Costs

Immediacy to Cut Costs

The time spent hiring a new team member costs your business money. With this in mind, the immediate placement we provide saves time and money by limiting the time you devote to hiring.

Your business’s financial needs are critical; you need immediate assistance with business accounting, raising capital, and more.

Through Northstar, you fulfill immediate necessities. For example, if your current CFO leaves suddenly, you can replace them fast and continue operations without delays.

giving ideas for cannabis business

New Perspectives for Your Cannacompany

It’s always ideal to have fresh perspectives for your business. And the experience we have in cannabis will offer ideas that your team might not consider.

Goals and plans can limit the way your team thinks. But someone who isn’t involved in the daily operations will offer a viewpoint only achievable from the outside looking in.

For difficult decisions, this is valuable. Our impartial advice will help you navigate challenges that hinder success, allowing you to scale more easily.

more knowledge brain

More Expertise & More Knowledge

Expertise and knowledge go a long way in the cannabis space. This is especially the case for operations that don’t want to pay the hefty price tag of a full-time team.

You don’t just get one person working on your business’s success. Instead, you have our entire team with experience operating in the cannabis space.

fractional cfo for cannabis businesses

Fractional CFO Services for this Elevated Space

The right fractional CFO service can provide the niche-specific business expertise your cannabis company needs to grow while keeping your access to these services within financial reality.

A fractional CFO service is just that: a handful of talented professionals who act as “sub-CFOs” for small businesses and startups. They share responsibilities with an outsourced general accounting team, bookkeepers, and other financial experts all while working under one cohesive fractional business consulting service.

Northstar’s Services

Our fractional CFO services are the perfect solution for cannabis companies that do not need a full-time finance advisor or team to run operations. As your fractional CFO partners, our professionals offer experience in assessing business plans, managing virtual teams, and creating actionable strategies for growth.

cannabis cfo

Fractional CFO vs. Full-Time CFO Services

While a fractional CFO and a full-time CFO focuses on accelerating growth, the fractional CFO model comes with an assortment of benefits.

cannabis cfo

Full-Time vs. Fractional CFO Cost

Traditional CFO services are more costly on a month-to-month basis when compared to our fractional CFOs. This is because they provide CFO services, even when they might not be needed.

The fractional CFO model allows cannabis operations to overcome financial challenges as they arise. Rather than paying for a full-time CFO, you receive cost savings because you use the services as needed.

Not all cannabis businesses are ready to bring in a full-time team. Thus, hiring one in-house tends to be more expensive than most fractional CFOs.

However, fractional CFOs are ideal for many cannabis operations because these services give the business owner the capacity to scale up or down as needed. This freedom allows cannabusinesses the ability to overcome financial challenges like raising capital and cash management when needed. But it also helps with optimizing resources.

For example, your operation might need assistance from finance experts during the busier time of year. But when your growing business is having cash flow issues, you have the option to scale back the finance and accounting services for the time being.

fractional cfo faq

Fractional CFO FAQ

What is a fractional CFO?

A fractional CFO is a finance professional who partners with small businesses and large-scale operations to offer financial services. In the same manner as a full-time team, fractional CFOs provide business owners accounting expertise and financial guidance.

But because these professionals are only available part-time, they help you pursue growth strategies when your needs arise.

Why should I choose a fractional CFO over a full-time finance team?

By hiring Northstar as your fractional CFO partner, you get access to experienced accounting and financial professionals at a fraction of the cost. But what’s more, the connections we have acquired by working with the cannabis sector are conducive to scaling your operations.

Rather than hiring a freelancer to handle your accounting, you have a team dedicated to your success. Our industry connections make it easy to obtain the financing and other services your growing business needs to scale.

Let’s say your hope is to build your company to the point you can offer stock options. Or perhaps you need help creating and implementing a financial strategy that will work for your operation.

Strategic planning is our bread and butter, and since we’re knowledgeable about cannabis nuances, we can act as your trusted advisor every step of the way!

How much does a fractional CFO make?

You’re probably wondering how much a fractional CFO earns. This varies from industry to industry, as well as how much time they dedicate to each company.

The beauty of the fractional CFO model is that the individual can also work with other businesses. This means that rather than being limited to one company, a fractional CFO can service other businesses on a part-time basis.

Many fractional CFOs will work on a project basis. However, at Northstar, we want to be your long-term CFO partner instead. This means we get to know your company, the people that make it great, and your plans.

Whether you hope to make an exit strategy a few years down the road or want to build something sustainable, we’re here to help with expert accounting and other financial services on a fractional basis. Our mission is to set your company for scaling its operations as your fractional CFO partners.

cfo cannabis businessman

Why is a CFO a fractional?

