How to Write a Cannibis Business Plan

The cannabis industry has grown at an exponential pace over the last several years.  There is a multitude of reasons why this industry is growing, based on research from our cannabis business plan writer.  For example, an ever-increasing number of states have legalized or decriminalized marijuana.  Specifically, 48 of the 50 states have taken either one or both of the steps.  As cannabis usage becomes an accepted practice in our society, the need for growing, distributing, and selling the product will also increase in tandem.  From this, our cannabis business plan writer foresees an immense need for this type of business plan.  A cannabis business plan will allow business owners to strategically document activities for their business as well as use it for traditional as well as investor financing.  With this said, our cannabis business plan writer has come up with some tips and tricks that business plan writers may use when writing cannabis business plans.

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Executive Summary for a Cannabis Business Plan.

In the executive summary section of a cannabis business plan, regardless if you are a cultivator, distributor, or retail seller of marijuana, make sure to highlight specific, important aspects of your business plan from segments such as the financial projection section, marketing section, operation segment, and target market opportunities.  Further, for this type of business plan, our cannabis business plan writer recommends discussing security in the executive summary section as well.  An unfortunate reality for marijuana distributors, cultivators, and retailers is crime.  Drug dealers need drugs, and marijuana is well a drug.  Because of this paradigm, briefly discuss security steps that your cannabis business will take in order to protect the product.  Common steps to highlight in the segment may include hiring an armed security guard, state-of-the-art security systems, and other practices.

Company Information and Location.

Depending on your cannabis business type, your location may either be a warehouse, for cultivators and distributors, or retail front, for retail cannabis sellers.  Regardless of which location structure is needed, some common attributes for the business location will be a business owner’s ability to provide security for customers and products, a climate-controlled area to ensure cannabis longevity, and easy entry and exit to the location.  Because of these important attributes, make sure to discuss each one and others from the perspective of business location.

Service Description and Competitive Advantages

The competitive advantage section for a cannabis business plan usually focuses on the quality of cannabis or the wide range of cannabis-related products available at the location, based on the experiences of our business plan writer.  For example, if your organization is going to exploit high-quality cannabis products, then make sure to discuss why the product is top shelf as compared to “Schwag.”  Your business plan discussion focus may include how your organization dries the product, packaging techniques, and or THC levels.

Target Market for a Cannabis Business Plan

The target market for a cannabis business depends on, again, whether your organization will be a cultivator, distributor, or retailer.  As a retailer, a campus business plan may target individuals with chronic diseases such as arthritis.  From a recreational perspective, a target market may be college students at local universities.  From a cultivator perspective, the target market would change to distributors in your area.  Finally, a cultivator cannabis business plan may target either distributor in the area or cut out the middleman and focus on retailers in your region.  No matter what the strategy or target market, specifically state the target market and discuss why the target market is important to your organization.

Industry research for a Cannabis Business Plan

Industry research for a cannabis business plan should focus on a broad, national trend first and then target your local market.  For example, at present, the medical and recreational marijuana growing industry in the US has achieved $11.6 billion in revenues based on research from IBIS World.  Further, industry competitors enjoy profits of over $1.5 billion.  On average, medical and recreational growers average approximately a 13.2% profit margin.  Once your national research is rounded out, then identify the number of competitors in your proximity, their price points as compared to yours, and one or two differentiating factors that the competitor may use in their operations that set him apart.  By following the structure, cannabis business owners are able to show a solid understanding of national trends and display competence in relations to the local market.

Owner and Management Section

The owner and management section for a cannabis business plan should start with the cannabis business owner’s educational background.  For example, if you have a degree in business, make sure to state it, the school you earned from, and any specializations.  Next, discuss any jobs that you have held related to your cannabis business.  An example of this would be if you plan on selling retail cannabis, then any retail management or sales experience would be helpful.  In contrast, if you plan on cultivating cannabis, then the agricultural experience would be best aligned in this example.

Funding Request for a Cannabis Business Plan

The funding request section for a cannabis business plan should start with explicitly stating the dollar amount needed to start operations.  Once the dollar amount is identified, then cannabis business owners should important categories and align a budgeted dollar amount for each category.  For example, a cannabis retailer may have categories such as working capital, cannabis inventory, buildout, shelving, POS system, security system, and training budget.  Once the categories are identified in dollar amounts allocated, make sure to total up each category at the bottom of your spreadsheet.  Make sure the dollar amount total is identical to your top-line dollar amount specified for funding needed.  By following this practice, cannabis business owners are able to show specifically how much money is needed to start their cannabis operation but also allows them the flexibility to spend money within designated categories.

Financials and Financial Projections for a Cannabis Business Plan

The financial projection section for the cannabis business plan should be structured based on your business needs.  For example, a cannabis cultivator may structure its financial projections by starting with identifying how many pounds of cannabis will be cultivated and sold on a daily basis.  Next, business owners need to identify variable costs aligned with growing and harvesting cannabis flowers.  Variable costs may include disposable pots, soil, fertilizer, and packaging for products.  The next step would be to identify fixed costs associated with your business.  Fixed costs for a cannabis retailer may include a lease, utilities, arm security, and employee wages.  Once this information is compiled, then subtract the variable cost from your sales price for the cannabis sold daily.  Next, make sure to multiply your gross profits by the number of days on average in a month, typically 30.  Finally, total up your fixed costs and deduct the sum from your gross profits for the month.  This process sounds tedious, but it’s a great way to start and compiling a model for your cannabis financial projections.

Hopefully, these insightful tips and tricks for writing a business plan were helpful.  As always, if you need help with a business plan or financial projections, just send us an email or give us a call. 

Phone: 321-948-9588

Email: Paulb@Qualitybusinessplan.com

 

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Quality Business Plan, and Quality Business Consultant.

Date: 6/18/2021