28 Jul Comparing Startup Costs for Cannabis Growers
in Marijuana Growers
There’s still time to ride the “green rush” and cash in on one of the fastest growing markets in the world. However, entrepreneurs looking to become suppliers should be aware of what options they have and wary of costs.
The Marijuana Business Factbook, published by Marijuana Business Daily, sheds some light on startup costs for commercial growers. According to the latest edition, the median startup costs for wholesale cannabis growers over the past three years has been $42 per square foot.
Even though the statistics from Marijuana Business Daily don’t offer much additional detail (the full factbook is $249), they illustrate the big cost differences between outdoor, greenhouse, and indoor growing.
For outdoor, where getting started is pretty simple, median startup costs are $10 per square foot. However, outdoor-grown marijuana still does not command as high a price as precisely controlled and protected greenhouse or indoor-grown products.
The legal cannabis market is starkly fragmented and changing quickly. Cultivators might find much lower startup costs in California, where patchwork local rules can be lenient or nonexistent, than in tightly regulated markets such as Colorado, which require grows to be “fully enclosed.”
Is indoor growing still worth it?
At $75 per square foot, indoor grow spaces are 50% more expensive to get up and running than greenhouse operations.
Since they rely at least partially on the sun, greenhouse growers can save on expensive ventilation and climate control systems, not to mention the electrical costs of running all those lights. In the past, the cost of indoor growing was worth it, because the product sold at a high enough price to cover these expenses.
Now, new market entrants and existing businesses looking to expand are investing in sprawling greenhouse facilities. Taking advantage of new technology and techniques, such as light deprivation, greenhouse growers can have more harvests per year and produce quality bud that rivals the most precise indoor-grown product.
So, is indoor obsolete? Not yet, though some experts may agree that is the direction it is heading. If greenhouses can consistently achieve indoor levels of quality using the power of the sun, expect the trend to accelerate.
For cost-conscious growers, greenhouses are an effective compromise between expense and quality. Hoop houses present a more inexpensive greenhouse option for smaller-scale growers.
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