So, why is a CFO a fractional CFO as opposed to a full-time accounting and finance expert? Some choose to become freelance CFOs for additional freedom. However, at Northstar, we believe that a fractional CFO stands to help most companies operating in cannabis with the specific challenges this industry presents.

Top companies operating in the cannabis space are overcoming obstacles daily. But what about the small business that’s just starting out? Or the small companies that have highs and lows throughout the year?

This is why we provide high-level fractional CFO services as opposed to full-time or interim CFO services.

Cash management is one of the most significant problems a cannabis business will face. But these operations still need a trusted advisor to lead board meetings, analyze current finances, and ensure exit strategies prioritized are on track in accordance with the company’s financial statements.

We want to make sure every cannabis business has access to a trusted advisor when a company needs a high-end CFO. General accounting is important, too. However, without specialization in the cannabis space, hundreds of millions of dollars can be lost as these organizations implement without the right guidance.

fractional cfo cannabis

Fractional CFO Financial Strategy for Cannabis

The fractional CFOs at Northstar work exclusively with businesses operating in cannabis. We understand how financial forecasts and financial strategy should work for this space.

Financial modeling for the cannabis sector must consider the specific financial challenges of this industry. This, of course, includes all compliance-related issues that can come up.

Optimizing cash flow is especially important for this space. And for large-scale organizations managing multiple companies in this industry, operational strategies, maximizing shareholder value, and planning for exit strategies are all important considerations for maximizing profitability.

For a privately held company with diverse management projects, private equity funding could be essential to financing real estate and other large purchases. But other diverse management projects within the company might need accounting and other financial services, too.

Northstar’s Fractional CFO Service

As your fractional CFO, we can serve as your interim CFO between hires. But we want to become your strategic planning partners long-term!

As your fractional CFO partners, your success is our priority. Rather than bringing in a full-time Chief Financial Officer, you’ll have our professional team focused on accelerating growth with a proper cannabis-specific financial strategy.

With Northstar, you never have to worry about compliance-related risks. We remain vigilant in our data acquisition, ensuring we always have the right answer at the right time.

Looking for a part-time CFO to help your cannabusiness navigate this space? Northstar is here to guide you!

Contact us now to find out how our services will help your cannabis operation scale in this budding space.

California Cannabis CPA Accounting Services

California Cannabis CPA Accounting Services

More often than not, cashing in on the cannabis industry can be tricky, especially when you’re new to this type of business.  It is also very likely that you’ll need assistance with organizing and filing your taxes if you come from a background in non-cannabis-related businesses.

Keep reading to learn how our experts minimize tax liability and maximize cannabis company profits with the right systems and procedures in place.

Looking for a cannabis CPA in California? Let Northstar lead the way!

Contact us now to speak with one of our tax and accounting experts about how to scale your operation with financial expertise.

california cannabis cpa

What is a Cannabis CPA?

A cannabis CPA offers tax and financial services for the people and companies operating in the legalized medical and recreational cannabis spaces in states throughout the country. These services involve handling taxes, business structuring, and obtaining financial support.

What does a cannabis CPA firm do for cannabis CEOs?

A CPA that exclusively serves cannabis companies understands the industry and the federal and local laws surrounding it. It’s always best to go with a specialized cannabis CPA firm as cannabis companies need more than generalized tax services.

The cannabis industry is a special sector, and as such, it demands industry expertise to ensure compliance. Accounting from public accounting firms has the potential to cause problems, even with something as simple as tax preparation.

While working with a cannabis CPA firm, cannabis CEOs partner with an accounting firm that understands cannabis accounting. From tax services to assurance services, someone who specializes in cannabis accounting will provide the proper guidance to ensure compliance with internal controls and industry-specific professional advice.

How do these ancillary services help cannabis CEOs scale their operations?

Cannabis accounting is a specialized field and should be treated as such. While the federal government has placed various restrictions on our cannabis clients, our mission is to handle all regulatory challenges in place to ensure appropriate tax planning and other services to cannabis companies.

Cannabis CEOs can rest assured that federal-level accounting issues never become a problem. By working with Northstar, CEOs operating in this industry are guaranteed compliance and ensure their businesses are always audit-ready.

The California Board of Accountancy (CBA) on Cannabis

The California Board of Accountancy (CBA) on Cannabis

The California Board of Accountancy (CBA) understands that a certified public accountant interested in providing accounting or advisory services to cannabis-related industries will need to understand this space. However, some advisory firms also have an interest in operating with cannabis clients.

