Cannabis Cultivation Business Plan Template
If you want to start a cannabis cultivation business or expand your current cannabis business, you need a business plan.
Fortunately, you’re in the right place. Our team has helped develop over 100,000 business plans over the past 20 years, including thousands of cannabis cultivation business plans.
The following cannabis cultivation business plan template and example gives you the key elements you must include in your plan. In our experience speaking with lenders and investors, the template is organized in the precise format they want.
Sample Business Plan For Cannabis Cultivation Businesses
I. Executive Summary
Business Overview
[Company Name], located at [insert location here] is a cannabis cultivation business that grows cannabis for medical and recreational markets. We will offer organically produced indica, sativa, and hybrid strains, for manufacturers and dispensaries across the state.
Products and Services
[Company Name] will grow cannabis in a greenhouse environment, using organic production methods. Initial products include:
- Indica – We will start with three indica-dominant strains: Girl Scout Cookies; Northern Lights; and Sour Kush
- Sativa – Our first three sativa-dominant strains will be: Jack Herer; Green Crack; and Amnesia Haze
- Hybrid – We will offer three hybrid strains in the beginning: Wedding Cake; Peanut Butter Breath; and Trainwreck
In addition, [Company name] will offer seeds from these strains.
Customer Focus
[Company Name] will primarily serve both medical and recreational dispensaries across the state. The demographics of these customers are as follows:
- 423 Medical Provisioning Centers
- 555 Recreational Retailers
- 752 Growers licensed for Medical
- 779 Growers licensed for Recreational
This bodes well for [Company Name], as the prime demographic for cannabis cultivation businesses are dispensaries (provisioning centers and retailers). [Company Name] will work to become known as the premiere cultivator of craft, organic cannabis.
Management Team
[Company Name] is led by [Founder’s Name] who has been a gardener his whole life. While [Founder] was not a cannabis grower before legalization, he began studying cannabis cultivation once legalization became imminent. As such [Founder] has an in-depth knowledge of gardening and has quickly been able to come up to speed with cannabis cultivation, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- The Company will fill a specific market niche for craft product in the growing cannabis market. In addition, we have surveyed local dispensaries and received extremely positive feedback saying that they explicitly want to frequent our business when it is launched.
- Our location is centrally located near several cities with multiple dispensaries within driving distance.
- The management team has a track record of success in the growing industry.
- Cannabis is a growing industry, and is highly successful in communities throughout the United States.
- Local competitors leave a large gap in the market—there are cultivators offering more strains, and cultivators that exclusively focus on seed production, but nothing that caters to high quality organic cannabis production.
Financial Highlights
[Company Name] is currently seeking $250,000 to launch. Specifically, these funds will be used as follows:
- Greenhouse design/build: $50,000
- Licensing, Seeds, Automation, Supplies: $100,000
- Working capital: $100,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
Topline projections over the next five years are as follows:
| Financial Summary | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | $400,000 | $466,067 | $524,563 | $590,400 | $664,500 |
| Total Expenses | $345,594 | $385,172 | $419,434 | $475,894 | $507,480 |
| EBITDA | $54,406 | $80,895 | $105,129 | $114,506 | $157,020 |
| Depreciation | $20,840 | $20,840 | $20,840 | $20,840 | $20,840 |
| EBIT | $33,566 | $60,055 | $84,289 | $93,666 | $136,180 |
| Interest | $16,822 | $14,719 | $12,617 | $10,514 | $8,411 |
| PreTax Income | $16,744 | $45,336 | $71,673 | $83,153 | $127,769 |
| Income Tax Expense | $0 | $0 | $17,104 | $29,103 | $44,719 |
| Net Income | $16,744 | $45,336 | $54,569 | $54,049 | $83,050 |
| Net Profit Margin | - | 10% | 10% | 9% | 12% |
II. Company Overview
Who is [Company Name]?
[Company Name], located at [insert location here] is a cannabis cultivation business that grows cannabis for medical and recreational markets. We will offer organically produced indica, sativa, and hybrid strains, for manufacturers and dispensaries across the state.
[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been a gardener for some time, it was in [month, year] that he decided to launch [Company Name]. At this time, recreational cannabis had just been legalized in the state, and the licensing process was in planning stages. [Founder’s Name] attended all public hearings during the planning stages, and networked with other licensee hopefuls. After discussing the business at length with other prospective cultivators, [Founder’s Name] realized there was a gap in the market, as none of the other cultivators were planning organic grows.
