How Much Does It Cost To Start A Cannabis Business? (In 2024)
Looking to start a cannabis business?
But curious about:
- how much it costs to start a cannabis business?
- what are the typical cannabis business startup costs?
- or the actual cost of starting cannabis businesses?
Well, we have the data to prove it, supported by real cannabis businesses and how much they actually cost to start.
Let's go over it.
What is the average cost of starting a cannabis business?
Based on our data reported by actual cannabis business founders, the average cost of starting a cannabis business is between $1,000 and $150,000.
Additionally, our data shows that the the median startup costs for a cannabis business are around $30K.
Remember, though, not all cannabis businesses are the same - and neither are people's budgets. It's important to distinguish between different levels or types of cannabis businesses
Real World Examples: How much does it cost to start a cannabis business?
We asked real cannabis business founders and business owners how much it actually cost to get started?
Here is what they said:
Bjorn Dawson
Founder of Grobo ($250K/month)
"Within the first week of starting Grobo, we won a $5,000 pitch competition which provided the initial capital to start R&D. Only 3 months later, we won a $25,000 pitch competition and honestly thought we were rich. This was a huge amount of money at the time. We leveraged this to secure a government grant for another $30,000 and then another $30,000."
Bjorn Dawson is the co-founder of Grobo, a smart hydroponic growing systems business.
Rod Glupker
Founder of CBD Store of Michigan ($20K/month)
"Launching a business with no money. I mean NO money was not easy. We had started with the 3 bottles that were free. That gave me $180 to order 6 bottles and then 12 bottles and 24 bottles, etc."
Rod Glupker is the founder of CBD Store of Michigan, a CBD retail business with a storefront and e-commerce site. They currently carry over 60 brands of CBD products.
Nate Lipton
Founder of Growers House ($3.1M/month)
"To get the business up and running, I ended up cobbling together $150k from a mixture of myself, my father, and some family friends. I had about $7k to my name at this point and invested $5k of the $150k."
Nate Lipton is the founder of GG Growth, a conglomerate of cannabis and hemp businesses, which include GrowersHouse.com and the Canna Cribs YouTube series, making significant strides since their launch in 2011.
Michael Berk
Founder of Cannabox ($350K/month)
"Our startup costs were around $1,000, including products, the domain, server time, and paying my friends for help."
Michael Berk is the founder of Cannabox, a subscription box business for essential cannabis accessories that has grown to an MRR of $350,000 with 11,000 subscribers.
Evan Marshall
Founder of Plain Jane ($275K/month)
"We funded the company from savings."
Evan is the founder of Plain Jane, a CBD business that is dramatically changing the CBD market with their unique low odor Hemp CBD flower and cigarette.
Jacob Meyers
Founder of elate ($3K/month)
"Once the labels checked off-brand and legal guidelines my first round of product was officially complete, $12k plus a ton of sweat equity and I was off to the races."
Jake Meyers is the founder of elate CBD, a premium CBD brand on a mission to shatter the cannabis stigma, started in 2020.
Lauren Kay Forsch
Founder of Popped.NYC ($20K/month)
"I exchanged $400 for a bundle of vape cartridges. Then I purchased a sign for $50 and rented a booth at Hester Street Fair for $85 + table and chair."
Lauren Forsch is the founder of Popped.NYC, a CBD products business in the health and wellness industry.
Gordon Loi
Founder of Vitaeglass ($30K/month)
"We managed to gather $30,000 from friends and family to get the launch-ready."
Gordon Loi is the founder of VITAE Glass, a modular bong company that launched in April 2019 and serves the legal cannabis market in the US and Canada.
jackson jesionowski
Founder of CannaFacturer ($74K/month)
"When I started FullBodyZen, the initial costs were really minimal. The MVP took just two weeks to build and cost only $400. I registered the domain and it cost $12.99. It really didn't cost much, I reinvested the funds right away buying people's empty pods and stocking the vending machine I had placed in the fraternity right away."
Jackson Jesionowski is the founder of FullBodyZen, a CBD/HEMP manufacturing company that started in 2019 and now generates $17K per month in revenue.
Yanet Caliz
Founder of Gold Spectrum ($25K/month)
"The startup cost is almost always more expensive initially, particularly because my initial orders were low quantities, but it gets more cost-effective as demand increases."