At this point, the CBA is not able to issue legal opinions on cannabis accounting services. With this being the case, no position statement is to be issued by the CBA on this topic.

However, the CBA has issued some insight into operating a CPA firm that serves the cannabis industry. Here’s a quick FAQ that answers questions an industry-specific CPA firm might ask:

CBA Cannabis Industry CPA Firm FAQ

What is the new California law about cannabis that just passed?

California Governor signed Assembly Bill (AB) 1525, which took effect January 1, 2021. This bill provides a safe harbor for licensed individuals or firms that practice accounting if they render services to California’s cannabis industry.

The bill states that authorized persons or entities do not commit a crime under California law if they receive deposits or provide transportation and financial services to people licensed in commercial cannabis activity. However, the authorizations can be rescinded by the licensee at any time.

Can we accept a Licensed Cannabis Business as a client?

AB 1525 will take effect on January 1, 2021, and it provides that those who practice as a Certified Public Accountant in California can offer services to cannabis entities without it being considered criminal.

What are the potential risks of providing services to a Licensed Cannabis Business?

While it is legal to use cannabis products from state-licensed businesses in California and more than half the other individual states, they remain illegal federally.

Federal law states that any entity that supports illegal activity or accepts fees from it is engaging in racketeering. This means accounting firms, banks, insurance companies, and financial institutions may be breaking federal laws by doing this. It’s important to consult legal counsel before entering into such an arrangement because of the consequences.

Any other factors to consider when choosing to accept a Cannabis client?

In August 2016, the 9th Circuit Court ruled that medical marijuana laws are legal in accordance with state law. The federal government cannot prosecute people who grow and distribute medicinal marijuana under state laws because it would be unconstitutional to do so.

The decision to allow medical marijuana in the state of Arizona was based on a few factors. One factor is that Congress has passed laws preventing federal agencies from interfering with states’ implementation of their own statutes regarding medical marijuana.

As the differences between states and federal laws persist, Certified Public Accountants (CPA) are becoming more concerned with their professional liability insurance policies. In order to reduce the risk of a lawsuit or claim against them, CPAs should take note that there may be exclusions in their policies.

Cannabis Companies & Federal Law

Cannabis Companies & Federal Law

Cannabis companies must comply with state and federal law. But when it comes to laws at the federal level, cannabis accounting firms must know how to navigate them appropriately.

Business expenses for adult-use and medical marijuana-related operations are the same in both of these spaces. However, when it comes to deductions for expenses, these operations need a crafty accounting method to minimize tax liability.

As mentioned earlier, public accounting firms can cause problems with things as simple as tax preparation or filing returns. Accountants may be unwilling to work with companies working with or selling cannabis due to a lack of education and knowledge about the industry.

Accounting Services for Cannabis Business in Cali

Our cannabis accounting firm has a combined 120+ experience working with cannabis. As a full-service financial firm, we handle everything accounting-related for our clients.

From tax planning and compliance advisory services to ensuring our clients are committed to compliant practices, we’re here to help any legal business operators working in the cannabis industry.

Financial Services for the Cannabis Industry

Bookkeeping & Internal Accounting

We encourage efficiency and increase scalability long-term with our virtual accounting and tax offerings.

Here’s what you can expect:
  • Comprehensive & up-to-date books to offer the IRS everything they need to see in case of an audit.
  • Historical financial records cleanup to ensure all taxes and money owed have been handled appropriately.
  • Monthly reconciliation pack to ensure audit & investor readiness that helps companies bypass potentially critical issues.
  • Auditable & accurate cost accounting, including payroll management and other aspects of your operation that the IRS wants to see in your documentation.
  • Present monthly financial statements to keep the focus on your company’s success.

Controllership, Financial Processes, & Controls

The economic impact of COVID-19 has made these business accounting services more important than ever. With these our expertise in the cannabis sector, your business will meet its financial goals through improved governance and due diligence.

Here’s what you can expect:
  • Optimize financial systems in preparation for tax season.
  • Create & manage financial policies & procedures.
  • Internal & external audit preparation to satisfy the IRS and minimize tax liabilities.
  • ERP and IT system integrations to maintain adequate records of everything from the cost of goods sold to taxes.
  • Assess & manage financial risks to minimize tax liability and optimize money.

Chief Financial Officer (CFO) & Treasury

Northstar provides value to your business by improving inefficiencies, reduce expenses & enhancing earnings.

Here’s what you can expect:
  • Accounting and financial oversight for your cannabis business.
  • Cash-flow planning & management for your business.
  • Financial modeling & forecasting to set a roadmap for your business.
  • Key performance indicators & MIS dashboards to keep your business on track for success.
  • Strategic financial insight & analysis to keep the focus on your goals.

