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How Much Can You Profit From Launching a Cannabis Business?

How Much Can You Profit From Launching a Cannabis Business?


How Much Can You Profit From Launching a Cannabis Business?

The “green rush” of the legal cannabis industry is creating all sorts of business opportunities. Cannabis investing took a big step forward earlier this month when the Toronto Stock Exchange introduced the world’s first-ever cannabis exchange-traded fund.

But the green rush isn’t just about investing. There are also opportunities to make some big-time green for anyone who wants to start their own cannabis business.

Legal Cannabis Industry Generates Big Bucks

How Much Can You Profit From Launching a Cannabis Business?

To give you a general sense of how much you can make by starting a cannabis business, consider how much money the legal weed industry is currently generating.

According to The Arcview Group, people in North America spent $6.7 billion on legal weed in 2016. That number represents a 34 percent increase over the previous year.

While last year’s stats are enough to get any business person’s mouth watering, that’s not even the most exciting part.

The legal cannabis industry is expected to continue its fast-paced growth for the foreseeable future. By 2021, it will generate almost $23 billion.

For the experts at the Arcview Group, the ability to sustain this type of growth is one of the most important trends in the entire industry.

“Very few consumer industry categories reach $5 billion in annual spending and then post anything like 25% compound annual growth across the following five years,” the report said.

This is good news for anyone thinking about starting a weed business. If these predictions are even remotely accurate, there are big bucks to be made in legal weed.

The industry is already generating incredible amounts of revenue, and it will only get better in future years.

The Upside

How Much Can You Profit From Launching a Cannabis Business?

The biggest upside for people thinking about starting a cannabis business is that there are seemingly limitless opportunities.

The legal weed industry encompasses a whole lot more than you might first think. Of course, there are the businesses that handle cannabis.

These include breeders, growers, distributors, lab analysts,  and dispensary owners. Each of these sectors represents tons of entrepreneurial opportunities.

But that’s not all. The weed industry also includes other fields and skill sets as diverse as app makers, media companies, tech developers, marketing agencies, financial experts, market analysts, security companies, and more.

To put it simply, a clever entrepreneur can find a way to adapt virtually any business, expertise, or skill set to the cannabis industry.

In addition to all this, the market itself is continually expanding. This is especially true as weed is legalized in more places.

Last fall, for example, four states legalized recreational weed and four more passed new medical marijuana laws. Currently, there are more than 20 states at work on new cannabis laws.

Already, one in five Americans has access to some form of legal weed. And as legalization continues to spread, that market will continue to grow.

The Downside

Launch a Cannabis Business

There are a couple of big downsides facing people who want to start a weed business. Most of these challenges stem from the fact that cannabis is illegal at the federal level.

As a result, it is difficult for weed businesses to operate like regular companies. For example, dispensaries typically operate as cash-only businesses since banks and credit companies generally steer clear of the cannabis industry.

And sometimes, even when a company is operating according to state laws, owners still get busted by federal agents.

Taxes are another challenge for cannabis businesses. In general, cannabis companies can’t write off the same expenses as other businesses.

Legalization is a double-edged sword for cannabis business owners. On the one hand, when a state legalizes it opens up tons of new business opportunities.

But on the other hand, the tension between state and federal laws creates many challenges for business owners.

The Final Hit: Show Me The Numbers

Cannabis Business Profits

The awkward legal status of weed makes it hard to calculate precisely how much cannabis businesses are worth. But here’s what we know.

Using the standard retail metric of “sales per square foot,” experts estimate that recreational cannabis retail businesses average $1,773 per square foot. Medical marijuana retail businesses come in slightly lower at $1,143 per square foot.

To give you some context, high-end jewelry stores average $3,017 per square foot. Liquor stores pull in $250 per square foot. And pharmacies average $241 per square foot.

To gauge how much you can make from a cannabis business, we can also look at the types of jobs currently being filled and how much those jobs earn.

We estimate that there are upwards of 120,000 jobs in the legal cannabis industry. Here are some numbers on how much different positions in the industry make:

  • Good grow masters can make $100,000 a year and up.
  • Dispensary managers typically earn at least $75,000 per year.
  • Folks working in labs to make concentrates and extracts make between $75,000 and $125,000 per year.
  • Trimmers usually make $12 to $13 an hour.

Of course, all of this depends on location. Some retail stores in California’s Bay Area report annual sales that climb as high as $10 million, while stores in other parts of California bring in closer to $3 million.

Bottom line: there are too many uncertainties to be able to accurately gauge how much you can make by launching a cannabis business.

But one thing that is certain is that the legal cannabis industry is full of opportunities for entrepreneurs.

As a whole, the industry is already generating huge profits. And those profits will continue to rise as legalization spreads and as new business people come up with innovative ways to engage the cannabis market.

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