Do you want to start cannabis company business?

Executive Summary

Company Summary

Products

Marketing Analysis of Cannabis Business

Strategy

Personnel plan

Financial 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’.

Executive Summary

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.

2.2 Management

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.

2.3 Customers

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:

Cannabis Business Plan 1

Company Summary

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:

Cannabis Business Plan 2

The detailed information about the start-up is given below:

Start-up Expenses 
Legal$55,300
Consultants$0
Insurance$32,750
Rent$32,500
Research and Development$32,750
Expensed Equipment$32,750
Signs$1,250
TOTAL START-UP EXPENSES$187,300
Start-up Assets$0
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
TOTAL ASSETS$121,875
Total Requirements$245,000
START-UP FUNDING$0
START-UP FUNDING$273,125
Start-up Expenses to Fund$11,875
Start-up Assets to Fund$15,000
TOTAL FUNDING REQUIRED$0
Assets$23,125
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
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$332,500
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$695,000
Loss at Start-up (Start-up Expenses)$313,125
TOTAL CAPITAL$251,875
TOTAL CAPITAL AND LIABILITIES$251,875
Total Funding$255,000

Products

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.

Cannabis Business Plan 3

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:

Market Analysis
Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
Psychiatrists32%11,43313,34416,55318,74520,54513.43%
Medicinal Industries48%22,33432,34443,66552,54466,43210.00%
Research Groups20%12,86714,43315,99917,56519,13115.32%
Total100%46,63460,12176,21788,854106,1089.54%

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.

Strategy

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

Cannabis Business Plan 4

6.4 Sales Yearly

Cannabis Business Plan 5

6.5 Sales Forecast

Our forecasted sales are summarized in the following column charts:

Cannabis Business Plan 6

The detailed information about the sales forecast is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Hemp production1,887,0302,680,3202,588,240
Soft gels pills802,370815,430823,540
CBD oil539,3207702301,002,310
CBD concentrates265,450322,390393,320
TOTAL UNIT SALES3,494,1704,588,3704,807,410
Unit PricesYear 1Year 2Year 3
Hemp production$140.00$150.00$160.00
Soft gels pills$600.00$800.00$1,000.00
CBD oil$700.00$800.00$900.00
CBD concentrates$650.00$750.00$850.00
Sales
Hemp production$2,149,800$2,784,000$3,383,200
Soft gels pills$120,050$194,500$268,500
CBD oil$50,110$71,600$93,000
CBD concentrates$139,350$194,600$249,850
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Hemp production$0.70$0.80$0.90
Soft gels pills$0.40$0.45$0.50
CBD oil$0.30$0.35$0.40
CBD concentrates$3.00$3.50$4.00
Direct Cost of Sales
Hemp production$989,300$1,839,000$2,679,700
Soft gels pills$66,600$119,900$173,200
CBD oil$17,900$35,000$52,100
CBD concentrates$19,400$67,600$115,800
Subtotal Direct Cost of Sales$1,294,100$1,699,400$2,104,700

Personnel plan

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

 Personnel Plan   
Year 1Year 2Year 3
General Manager$85,000$95,000$105,000
Accountants$145,000$152,000$159,000
Chief Legal Officer$85,000$95,000$105,000
Field Employees$550,000$650,000$750,000
Sales Executives$152,000$159,000$166,000
Driver$50,000$55,000$60,000
Security Officers$85,000$95,000$105,000
Total Salaries$702,000$809,000$916,000

Financial Plan

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

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

 

8.2 Brake-even Analysis

Cannabis Business Plan 7

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Assumptions:
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 1Year 2Year 3
Sales$309,069$385,934$462,799
Direct Cost of Sales$15,100$19,153$23,206
Other$0$0$0
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Expenses
Payroll$138,036$162,898$187,760
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Depreciation$2,070$2,070$2,070
Leased Equipment$0$0$0
Utilities$4,000$4,250$4,500
Insurance$1,800$1,800$1,800
Rent$6,500$7,000$7,500
Payroll Taxes$34,510$40,726$46,942
Other$0$0$0
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
EBITDA$107,275$148,110$188,945
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Cannabis Business Plan 8

8.3.2 Profit Yearly

Cannabis Business Plan 9

8.3.3 Gross Margin Monthly

Cannabis Business Plan 10

8.3.4 Gross Margin Yearly

Cannabis Business Plan 11

8.4 Projected Cash Flow

Cannabis Business Plan 12

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
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
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
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
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$184,666$218,525$252,384
Accounts Receivable$12,613$14,493$16,373
Inventory$2,980$3,450$3,920
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL LONG-TERM ASSETS$980 $610 $240
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
Earnings$100,709$119,555$138,401
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420

 

8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets4.35%4.71%5.80% 9.80%
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.