Investor & Board Management

Northstar gives advice and increases confidence for shareholders, board members, and company leadership. This leads to reliable partners that trust in your business as operators incorporate strategies that scale.

Here’s what you can expect:
  • Annual & interim reporting for sales, pay, distribution, and more.
  • Quarterly financials & business updates for the account.
  • Financial interface for board members & investors to focus on the success of the operation.
  • Board representation for partners.
  • Business decision support for everything, from costs and payroll to taxation, and more.

Fundraising & Development

Besides tax- and accounting-related services, Northstar will help you meet your short- and long-term capital goals. By structuring beneficial transactions and establishing crucial relationships, your operation will thrive.

Here’s what you can expect:
  • Robust financial modeling, equity valuation & capital-raising strategies.
  • M&A and strategic exit insight.
  • IPO support every step of the way.
  • Due diligence oversight to ensure the best decisions every time.
  • Business plans & investor pitch decks to showcase your operation to investors.

CEO Strategic Advisor

Northstar shapes and implements strategies to drive long-term profitability and support CEOs while enabling them to focus on their core mission: growing their cannabis businesses.

Here’s what you can expect:
  • Advice on business strategy.
  • Counseling on cash flow and capital structure.
  • Supporting/challenging business decisions for when you need it most.
  • Conveying business performance and concerns to the Board.

Cannabis Industry Success with Financial Services

Working with Northstar is easy. Visiting our website is the first step. Now it’s time to book your free consultation.

Schedule a time to speak with one of our experts and provide us with some insight into your operation. We’ll then develop the best strategy for your business.

Next, we’ll create customized solutions for your review. Once you’re happy with the plan, we’ll begin implementing it immediately.

Now it’s time to scale your business. The right systems, processes, and financial support will set your business up for ultimate success!

The Guidance Cannabis Businesses Need to Succeed

Looking to scale your cannabis company’s operations? Northstar is here to lead the way!

Contact us now to speak with one of our experts about how our California cannabis CPA services will grow your business in this budding space!

If you liked this article, make sure to check out our other articles, too!

Cannabis Banking California Insight

Cannabis Banking California Insight

The California cannabis industry has not come this far without feeling some growing pains. But, besides state law overregulating this industry, even a business operating with California law in mind has a serious obstacle to overcome.

Of course, we’re talking about the banking situation.

The Cannabis Industry Banking Dilemma

The financial relationship between cannabis operations and the finance industry has been strained. Due to the legal implications put in place at the federal level, banks and credit unions have not been able to provide safe harbor for these operations.

But as legal cannabis has expanded, more banks and credit unions have begun providing services that aim to enhance legal business in this industry. Even without the full support of President Joe Biden, California law has become more progressive for the legal cannabis space.

In this article, we discuss how California state laws regarding the financial industry have changed. While a business operating in cannabis used to have to operate on a cash basis, we see California opening the industry with its bill, the SAFE Act.

Looking for financial services to scale your business in California? Northstar understands that these services are core business necessities!

Stop operating on a cash basis! Contact us now to learn how we can provide a safe harbor for your business in the cannabis space.

cannabis banking california insight

Banking Options for Cannabis Businesses

Recently, the House approved a cannabis banking bill that has the potential to expand California’s cannabis industry. This legislation lets banks provide financial services to cannabis businesses in states that have already legalized cannabis.

The bill clarifies that the money earned by legitimate cannabis businesses is not illegal, directing federal regulators to create rules regarding how they will supervise cannabis banking activity.

Historically speaking, many banks have refused to work with cannabis companies. It’s even been a challenge to find a credit union willing to work with cannabis!

These financial institutions justifiably feared they could violate federal laws by working with cannabis operators, despite the existence of the legal cannabis industry.

With this being the case, few options – besides operating on a cash basis – were available for cannabis companies. Only a few financial institutions were willing to offer banking services, which meant many had to conduct business in cash.

What is the Safe Banking Act 2021?

The SAFE Banking Act of 2021 was a bill that the American Bankers Association lobbied aggressively to pass. This group wrote the following to lawmakers:

“Banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it. Congress must act to resolve this conflict.”

Through the SAFE Banking Act, the cannabis industry obtains access to banking services and other financial services. Financial institutions no longer have to fear that they’ll get penalized for providing these banking services to legitimate cannabis businesses.

