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Cannabis Business Plan
Do you want to start cannabis company business?
Are you planning to start a cannabis business? The business is the right choice for you if you are starting it in a country where its plantation and use is legal.
Legal usage of cannabis includes research purposes and making medicines to be given to very serious patients. People misuse them for recreation, so you have to make sure that you will run the business throughout without indulging into its controversial and illegal part.
To help you in learning the sum and substance of this business, we are providing you a sample cannabis business plan of a cannabis business startup named, ‘Cannabis Crop Corporation’.
2.1 The Business
Cannabis Crop Corporation will be a licensed and registered cannabis cultivation and processing company, owned by Colin Pattinson, a pharmaceutical scientist. The company will be located in Omaha, the business and all its operations will be open to getting inspected at any time by legal authorities.
For managing the day to day tasks of your company it is essential to have a management plan. Before thinking about how to start a cannabis business, decide the sector of the marijuana industry in which you would like your company to serve. After it, you can make your cannabis cultivation business plan and extend it to include whatever else you want.
Before making your cannabis business plan, you must know who will be interested in your products and services. After a deep research Cannabis Crop Corporation has identified its major customers in medicinal industries and factories.
2.4 Target of the Company
The company aims to produce high quality, pure with minimal side effects products from cannabis. The company’s three-year performance, as forecasted by the experts, is given in the chart below:
3.1 Company Owner
Colin Pattinson will be the owner of Cannabis Crop Corporation. Colin is associated with the pharmaceutical industry for more than six years. He has a degree in medicine from the Johns Hopkins University, with an additional course of management sciences. Regardless of the completion of his degree, he is still continuously indulged in research works and exploring new ideas.
3.2 Why the Business is being started
Colin is a pharmaceutical scientist, and his major research is centered on narcotics and synthetic medicines from plants. To use his knowledge, skills, and dedication in this field he is starting a cannabis business. By availing this opportunity of starting his own business, Colin will get a chance to increase his work area, explore new ventures as well as earning a wholesome profit.
3.3 How the Business will be started
Before researching on how to start an edible cannabis business, you must first hire an attorney to navigate the rules and regulations to make sure that your business is legal.
After required registrations and licensing, Colin will hire the required staff and equipment to run his business. The business will be based on cultivating cannabis plant and preparing edible and useful products out of it by extracting its oil and concentrates. To help others in this domain, we are providing sample cannabis business plan pdf including all the details, specifications and requirements as mentioned by Cannabis Crop Corporation. The company has forecasted the following costs for the start-up:
The detailed information about the start-up is given below:
|Research and Development||$32,750|
|TOTAL START-UP EXPENSES||$187,300|
|Other Current Assets||$232,500|
|Start-up Expenses to Fund||$11,875|
|Start-up Assets to Fund||$15,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$18,750|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$18,750|
|Cash Balance on Starting Date||$21,875|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$695,000|
|Loss at Start-up (Start-up Expenses)||$313,125|
|TOTAL CAPITAL AND LIABILITIES||$251,875|
To maximize your profit, include in your business plan cannabis plantation, its processing techniques and the methods to maximize production of its by-products.
Cannabis Crop Corporation aims to provide the following services to its consumers.
- Hemp production: Our major product will be fully grown cannabis plant i.e. hemp. We’ll sell natural as well as processed hemp, for making items like cloths, biodegradable plastic, biofuel etc.
- Soft gels pills: For medicinal purposes, we’ll prepare pills from cannabis extract varying from light to high dose.
- Oils and Concentrates: We’ll extract and refine CBD oil to be sold to the medical companies.
Marketing Analysis of Cannabis Business
Before starting your marijuana growing business, do extensive research on whether you will be able to sell your products to your target customers in your selected location for your business or not. For a business to run smoothly and successfully owner must be wary about the market potential and trends. One must be very much careful about the law and rules while making hemp farm business plan as many aspects of this business are considered illegal in several countries.
5.1 Market Trends
The industry has shown a tremendous growth rate of 28.3 percent over the past five years. In the United States, more than 223,100 registered cannabis marijuana businesses are running for medical and other purposes. The demand is high as there are several things mainly medicines that can only be made through the marijuana plant. The annual revenue generated by this business in 2018 is about $6 billion which proves that you will also get flourished provided that you plan your business carefully.
5.2 Marketing Segmentation
Knowing your customers before the launch of business doesn’t only help in deciding the products you should provide, but also help in developing effective marijuana marketing strategies to attract your target groups. In this hemp business plan pdf, marketing segmentation done by Cannabis Crop Corporation is given for anyone who wants to take help.
5.2.1 Medicinal Industries & Factories: Our biggest target group will be the pharmaceutical companies in our city or in neighboring cities. Pharmaceutical companies rely on our oils and concentrates to prepare their medicines especially for curing mental sickness. Our products like hemp and fresh cannabis flowers will be a need of factories to make a variety of products such as cloths, mattresses, biodegradable plastics etc.
5.2.2 Psychiatrists: The psychiatrists or mental therapist who use low and moderate doses of cannabis extract to cure their patients and addicts will also be our customers. We expect them to buy our soft gel capsules and CBD oil extract.
5.2.3 Research Groups: Last group of our target customers will comprise of the doctors and researchers who will need our products to explore more about cannabis plant.
The detailed market analysis of our potential customers is given in the following table:
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
5.3 Business Target
Our aim is to provide trustful and legal service to cannabis consumers while producing several extracts for the benefit of people. However, to meet financial goals we look forward to:
- Achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- Balance the initial cost of the startup with earned profits by the end of the first year
5.4 Product Pricing
Since producing and processing cannabis has to be done very carefully to avoid the risk of addiction, so taking in account the quality of our pure products despite all the difficulties which we have to face, we have priced our items a little higher as compared to the market.
