Cannabis Business

How Profitable Is A Cannabis Business? (Updated for 2024)

Pat Walls

•

Updated: July 21st, 2024

How Profitable Is A Cannabis Business? (Updated for 2024)

So you want to start a cannabis business?

And the first question that came to your mind was, “well, are cannabis businesses actually profitable?”

With a market size of $33.1B - there’s plenty of business to go around.

Especially considering:

You could start a cannabis business with as low as $1,000
Based on our data, cannabis businesses generate an average of $3.26M per year
You could see gross margins as high as 75% with cannabis businesses

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a cannabis business.

Let’s dive in!

Is a cannabis business profitable?

Yes, a cannabis business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $3.26M per year with an estimated gross margin of 40%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your cannabis business.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your cannabis business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a cannabis business worth it?

If you’re wondering if a cannabis business is worth it, the answer is a big YES. With cannabis businesses, you have the potential to earn $3.26M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $33.1B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a cannabis business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful cannabis businesses case studies.

Examples Of Profitable Cannabis Businesses

Here are a few examples of profitable cannabis businesses, and a few more details about them:

1. Grobo ($3M/year)

Bjorn Dawson, Co-Founder of Grobo, was inspired to create smart hydroponic growing systems after experiencing the joys of growing his own food in gardens at his rental property. He saw a gap in the market for indoor growing systems and began prototyping different ideas. After pivoting into the cannabis space and launching a successful crowdfunding campaign, Grobo has grown steadily, now making $165K per month and attracting both beginner and advanced growers.

Is it profitable? Yes
How much money it makes: $3M/year

How We Launched A $165K/Month Automated Home Growing Box

Grobo, a smart hydroponic growing system company that creates boxes for growing plants, is making $165K per month and increasing quickly, with its flagship products enabling users to easily grow food and cannabis at home.

Read this case study

Read by 10,792 founders

2. Utokia ($504K/year)

After overcoming a wrist injury and opioid dependency, Holly Hillyer discovered cannabis through her parents' homemade edibles. This, combined with Oregon's newly legalized cannabis market in 2016, inspired her to leave her project management job and launch Utokia, now generating $30,000 monthly.

Is it profitable? Yes
What's the gross margin? 75%
How much money it makes: $504K/year
How much did it cost to start: $30K

I Created A $45K/Month Female-Led Cannabis Brand

Discover the journey of a cannabis entrepreneur who transitioned from opioids to cultivating some of the best indoor flowers in the nation, generating $30,000 a month, and expanding into a hemp-derived product line that already rakes in $15,000 a month in revenue.

Read this case study

Read by 534 founders

3. Plain Jane ($3.3M/year)

Plain Jane, the ultra smooth and low odor Hemp CBD flower and cigarette company, was started by college roommates Evan and Duane. The idea came from their desire to create less smelly weed products that don't cause coughing. Within 5 months of starting to sell, the company is generating over $20K a month in sales and has customers in 47 states and 12 retail locations.

Is it profitable? Yes
How much money it makes: $3.3M/year

How Two College Roommates Started An Online CBD Business

Plain Jane, an online CBD company founded by two college roommates, offers unique products and has generated over $20K a month in sales within five months, attracting and retaining customers through social media, authentic stories, and content.

Read this case study

Read by 17,252 founders

Learn more about starting a cannabis business:

Where to start?

-> Cannabis business plan
-> How to finance a cannabis business?
-> How much does it cost to start a cannabis business?
-> Pros and cons of a cannabis business

Need inspiration?

-> Other cannabis business success stories
-> Marketing ideas for a cannabis business
-> Cannabis business slogans

Other resources

-> Cannabis business tips

How much can you make with a cannabis business?

With a cannabis business, you can make an average of $3.26M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $1,000. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a cannabis business make a week?

Based on our data, average weekly revenue for a cannabis business ranges around $68K. As such, you could see monthly revenues of $272K.

To know if your cannabis business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your cannabis business.

How much do cannabis businesses owners make?

The income of a cannabis business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established cannabis business is about $68K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a cannabis business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Cannabis Business Profit Margins

Generally speaking, a cannabis business can expect profit margin of around 40%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a cannabis business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, cannabis business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, cannabis business owners can ensure long-term sustainability and profitability for their business.

Cannabis business owner salary

The salary of a cannabis business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established cannabis business, in a prime position, might see an average weekly salary around the ballpark of $27.2K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, a cannabis business is quite promising if you plan on starting such. With a market size of $33.1B, you can enjoy a potential revenue of around $3.26M per year with a gross margin of 40%.

Considering this information, you can enjoy a return of investment within 7 months, especially if you have a monthly profit of $109K. Overall, the success of your cannabis business also depends on your effort and knowledge about it. If you persevere with these things, you can ensure that this cannabis business is profitable.

Make sure you have a proper cannabis business plan and know how to get clients for your cannabis business.

Part of

Starting A Cannabis Business: Everything You Need To Know

‹

›