Now that the SAFE Banking Act has passed, California cannabis businesses have more options for financial services than ever before. Rather than being limited to a handful of financial institutions and credit unions, those operating in the state’s cannabis industry have more accessible options in the banking industry.

California cannabis industry association on banking

California Cannabis Industry Association on Banking

Giving businesses the ability to access loans and other banking services is essential for any company. But for a cannabis business operator, these services have been hard to come by.

Due to the Controlled Substances Act that the federal government put in place, state financial institutions and credit unions have been hesitant to take on cannabis clients.

Handling marijuana-linked money is scary for other financial institutions, including many California banks. But despite many banking institutions refusing to work with adult-use and medical cannabis business operators, California law has enabled more access to banking services for the marijuana industry.

CCIA Partnership with North Bay Credit Union

The California Cannabis Industry Association has also announced its exclusive partnership with the North Bay Credit Union. Through this partnership, CCIA members have direct access to banking, which has allowed licensed cannabis businesses the opportunity to get the banking services they need.

The struggle to pay staff and vendors without access to financial institutions encouraged this partnership. Even though many cannabis companies operate compliant businesses, they lacked access to banking.

The CCIA, a state and federally registered nonprofit trade association, lost its third bank account in a year during 2017. The association then decided to partner with the NBCU to gain access to the financial services it had been denied.

Through this partnership, members of the CCIA were able to bypass the financial institutions that refused to provide marijuana companies with wire transfers, ACH processing, and other banking services. Now, members of the CCIA have various banking options, including access to:

  • Checking accounts
  • Online bill payment
  • Wire transfers and ACH processing

Even the employees of CCIA members have access to these services if they join as individual members of this credit union.

Financial Crimes Enforcement Network Marijuana Banking Update

According to the Financial Crimes Enforcement Network (FinCEM), the number of financial institutions banking for licensed cannabis businesses has shown a slight decline since the 1st Quarter FY2020 (December). This began with the release of FinCEN’s guidance for providing financial services to those operating hemp-related businesses.

However, it’s possible that the COVID-19 pandemic is increasing this decline for the following reasons:

  • Many adult-use cannabis and medical marijuana dispensary operations have ceased operations because of government-imposed quarantine restrictions.
  • Even though the 90-day window for filing Suspicious Activity Reports is still in place, more financial institutions lack the staffing needed to file these reports efficiently. This has caused delays.

Cannabis Industry Banking FAQ

Can dispensaries in California use banks?

Since financial institutions are at risk while offering services to dispensaries, many choose to avoid working with them.

Thus, many California dispensaries have not been able to use direct deposit, checks, and credit card transactions. But what’s worse is how many dispensaries have had to resort to solely accepting cash or cryptocurrency.

Will banks finance cannabis?

Traditional banks are not willing to lend to Cali cannabis businesses. With this being the case, federal legalization could change this. But with the Safe Banking Act’s passing, cannabis businesses can now find reliable capital sources.

Concluding on Cannabis Banking in California

Whether you operate in Santa Rosa or Los Angeles, banking has likely been an issue for you if you operate a cannabis business. But with the passing of the Safe Banking Act, the industry now has more options than ever before.

Since the passage of this bill, more financial institutions have begun offering services to cannabis companies. But it’s important to be aware that many individuals within these institutions still have mixed feelings about supporting dispensaries.

Nevertheless, California cannabis business owners should keep their eye on the future. With more banks finally willing to work with them, prospects are looking brighter than ever before.

Interested in scaling your California marijuana business? Your experts at Northstar are ready to help!

Contact us now to learn how our financial services will expand your operations and minimize your tax liability in California.

We noticed you enjoyed reading about cannabis banking in California. If you liked this article, make sure to check out these other articles, too!

Starting a Nursery for Cannabis

Starting a Nursery for Cannabis

You’ve heard about the countless successful nurseries popping up all throughout the U.S. But having your own plant nursery changes when you choose to focus on cannabis instead of fruit trees, and tree seedlings.

You likely won’t find cannabis clones at garden centers any time soon – and for several reasons. Over the past few years, some growers have made the switch from growing trees and crafting potting soil to cultivating smaller plants; namely, cannabis.

Each successful plant nursery is selling plants to retail garden centers and acts as a wholesaler. But these sales come from potted trees, like Japanese Maples and other big plants that many nurseries grow.

While some small growers still want to propagate trees and create potting mixes from cow manure, many are making the switch to cannabis. But starting from the cannabis seed, everything is different.

In this article, we cover what goes into starting a nursery for cannabis, the regulations these businesses must adhere to, and how growing cannabis can be more profitable than selling a thousand trees annually.