Specifically, he knew that once the frenzy of the new industry subsided, connoisseurs would increasingly demand craft and organic cannabis. After discussing these matters with dispensary applicants, [Founder’s name] was assured that this type of product would be well received, so he went ahead and founded [company name].
[Company Name]’s History
Upon realizing the need and confirming demand for organics, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
The business is currently being run out of [Founder’s Name] private offices, but once the build-out on [Company Name]’s commercial location is finalized, all operations will be run from there.
Since incorporation, the Company has achieved the following milestones:
- Found commercial space and signed Letter of Intent to lease it
- Developed the company’s name, logo and website located at [website]
- Determined equipment and inventory requirements
- Begun recruiting key employees with previous organic gardening experience
[Company Name]’s Products & Services
Below are [Company Name]’s products and services:
- Indica – We will start with three indica-dominant strains: Girl Scout Cookies; Northern Lights; and Sour Kush
- Sativa – Our first three sativa-dominant strains will be: Jack Herer; Green Crack; and Amnesia Haze
- Hybrid – We will offer three hybrid strains in the beginning: Wedding Cake; Peanut Butter Breath; and Trainwreck
In addition, [Company name] will offer seeds from these strains. [Company Name] will continue to research and broaden its strain offerings, based on feedback from the market.
III. Industry Analysis
[Company Name] competes against other licensed cannabis cultivators, as well as black market cultivators.
According to a report by The National Cannabis Industry Association, the cannabis cultivation business industry is a fragmented one, with the four largest operators accounting for less than 25% of revenue. The market is estimated to grow to over $32 billion in five years. Since there are no truly dominant competitors, barriers to entry are not as high as many other industries, and a start-up can expect to have success in this growing market, [Company Name] is well-positioned for success. There is plenty of room in the industry, particularly for organic growers that cater to specific demographic trends and demands.
Market Trends
The market in which [Company Name] will compete is experiencing a number of different trends.
Market-level trends:
- Strong growth. Though the rate of growth has begun to slow, this market is expected to exhibit continued strong growth of about 18.3% annually.
- Regulation. The use of cannabis is still illegal on a Federal level; however, the current administration has expressed support for the industry. Legislation regarding the removal of cannabis from the Federal list of Schedule 1 drugs has been passed by the House of Representatives, and is moving now to a Senate vote. Further, many states have legalized the medical use of cannabis, and a growing number have legalized the recreational use of cannabis. Because the industry is young and legalization is fairly new, many states still have several regulatory details to iron out.
Firm-level trends:
- Consolidation. As the industry matures, merger and acquisition activity is likely to increase. In fact, last year was a strong year for M&A activity, with more than 306 transactions. Over the next five years, the industry is also expected to continue to have significant M&A activity.
- Environmental Consciousness. Cannabis requires a lot of natural resources to grow. Worsening drought conditions and environmental concerns are prompting cultivators to look for ways to conserve water and reduce electricity usage to lessen carbon emissions.
Customer-level trends:
- Potency. There has been an increasing demand from consumers for high THC strains.
- Purchasing preferences. Customers are increasingly shopping online, including shopping for cannabis. The pandemic spurred increased usage of preordering, curbside pickup, and delivery, and consumers continue to embrace these options.
IV. Customer Analysis
Profile of Target Market
[Company Name] will initially serve dispensaries in [company location] and the immediately surrounding areas, with plans to expand statewide.
The area we serve has licensed a larger than average number of dispensaries, and we are centrally located and ideally situated to serve the entire area.
| Wilmette | Winnetka | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
Customer Segmentation
The Company will primarily target the following three customer segments:
- Medical provisioning centers: Medical provisioning centers are expected to command 40% of the cannabis market. [Company name] will work with these centers to grow the strains that best meet the needs of their patients.
- Recreational dispensaries: Recreational dispensaries account for 39.9% of the cannabis market. Recreational customers typically prefer high THC strains, so [Company name] will be sure to always have at least one such strain in its lineup.
- Manufacturers: Many cannabis cultivators also manufacture cannabis products such as tinctures and cannabis infused edibles. [Company name] intends to focus solely on cultivation, and expects manufacturers to represent a significant demand.
- Location: [Company Name]’s location is centrally located within a cluster of cities with high numbers of dispensaries.
- Strong inventory: The strains offered by [Company Name] are popular ones, and [Company Name] offers its flower at affordable prices.
- Management: Our management team has years of business and marketing experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all of the local leaders, newspapers and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.
