Commercial Cultivation Business Plan

By Kait Hobson
July 16, 2019

The cannabis industry is thriving in the U.S., with over 50 percent of states opting to legalize or decriminalize some form of marijuana. Generally, people tend to think of dispensaries and growing operations; we’ve written a guide to starting your own dispensary here. But if you’ve ever wondered how to start a grow op, then this article will help you get started.

To design a growing operation plan, you’ll need motivation, time, and resources. First, you must apply for a license to grow cannabis in your state. Each state’s application is slightly different, so be sure to read your state’s website first. Once you understand all of the requirements, you’re ready to start by:

Consulting a lawyer

You’ll need a lawyer to help you navigate the laws associated with opening a cannabis business. Since federal and state laws will be involved, it’s important to find a lawyer that you trust to help you understand the differences. Keep in mind that marijuana remains federally illegal; don’t get yourself in trouble on a federal level by trying to take shortcuts at the state level. Having trouble finding legal assistance? The National Organization for Reforming Marijuana Laws (NORML) has a database of cannabis lawyers in the U.S. 

Learning about your application

In order to get your cannabis license, you’ll need to submit an application to a state program overseen by the state’s public health department. For example, in Florida, your application goes to the Office of Medical Marijuana Use (OMMU), which is overseen by the Florida Department of Health. You can usually find the application on this program’s website. After you submit it, your application will be graded or rated based on the state’s criteria. Competition is fierce, so you’ll want to make sure that your final product is as polished as possible. If you can manage it, consider hiring a master editor and a director to proofread your application and make it cohesive. 

Building a development team

Your team could be the deciding factor between your application and someone else’s. States want to see a team made up of high quality individuals - people who will serve the community once your business is up and running. Some people you may want to consider hiring are:

  • Doctors, especially if you are growing medical marijuana
  • Engineers, to help you design your growing operation
  • Horticulturists, to help you plant, grow, and clone cannabis
  • Administrators with marijuana growing experience, to lead your team
  • Managers with security experience, to protect your assets
  • Managers with operational, zoning, and/or financial experience in medical marijuana, to fill in your gaps of knowledge
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Establishing your finances

Your finances are another tiebreaking factor in your application. The health department and state government want to see that your business has enough capital to sustain itself through its first few years, which are typically not as lucrative. An application may call for proof of capitalization of at least $250,000, though the exact number varies by state. You should aim to gather more liquid capital than your application requires. This will set your application apart and will also help your business, since more capital means more chances to succeed. 

Finding a facility

When finding a facility, there are four things you should keep in mind:

  • Physical features of the real estate. Is it large enough to sustain the growing operation you want to build? Are the ceilings tall enough to fit your plants, grow lights, and ventilation system? Will you have to clear a plot of land before you can start growing outside? Does the layout of the building make security easier, or more difficult?
  • Zoning requirements and related issues. Does the building comply with all state zoning requirements? For example, are you an appropriate distance from schools, libraries, arcades, or other buildings that minors frequent? Are there neighbors nearby who may be unhappy to see a grow op popping up next door? 
  • Legal and financial considerations. What is the price or the rent? Can your new business absorb that cost? Has the landlord agreed to allow you to grow marijuana in the space? Do you have the option to purchase the facility from the landlord after you have paid the rent for some years? 
  • Owning vs. leasing. Which is more cost effective? Will the rent add up to more than the purchase cost over time? Which option makes more sense for your business?

You will also need to submit documents that prove your compliance with state and local zoning requirements. These include a lease, letter of intent, or proof of ownership. 

If you haven’t given any thought to your security system, now is a great time to do so. Your facility should be easy to secure and not too big; otherwise, you may not be able to hire enough security personnel to keep your product safe. If a team of security guards is too expensive, consider purchasing an access control system like Kisi. Restrict access to yourself or a few employees in different areas of the facility. Use your phone to gain entry and avoid misplacing keycards where customers or potential thieves could find them. Integrate with Doorbird to unlock doors from anywhere in the world and use Kisi to track unlock logs. With Kisi, you can prove in your application that your cannabis facility and product are completely secure 24/7. 

Writing your cultivation plan

Now, you can write a commercial cultivation business plan. The first step is to create a mission statement. But before you start jotting ideas down, do some research. Different states prioritize different facets of the marijuana industry. Some focus on the health and safety of medical marijuana patients, while others focus on the purity and protection of the product. Read your state’s cannabis department’s website and see what its goals are. Incorporating these goals into your mission statement could give your application a boost.

Your growing operation plan must address the following processes:

  • Breeding (if applicable)
  • Cloning 
  • Vegetation 
  • Flowering 
  • Harvesting and dying
  • Trimming 
  • Curing 
  • Packaging 
  • Distribution 

You should also explain each stage of your business’ plant production and supply chain process. Many applications will ask for descriptions of your technology and your facility, as well as your quality control and testing procedures. 

Your application may or may not request additional plans, including:

  • Organizational business plan
  • Financial projection plan
  • Patient confidentiality training
  • Record keeping
  • Seed to sale inventory tracking plans
  • Security plans
  • Product safety testing plan

Running your growing operation

You’ve done the paperwork, put in the time, and are well on your way to obtaining your license. Just a few additional things to consider while you start planning how to run your commercial cultivation business:

  • Will your grow space be indoors or outdoors? Each state has different regulations depending on your setup. For example, in some states, only indoor grow ops are permitted. 
  • The cost of your grow op location can vary. Outdoor plots tend to cost $10-$17 per square foot. Greenhouses cost around $50 per square foot, while indoor spaces cost $75 per square foot. 
  • If you do decide to set up an indoor grow space, here are five steps to get started now:
  • Create a blueprint to determine how many plants you can fit in your space
  • Prep the space by removing unnecessary elements and checking the electricity and plumbing
  • Set up all light and water systems by hanging light fixtures, running wiring, and plugging in and testing everything
  • Prep your pots by arranging them in your space and double-checking the number of seeds, pots, and plants you have
  • Start planting! 

Need help?

If you’re stuck, try visiting one of these websites:

Kait Hobson

Workplace Innovation

How to Guide