Wholesale nurseries make more money with the right financial services! Step by step, Northstar will transform your plant nursery into a successful nursery.

Contact us now to learn how our experts will help you scale your part-time operation into a full-time business.

cannabis nursery

Cannabis Nurseries Are Different

The small business operations you buy your seed, the way you distribute, and the methods used to save money are all unique to this industry. Even the growing season is different – unless you grow indoors, of course.

Other nurseries can go to garden shows to obtain industry insight. But for a business responsible for growing plants that are still prohibited under federal law, they’re dealing with high value plants that must be grown in accordance with state regulations.

A simple Google search for softwood cuttings will reveal hundreds of nurseries that specialize in these cuttings. However, searching for cannabis seed, clones, soil, and other industry-specific products will solely reveal businesses that have focused their marketing on search engine optimization.

Since cannabis is still federally illegal, “free advertising” is essential. Pay-per-click options aren’t available just yet. However, despite the lack of paid advertising available, SEO can be quite costly.

Regardless of such, it’s important to know that this isn’t the only way cannabis nurseries can advertise. Despite these being tough times for cannabis nurseries to go into business, some websites and publications will allow marketing for nurseries. But these are niche-specific publications as opposed to the more mainstream advertising options.

As you can see, these operations aren’t all about their cuttings and plants; there’s more to this unique industry than meets the eye. But let’s cover more of the considerations you’ll face choosing to grow cannabis instead of trees and other more common plants from seeds.

cannabis nursery

The Start of a Cannabis Plant Nursery Business

Before starting a business specializing in cannabis seed and clone production, you’ll need a nursery business plan. This is especially the case if you plan to bring in investors.

cannabis nursery business plan

Planning Your Cannabis Plant Nursery

Your plan and pitch deck should showcase your plant nursery goals, and at the same time, it should offer your strategies. Give an analysis of the market, organizational structure, financial information, and operating plan on your own schedule.

Introduction

Your plan should offer an introduction for your plant nursery. This is where you’ll include an Executive summary and an overview of the market.

Your market overview should provide insight into the market, your target market, how you plan to price your products, and SWOT analysis.

Marketing Strategy

Your marketing strategy should offer insight into the sales forecast. This will include online advertising obstacle outlines, a marketing plan, competition analyses, target customer outline, and sales forecast.

Operational Overview

The operating plan should offer insight into the operations of your plant nursery. You’ll include what you plan to offer, how you plan to offer it, where you plan to grow, product assumptions, a physical security plan, transportation outline, and tracking solution. This is minimal information, and more information is always better.

Considering the products you plan to provide is essential in your plan. Whether you plan to offer clones, seeds, mature or young plants, flower, or something else, you’ll need to list out everything you plan to do as you’re selling all your plants.

Organizational Structure

Think about how your plant nursery should be structured. You’re not running a simple backyard nursery here; you’re starting a nursery for selling plants that are prohibited by the federal government.

You’ll need to determine how you’ll abide by regulations within your organization. This will include security and traceability, as well as training employees to adhere to compliance standards.

You’ll also need to consider cannabis waste removal. How will you remove waste products from the premises in accordance with local regulations?

How many plants can you grow? And how will you transport for retail, package, and process your products?

Consider every aspect of your plant nursery and describe the operations planning and production process. This should include soil, equipment, fertilizers, and other products used in the operation, as well.

Financial Plan

Your financial plan should outline a funding analysis. Where will you get the money for starting a nursery and maintaining its operations?

Your goal here is to provide a breakdown of your expected direct and operating expenses, as well as a forecast for your profits and losses. If you have cash flow, you should also include this statement, along with the main ratios and a balance sheet.

cannabis nursery

Cannabis Nursery Business Financials

Before you begin propagating plants and creating your secret own potting mixes, you likely want to know more about the financials. What should you expect as you cultivate healthy plants?

cannabis nursery profits

The Potential Profits

The profits can be pretty impressive.

Similar to retail nurseries, your business might want to produce clones. One plant is capable of generating many clones. This is why it’s crucial to choose plants wisely.

Your healthy mother cannabis plants should be able to produce between 15 and 30 healthy cannabis clones monthly. However, equally important to note is that this can vary depending on the plants’ health and capabilities.

An operation that’s around 1,000 square feet could hold between 20 and 40 mother plants. If your mother plants produce 15 to 30 healthy cannabis clones monthly, you’re looking at between 300 and 1,200 clones produced each month. You might even be able to get more clones out of a nursery this size.

Small growers commonly sell clones for between $3 and $15 apiece. Thus, on the conservative side of this small business, you’re looking at around $900 to $18,000 worth of clones produced monthly.