- Convenient location
- Strain options based on end consumer needs
- Moderate price point
- Stellar customer service
- Sales
- Phenotype hunting
- Tending plants and grow operations
- Harvest
- Trimming and curing
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Sourcing and storing supplies
- Hiring and training staff
- Appointment making
- Customer service/accounts receivable functions
- Sales staff (1 to start)
- Gardeners (2 to start)
- Garden assistants (2 to start)
- Sales Manager
- Head Grower
- Supplies
- Salaries and commissions
- Lease
- Greenhouse design/build: $50,000
- Licensing, Seeds, Automation, Supplies: $100,000
- Working capital: $100,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
V.Competitive Analysis
Direct & Indirect Competitors
The following cultivators are located within a 20 mile radius of [Company Name], thus providing either direct or indirect competition for customers:
CannaWell
CannaWell is a cannabis lifestyle brand that manufactures and distributes award winning edibles. Established in 2015, CannaWell has emerged as one of the nation’s largest and most trusted manufacturers of cannabis products. With a mission to help people achieve a life of harmony and wellness with all-natural, consciously made, science-based cannabis products, CannaWell produces a wide assortment of edibles, sublinguals, and vape cartridges. CannaWell’s premium gummies have exploded in growth to be a top edible brand in the nation.
We expect that CannaWell will continue to thrive. But since it is a multi-state chain, we expect more and more customers will frequent [Company Name] because it is locally-owned, and because of the competitive prices we offer.
Green Farms
Established in 2018, Green Farms is a licensed MMJ grower, offering high quality medical cannabis. It prides itself on environmentally friendly cultivation methods, and pesticide-free cannabis.
[Company Name] has several advantages over Green Farms, in that offers more strains, and is organic-only.
CannaFarms
Established in 2013, CannaFarms is a third-generation family-owned and -operated Cannabis brand committed to sustainable farming practices, growing natural sun-grown, pesticide-free, high quality strains of Marijuana in U.S. legal markets.
CannaFarms is a large company and offers a wide variety of strains, and thus we expect it will continue to draw a large clientele. However, we expect to draw local-loyal customers.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
VI.Marketing Plan
[Company name] seeks to position itself as a grower of craft, high-quality cannabis. Customers can expect to receive organically produced cannabis offered at reasonable prices.
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
Promotions Strategy
[Company Name] expects its target market to be dispensaries within a 30-mile radius of its location. [The Company’s] promotions strategy to reach these dispensaries includes:
Trade Publications
[Company name] will announce its first harvest several weeks in advance through publicity pieces in multiple trade newspapers and publications. Regular advertisements will run to maintain exposure to relevant markets.
Networking Events
[Company name] will promote itself by distributing marketing materials and participating in local networking events.
Direct Mail
[Company Name] will send all area dispensaries direct mail pieces. These pieces will provide general information on [Company Name], offer discounts and/or provide other inducements for dispensaries to enter into purchase agreements.
Ongoing Customer Communications
[Company Name] will maintain a website and publish a monthly email newsletter to tell customers about new strains, harvests and more.
Pre-Opening Events
Pricing Strategy
[Company Name]’s pricing will be competitive so dispensaries feel they receive great value when purchasing flower. Dispensaries can expect high quality organic products and honest negotiations when securing contracts.
VII.Operations Plan
Functional Roles
In order to execute on [Company Name]’s business model, the Company needs to perform several functions. The majority of employees will have a primary function as cultivation aides. [Company name] anticipates using the services of X employees, divided into the following roles.
Service Functions
Administrative Functions
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name]is led by [Founder’s Name] who has been a gardener his whole life.
While [Founder] has never run a cannabis cultivation operation himself, he has undertaken intense research into successful practices. Further, he holds a Bachelor’s Degree in Horticulture from [University Name].
[Other person’s name] will serve as the customer service manager. [He/she] has extensive experience in the wholesale sector.
[Founder] will serve as the office manager. In order to launch our cultivation site, we need to hire the following personnel:
As dictated by demand and operational maturity, [Founder] will consider hiring the following personnel:
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come primarily from the sale of cannabis to dispensaries.
The major cost drivers for the company’s operation will consist of:
Moreover, ongoing marketing expenditures and cost of goods sold expenses are also notable cost drivers for [Company Name].
Capital Requirements and Use of Funds
[Company Name] is seeking $250,000 to launch. Specifically, these funds will be used as follows:
Key Assumptions & Forecasts
The following table reflects the key revenue and cost assumptions made in the financial model.
| Number of customers per day | |
|---|---|
| FY 1 | 75 |
| FY 2 | 100 |
| FY 3 | 125 |
| FY 4 | 150 |
| FY 5 | 175 |
| Annual Lease ( per location) | $50,000 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
