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© 2017 MERRY JANE. All Rights Reserved.

How Much Does It Really Cost to Start A Grow Operation?

Greenhouse grows may offer the best ratio of startup cost to wholesale prices.

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According to data from the last three years recently published in the 2017 Marijuana Business Factbook, the average startup cost for a large-scale wholesale cannabis grow-op is $42 per square foot.  However, the actual startup costs also end up varying based on a number of factors. Outdoor and combination methods of cultivation tend to cost between $10 and $17 per square foot, and greenhouse grow setups average at $50 per square foot. Indoor cultivation setups are the most expensive to invest in, costing an average of $75 per square foot.

The reason that indoor grow-ops are so expensive to start is that cultivators need to artificially control every aspect of the growing environment. This requires expensive equipment such as grow lights, as well as temperature and humidity control systems. Conversely, outdoor grows can use natural light, soil, and rain, allowing a startup to get their operation running at a much cheaper initial cost. In heavily regulated states like Illinois and Connecticut, indoor cultivation is the only legal method allowed by the state, which increases the startup cost significantly for any prospective cultivator.

Despite the high startup cost, indoor grows have some advantages over outdoor operations. The tight control over growing conditions can allow cultivators to grow a higher quality of flower, which can sell for a higher retail price than “sun-grown” marijuana. Also, indoor grows can produce multiple crops per year, where outdoor grows may be restricted due to seasonal changes or poor weather conditions.

Greenhouse grows occupy a middle ground between indoor and outdoor grows, offering a cheaper startup price along with less reliance on outdoor weather conditions. In recent years, greenhouse facilities have benefitted from technological advancements that allow greater control over the growing environment. These advancements allow cultivators to harvest higher-quality bud multiple times per year, which increases revenue for these operations.