The price will vary with several factors, including whether your buyer is purchasing clones in large quantities, the frequency at which you’re selling to the buyer, the demand for your genetics, and more. But if you’re operating as a reputable cannabis grower in California or elsewhere, you should find it easy to sell your clones.

If you’re creating your own genetics, some small growers might even be interested in purchasing a seed (or several hundred) for a personal garden or commercial grow operation.

cannabis nursery expenses burning

The Potential Expenses

Profits cannot come without expenses. And if you grow your plants from a seed and sell off the cuttings, it’s important to consider all expenses involved.

Your costs will vary, of course. Some areas are more expensive to own or lease property than others. Then you need to consider your cannabis grow licenses, utilities, marketing, labor, soil and other plant costs, pots, and more.

Cannabis taxes also vary from state to state. For example, if you’re a small grower in California, you’re likely to spend more than a home based nursery in Colorado.

cannabis unique taxes

Cannabis-Unique Taxes

Taxes on cannabis plants are important to think about. Cannabis nurseries must tread lightly and abide by all cannabis cultivation, excise, and sales taxes in place. Immature seeds, mature plants, and clones all have unique tax liabilities to consider.

For instance, in California, the following is how you’ll handle taxation:

  • Cultivation tax: Cultivation taxes don’t apply to nurseries that sell immature plants, clones, and seeds.
  • Excise tax: Immature plants, seeds, and clone sales can be sold to other cannabis licensees. But distributors have to transport cannabis from your business to the other licensees. If you’re selling immature plants, clones, and seeds to a retailer, the distributor will need to collect a 15% cannabis excise tax from the retailer.
  • Sales tax: As a cannabusiness operator, you don’t need to worry about sales tax unless you’re selling cannabis items in the retail market. If you’re simply selling cuttings (clones), seeds, and immature plants to cultivators and small growers, sales and use tax won’t apply to your operation. So long as the products grown from your immature plants, seeds, and clones will be resold as part of the cultivator’s regular business operations, you won’t have to worry about sales and use tax.

Choosing the Right Nursery Grow Site

outdoor cannabis nursery greenhouse

Outdoor Nursery

The right grow site makes a world of difference when operating a cannabis producing garden. A production facility might be better than a retail storefront, especially from a financial standpoint.

As a garden operator, you’ll benefit from having a remote location for your operation. These tend to be more secure, offer logistical benefits, and encourage future expansions.

Depending on your state, you might face restrictions if you plan to produce and open a grow facility. This could mean you’ll need to steer clear of public schools, transit centers, libraries, parks, and places that cater to minors.

Some states require outdoor production facilities to have an established location that’s enclosed by a wall. For example, Washington State needs nurseries to have a physical barrier that’s at least eight feet tall. Other states, namely Colorado, require cannabis growers to grow in a secure, enclosed grow that includes semi-permeable roofing and tall fences.

The Pacific Northwest allows outdoor cannabis production, which is great for plants that are 10 feet tall or more. These areas allow large-scale outdoor cultivation operations, and these businesses will want to get to know your plant nursery from the bare root all the way to the leaves!

indoor cannabis nursery

Indoor Nursery Facilities

A different type of grower will want to check your indoor plants from the bare root to their leaves; these growers go for quality as opposed to quantity, allowing nurseries to serve exclusively to a premium market as the cannabis industry expands.

The plant material that comes from indoor grows is what makes these high value plants so expensive. And while the costs might rise with an indoor grow, you’ll save because, besides the additional costs for lighting and other materials, you can bypass the commercial outdoor machinery and use a few hand tools instead.

Finding an indoor nursery facility can be a challenge. But if you purchase the land or location, you can bypass landlords that prefer to rent to nurseries that grow trees and shrubs rather than this federally prohibited plant.

Considering the benefits of having an indoor nursery. For starters, you’ll have complete control over everything. This means the humidity, light, and pests are all under control at all times. However, you’ll still need to maintain proper light levels and keep your nursery as energy-efficient as possible.

cannabis plants in pots at nursery

What You’ll Need for an Indoor Nursery

Each plant will require extensive care. But if cared for properly, you’ll earn a nice living working for your nursery.

If you’re new to the cannabis space, you’ll need to start with the basics. This means gaining some insight by performing some research in accordance with the seeds you plan to grow.

Depending on the strain, you’ll need to adjust the grow to its needs. Some seeds might do well with more humidity, while others will need dryer air to guarantee top-quality cuttings.

A greenhouse-specific HVAC system could also be a good investment for your indoor plant grow. These are perfect for closed nurseries and ensure your facility maintains the necessary grow conditions for healthy plant production.

