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The Cost of Growing Pot for a Business

Updated on April 21, 2013

There is a place in Denver, CO., the House of Blooms, that is a major marijuana production facility with 70 workers who harvest weed once week. All the "weed", or pot is grown indoors. The product is sold to numerous places that sell it for medicinal purposes to those with a prescription. Of course, gone are the days when a "lid" sold for only $15-25, like everything else, it is much more for a few ounces.

Between the 18 states that allow it, there are anywhere between 2000-4000 such small businesses, many with less than 70 workers. Together, they earn a whopping $1.2 billion, just selling Cannabis, aka, weed, pot, MJ, marijuana and a host of other names.

If you are underemployed or unemployed and thinking that this might be your own business, the startup costs are significant, just be sure you live in one of the 18 states! Also, beware that the Feds and the states are not on the same page. It is still against the law according to Federal law, so DEA will or may raid your business. In Colorado, a new law passed allows anyone over 21 to buy weed from any retailer.

Many times, the startups are small, maybe 40-60 plants grown in the basement or well hidden outside. That is how Pink House Blooms began a few years ago. Today, he has 2000 plants and earns a cool $1 million from his converted warehouse in an industrial section of Denver. After a harvest, the product is stored in a secure vault. The owner has sunk in over a million dollars to get his business to where it is.

Expenses for this size of operation are high and varies, but his electric bill averages $14,000 a month and investments are continually made to increase production. Another production farm earned $4.2 million but only had a profit margin of 6%, which because of its dangers is not good.

Common to all MJ industrial level farms is the cost of labor and this is a farm. Labor costs eat about 34% of the budget. The workers in this industry are or can be the more undesirable types that most managers would never hire. Theft is an issue. Then, there is selling the product and because of the growing competition prices fluctuate. For instance, in April 2011, a pound sold for $2900 and currently is selling for $2000.

Startup businesses can also make costly errors in production because cultivating MJ does take expertise because the product must have a good dose of THC, the drug resin that provides the "high" or relief from pain. Fighting spider mites and mildew are major enemies that can ruin a crop and one mistake can damage a harvest.

One startup, a woman who had been a landscaper, is still trying after investing $500K of her own money to convert a rundown party hall into a MJ factory. Even that amount was lacking to setup reliable production because each growing space runs about $100 a square foot at minimum. She is hoping to find another investor to give her another $150K.

Since it is illegal to grow MJ from cuttings in all states, these business owners must obtain seeds to begin their plants and the chances of it creating a worthwhile plant is akin to playing the Lotto. Starting from seeds, it is hard to tell a female from a male plant. Its the female plants that are the best for MJ production. So, the gamble is immediate.

The employees for the bigger production farms pay their workers only $11 hr. Yet, their best product sells for $50-70 per quarter ounce! So, a production MJ farm is around 2000 or more plants and to start one you need at least $700,000.

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    • profile image

      Headshake 

      5 years ago

      I wood ask were is all of my buds.Even if you didn't have any.And make the apartment and PD answer to.I did it in traffic court got pulled over and got 3-1/2oz took.I ask the judge were my BUDS I had 7oz the police sed i had 3-1/2.Were is the rest I want to know did cop smoke it or sell it.The Judge looked at me funny and sed I don't........want to deal with this case he throw it out dismissed.But that was in Washington in 1998

    • profile image

      Mackey 

      5 years ago

      I was charged with 5 felonies with out being arrested. After almost 2 weeks of going to the narc room at the police station and being every subvirsive thing they could do to get me to narc anyone out in the whole country. They threatened to charge my family, hold my 13 year old son 6 months till 14 so they could charge him. Wanted me to ride down crack street and buy til I got out of it. They said I would be thier bitch. I don't think so. My lawyer kicked in and they shut up left me alone and charged me and I was never read my maranda right or any rights. End results were 1 year suspended , 2 years probation and fine that totaled over 20000 dollars. That was 1 pound dry and 4 pounds wet. Now I have posession with intent to deliver felony. Or should I say ex-felon. LOL

    • perrya profile imageAUTHOR

      perrya 

      5 years ago

      Well, it is his residence, and If he is the only one there, he is toast.

    • profile image

      Dr. Ganja 

      5 years ago

      I have to jump in on this, dude the first thing going your way, you were not present at the time of the discovery. That right there is your way out, you have no idea how that got there, but this maintenance man was alone in your apartment, he seems a little unstable. He is going to have to prove it was not his, you were not present, so I don't think they can charge you with anything. What I am trying to say here, there is no clear evidence the weed is yours. Good luck man, and don't let them give you shit, get a nasty mean lawyer and fight them, they are in the wrong, hell you might even sue them for destroying your character.

    • profile image

      Carlos 

      5 years ago

      So my apartment in Texas was accessed by maintenance, and my grow was found. I've been evicted and turned over to the police, but I'm out of state right now. I'm trying to get a hold of the police there, some guy is calling me back soon. Am I f*cked? I had 2 foot tall plants, and maybe 10ish clones, all in veg. I myself am contacting the police, since they haven't tried to contact me yet. Does that help my situation at all? Any thoughts on what will happen to my dumb *ss? Please respond asap.

      I just want to say thanks for everyone's info that helped me through the process. Also, I know I'm stupid, please do not restate the fact. Thanks.

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