Yanet Caliz is the founder of Gold Spectrum Lifestyle CBD Brand, a CBD business that launched during the COVID-19 pandemic and makes an average of $20,000 per month.
Enjoyed reading these real world examples?
Our platform is full of case studies of successful cannabis businesses that you can learn from.
Starting a cannabis business - what you should know:
Starting a cannabis business involves navigating various financial factors that can significantly impact your startup costs.
Licensing and Permits
Licensing and permit fees are often the most significant initial expense. Costs vary widely by state and type of business, ranging from $5,000 to $50,000 for state licenses. Some states, like California, also require additional local permits, which can add another $10,000 to $20,000.
Real Estate and Zoning
Securing a location that meets local zoning laws can be costly. Leasing a suitable property can range from $25,000 to $100,000 annually, while purchasing real estate might set you back anywhere from $100,000 to $1 million, depending on the location and size.
Security Requirements
Cannabis businesses must comply with stringent security regulations. Installation of security systems, cameras, and safes can cost between $10,000 and $50,000. Additionally, ongoing security personnel expenses can amount to around $50,000 per year.
Product and Inventory
Initial inventory costs can surprise many new entrepreneurs. Expect to spend between $50,000 and $150,000 on seeds, clones, or bulk cannabis supplies. Additional costs for cultivation equipment or retail shelving and storage can further increase the expenses by $10,000 to $50,000.
Legal and Consulting Fees
Given the complex regulatory landscape, legal and consulting fees are a necessary expense. Legal advice and compliance consulting can easily cost $20,000 to $50,000 as you navigate the application process and establish your business.
Marketing and Branding
Building a brand and attracting customers require a marketing budget. Initial marketing costs, including website development, packaging, and promotional materials, can range from $10,000 to $30,000.
Operational Capital
Don't forget to budget for operational expenses such as employee salaries, utilities, and other day-to-day working capital needs. A reserve of $100,000 to $250,000 is often recommended to ensure smooth operations during the first year.
Starting a cannabis business is a significant financial commitment, and understanding the nuances of these costs helps in better planning and securing the necessary funds.
Potential Costs of Starting a Cannabis Business
Starting a cannabis business involves several key expenses, ranging from licensing fees to operational costs. Here is a detailed breakdown of some of the potential costs you might incur:
| Category | Specific Costs or Tools | Estimated Cost Range |
|---|---|---|
| Licensing Fees | Application Fees | $1,000 - $10,000 |
| License Fees | $5,000 - $200,000 | |
| Annual Renewal Fees | $3,000 - $100,000 | |
| Legal and Consulting | Legal Fees for Compliance and Setup | $5,000 - $50,000 |
| Business Consultancy Services | $2,000 - $20,000 | |
| Real Estate | Lease Deposit | $10,000 - $50,000 |
| Monthly Rent | $5,000 - $30,000 | |
| Purchase of Property | $100,000 - $2,000,000 | |
| Construction and Renovation | Build-Out Expenses | $50,000 - $500,000 |
| Security Systems (Cameras, Alarms) | $10,000 - $50,000 | |
| Equipment | Growing Equipment (Lights, HVAC, etc.) | $20,000 - $200,000 |
| Processing Equipment | $50,000 - $500,000 | |
| Packaging and Labeling Machines | $10,000 - $100,000 | |
| Inventory | Initial Cannabis Stock | $20,000 - $100,000 |
| Nutrients and Grow Medium | $2,000 - $10,000 | |
| Personnel | Salaries (Growers, Budtenders, etc.) | $100,000 - $500,000/year*gross |
| Training and Development | $5,000 - $20,000 | |
| Operational Costs | Utilities (Water, Electricity) | $2,000 - $10,000/month |
| Pest Control | $1,000 - $5,000 | |
| Marketing | Branding and Design | $2,000 - $10,000 |
| Digital Marketing | $5,000 - $30,000 | |
| Technology | Seed-to-Sale Tracking Software | $500 - $10,000/year |
| POS Systems | $1,500 - $10,000 | |
| Website Hosting and Maintenance | $300 - $5,000/year | |
| Miscellaneous | Insurance (General Liability, Crop) | $2,000 - $20,000/year |
| Office Supplies | $500 - $3,000 | |
| Unexpected Costs | $5,000 - $50,000 |
Note: Costs can vary significantly based on location, scale of operation, and specific business model (retail, cultivation, processing, etc.). Always consult professional advisors for tailored estimates.
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