Pots are also crucial for your garden. While pots might not seem so important if you have an outdoor grow, your choice for pots in an indoor grow makes a world of difference.

You’ll need 5-gallon pots to hold your plants. Since the roots expand rapidly, you’ll need plenty of room. Having larger pots for your plants ensures they have enough space to grow their root systems. But in some cases, grow bags will work for your plants.

Some high-end cultivators use permeable concrete pots with soil. This allows natural water recycling. However, if you’re interested in collecting some of the water from runoff, wooden pallets can work.

You’ll also need to consider the lights. Climate and light control are essential for the cannabis plant, regardless of the strain. This is especially true for those growing indoor as opposed to outdoors.

Energy-efficient lighting will ensure you get your dollars worth for energy consumption. The lights do all the heavy lifting to provide each plant with the energy they need to thrive.

cannabis plant lighting in nursery

More on Lighting & Electrical

Electricity costs can get out of hand for cannabis growers. This is why it’s essential to think about the lighting and electrical costs for your business. The two main options are HPS and LED grow lights. Here’s a bit more insight into each of these options:

hps grow light in cannabis nursery

HPS Grow Lights

HPS grow lights are the more affordable option. These generate a lot of heat, and the ballasts are usually installed in a separate room. While it’s true you’ll increase your energy costs with an HPS system, you can also save money by avoiding installation costs for ducting systems.

Another vital component when looking at indoor cannabis grow lights: is light penetration. High-quality light penetrates deep into the plants, helping to form potent buds with fewer leaves; this ultimately means higher yields and better nursery business practices for your indoor operation.

LED Grow Lights in cannabis nursery

LED Grow Lights

The LED choices for growers have actually been around for quite some time. But they’ve only recently become a popular choice because of their efficiency compared to other bulbs on the market today. For anyone interested in saving energy, these are a great option.

LED grow lights are also small in size and can be used for specific plants that require more humid conditions than others. Also, the LED growers allow you to control your specific yield time when growing cannabis indoors as well.

Ventilation Systems

A good ventilation system is one last consideration before setting up an indoor nursery for cannabis.

Cannabis requires high-quality air circulation. And filtering systems ensure that only clean air reaches your plant’s desired environment.

Poor ventilation will leave cuttings exposed to pests, mildew, mold, or even other environmental contaminants, which may destroy potential yields by devastating the plant growth cycle if left unchecked.

A bit of research regarding airflow and filtration will help you to set up the best possible environment for your indoor cannabis grow.

growing cannabis plants in a nursery

Growing Plants for Your Nursery Business

If you’re planning to grow cannabis plants and sell them as a nursery for extra pocket money, you might not be in the right business. While this could work for a small town operation interested in selling trees, flowers, and plants in small pots, cannabis is a different breed.

Growing cannabis as a nursery is expensive. You’ll likely need to test your plants’ genetics during a full bloom to have insight for the people interested in your seeds and cuttings. Your whole process will need documentation, including photos and videos. This is where you’ll get the information you need to show interested growers.

Depending on the grower, each is looking for something that appeals to them. For instance, some would prefer to grow short and wide plants. But for those with limited space, tall and thin plants might be the preference. With this in mind, you’ll need to grow a seed from each strain to maturity to offer growers an example of the final product. Offer growers a certificate analysis to showcase the quality of your end product, too.

It’s also important to keep your nursery clean and safe. You want interested growers to be able to trust that you’ve treated your cuttings with care.

Your cannabis plants should always look healthy, so it’s crucial to properly plan out your nursery and make sure all of the growing conditions are ideal for the cuttings and seeds.

Concluding on Starting a Nursery for Cannabis

Whether you’re just now breaking into the cannabis space or have been operating for a while, you’ll need to gear up for the competition.

Because there’s easy access to information online, it’s become easier than ever before to start your own business specializing in plants, seeds, and clones. But keep in mind that cannabis is still federally illegal. You might need legal advice about how to approach this market without running afoul of federal law surrounding marijuana.

Each plant you grow is an investment. If you’re not sure that your grow is the best quality, you’ll need to ensure your customers are happy with their purchases. Maybe consider offering them a small discount on any future purchase if they return for seeds or clones in the future.

If you’re thinking about getting into the cannabis growing business, there’s plenty of information out there to help you on your way. You’ll need a nursery license, as well as a few other permits, but with the right resources, you can have a successful business.

Looking for additional insight to scale your operation? Northstar is here to guide your success!

Contact us now to speak with one of our experts about taking your operation to the next level!