If you are starting a legal marijuana business, you are allowed to attract your target customers towards your business through your sales strategy. Ways to develop effective sales strategy in your hemp business plan will help your customers to know what benefits they have in choosing you and your products.
6.1 Competitive Analysis
Cannabis Crop Corporation will be a licensed and registered company. Our biggest competitive advantage is the variety and quality of products which we are offering. None of our competitor in the market has come up with the production of CBD oil and soft gel pills. Secondly, we do not have many direct competitors in the market as getting the permissions and required licenses for starting such a risky business is quite a lengthy and tough work. A very few people are able to meet the standards defined by the US Food and Drug Administration to start a cannabis business. Our company will be all-time open to the authorities who want to test our products and procedures. That will prove to be a great technique to win the trust of our consumers by our trustful services.
Lastly, we will have an excellent platform of cultivating, cutting and processing cannabis, where we’ll be independent in all our works.
6.2 Sales Strategy
In the marijuana cultivation business plan, Colin had defined various ways to advertise his business given here as well for your help.
- We’ll provide free samples of our few products to major pharmaceutical companies and factories to get introduced to them
- We’ll post posters and billboards at various places in our locality for our introduction
- We’ll advertise ourselves through newspapers and magazines
- We’ll arrange seminars on the wonderful procedures of using this wonderful plant
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
Our forecasted sales are summarized in the following column charts:
The detailed information about the sales forecast is given in the following table:
|Unit Sales||Year 1||Year 2||Year 3|
|Soft gels pills||802,370||815,430||823,540|
|TOTAL UNIT SALES||3,494,170||4,588,370||4,807,410|
|Unit Prices||Year 1||Year 2||Year 3|
|Soft gels pills||$600.00||$800.00||$1,000.00|
|Soft gels pills||$120,050||$194,500||$268,500|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Soft gels pills||$0.40||$0.45||$0.50|
|Direct Cost of Sales|
|Soft gels pills||$66,600||$119,900||$173,200|
|Subtotal Direct Cost of Sales||$1,294,100||$1,699,400||$2,104,700|
If you are looking for how to set up a cannabis business, be selective about your employees, as they will be playing a basic role in making and maintaining your reputation.
7.1 Company Staff
Colin will be the Chief Executive Officer, operations inside the production center will be managed by Colin himself, furthermore, he will hire the following staff to manage the day to day operations:
- 1 General Manager to manage the overall operations of the production plant
- 2 Administrators / Accountants to maintain financial records
- 1 Chief Legal Officer responsible for reporting laws and obligations
- 1 Chief Commercial Officer to manage tasks outside the production center
- 20 Field Employees to work in production and processing units
- 2 Sales Executives to discover new ventures
- 1 Driver to transport products to industries and factories
- 2 Security Officers
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Chief Legal Officer||$85,000||$95,000||$105,000|
After all the steps you have taken to start your cannabis business, here is the last and extremely decisive part of the success of your business i.e. the financial plan. Cannabis business is not a small scale business, it requires wide planning, a lot of equipment and a number of trained staff. So, you have to think twice before actually investing your large amount. The things you must cater are to be at a safer side by reserving some extra amount for the initial phase of startup. You must have a financial plan to run your company in case you are unable to find expected customers for your business. Balancing the startup costs with the profits earned is though a thing to be decided later but you should also include it in your business plan if you want to make a complete and thorough plan. Colin had hired a financial expert for this purpose, the key points forecasted by him are also given in this cannabis company business plan pdf.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||11.00%||12.00%|
|Long-term Interest Rate||10.00%||10.00%||10.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5530|
|Monthly Revenue Break-even||$159,740|
|Average Per-Unit Revenue||$260.87|
|Average Per-Unit Variable Cost||$0.89|
|Estimated Monthly Fixed Cost||$196,410|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$15,100||$19,153||$23,206|
|TOTAL COST OF SALES||$15,100||$19,153||$23,206|
|Gross Margin %||94.98%||94.72%||94.46%|
|Sales and Marketing and Other Expenses||$1,850||$2,000||$2,150|
|Total Operating Expenses||$188,766||$220,744||$252,722|
|Profit Before Interest and Taxes||$105,205||$146,040||$186,875|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$7,023||$8,610||$9,297|
|SUBTOTAL CASH FROM OPERATIONS||$47,143||$53,651||$59,359|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$47,143||$53,651||$55,359|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$35,296||$39,549||$43,582|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$35,296||$35,489||$43,882|
|Net Cash Flow||$11,551||$13,167||$15,683|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$201,259||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$980||$610||$240|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,482||$10,792||$12,102|
|TOTAL LIABILITIES AND CAPITAL||$198,839||$232,978||$267,117|
8.6 Business Ratios
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets||4.35%||4.71%||5.80%||9.80%|
|Other Current Assets||1.75%||2.02%||2.29%||27.40%|
|Total Current Assets||138.53%||150.99%||163.45%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.29%||71.83%||69.37%||65.20%|
|Profit Before Interest and Taxes||26.47%||29.30%||32.13%||2.86%|
|Total Debt to Total Assets||2.68%||1.04%||0.76%||67.10%|
|Pre-tax Return on Net Worth||66.83%||71.26%||75.69%||4.40%|
|Pre-tax Return on Assets||64.88%||69.75%||74.62%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.20%||21.16%||23.12%||N.A.|
|Return on Equity||47.79%||50.53%||53.27%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||14.17||14.67||15.17||N.A.|
|Total Asset Turnover||1.84||1.55||1.26||N.A.|
|Debt to Net Worth||0||-0.02||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$120,943||$140,664||$160,385||N.A.|
|Assets to Sales||0.45||0.48||0.51||N.A.|
|Current Debt/Total Assets||4%||3%||2%||N.A.|
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