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 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.
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.
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.
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.
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.
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.
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.
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 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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