Advice/input/criticism On A Cultivation Operation In 2018

[Casaverde]

Hey guys,

I've been toying with the idea of a cultivation operation in 2018 once the new licensing laws pass, and also under the assumption that prop 64 passes as well.

I'm confident there's going to be a drop in the price of flower, and with that in mind, I've decided on a greenhouse operation with blackout shades. My goal is a consistent high-quality flower.

I feel my entry costs will be minimal given my situation. By trade, I am an accounting manager. I have a BS in accounting and an MBA in finance. I will worry about the business/accounting/finance/legal/operational side of things. I already have land that is legal to cultivate (medically) on and has wells on the land to minimize my water cost. My uncle is the lead greenhouse erector at a large operation with dozens of greenhouses. His costs will be little to nothing. My friend of 20 years currently grows legally and various connections and knows larger-scale cultivators. In addition, he and his father (who also grows) are both electricians. They have set up several other legal ops and have experience with large scale operations (non-cannabis). Between my uncle and friend, the costs to erect the greenhouse will be very minimal. My friend will also serve as my head farmer and oversee production. Labor costs will be kept to a minimum due to my friend being paid by pound of production. Lower-level labor will be through other family members who currently work at a greenhouse and they will be trained on cannabis.

I have forecasted revenues and operational costs using studies found online on the costs of doing business in Washington, Colorado and other states. I forecasted greenhouse production using the little data I could find on several greenhouse ops and using the average. I forecasted the price at several drops (I went under $1,000). The numbers still look good playing various scenarios. I understand the market might become saturated, but my business model will keep costs to a minimum while still producing a high-quality flower.

I think the biggest thing I'm missing out is understanding how hard it is to cultivate high-quality buds on a large scale. I'm also not sure how much labor and time commitment I'll need to factor in. Can someone please give me some other things to think about?

Thanks

 

[markscastle]

Don`t think the prices will drop any more than they are now. Reason is the cost of gro0wing keeps going up and if passed there will be middlemen , permit and taxes added on to legal grows. This will all but insure a thriving black market continues.

 

[Seamaiden]

I think the biggest thing I'm missing out is understanding how hard it is to cultivate high-quality buds on a large scale. I'm also not sure how much labor and time commitment I'll need to factor in. Can someone please give me some other things to think about?

Right now, taxes seems to be the biggest issue looming. Some cities are cashing in, some are cashing in hard.

If you have a friend who's already familiar with GH growing, especially on a large scale, then I would think he already knows how to grow fine quality cannabis. If you feel he's doing something more akin to Budweiser-style growing, then I'd suggest finding out if there are any courses he can take that might help him, or consider the genetic sources.

If, however, he's not quite up to that scale, consider investing in a consultant. I know some people who I believe do consulting, but they may have shifted their focus given MMRSA. I know that one is moving entirely away from production and is going to be a nursery and transporter under the MMRSA legislation.

I'm also assuming that you're already familiar with MMRSA and have an attorney on retainer.

 

[markscastle]

Right now, taxes seems to be the biggest issue looming. Some cities are cashing in, some are cashing in hard.

If you have a friend who's already familiar with GH growing, especially on a large scale, then I would think he already knows how to grow fine quality cannabis. If you feel he's doing something more akin to Budweiser-style growing, then I'd suggest finding out if there are any courses he can take that might help him, or consider the genetic sources.

If, however, he's not quite up to that scale, consider investing in a consultant. I know some people who I believe do consulting, but they may have shifted their focus given MMRSA. I know that one is moving entirely away from production and is going to be a nursery and transporter under the MMRSA legislation.

I'm also assuming that you're already familiar with MMRSA and have an attorney on retainer.

Not going that route. I won`t be a part of the Tax, Regulate and Control wave. It`s going to crash and I won`t be a part of it. I don`t support government involvement .

 

[Casaverde]

Don`t think the prices will drop any more than they are now. Reason is the cost of gro0wing keeps going up and if passed there will be middlemen , permit and taxes added on to legal grows. This will all but insure a thriving black market continues.

I'd like to try to cut out the middleman and work as a direct delivery service. Permitting, testing, tracking, etc. misc costs are currently being factored in, but I should probably pad the budget there a little more.

I agree that the black market will continue, for how long, who knows? It will be interesting to see.

Right now, taxes seems to be the biggest issue looming. Some cities are cashing in, some are cashing in hard.

Agreed. My land is out in the Coachella Valley where it's currently taxed at $25 per square foot up to 3,000 square feet and $10 per square foot after. It's factored in and the numbers still look good.

If you have a friend who's already familiar with GH growing, especially on a large scale, then I would think he already knows how to grow fine quality cannabis. If you feel he's doing something more akin to Budweiser-style growing, then I'd suggest finding out if there are any courses he can take that might help him, or consider the genetic sources.

He does produce very high quality buds, they are super consistent, and he and his dad have been doing it for a very long time. The most he has grown has been 24 in a building, not a greenhouse,. He has set up larger operations, but has never led the grow in one, which is why I'm hesitant if we're going from 24 plants to hundreds of plants - how do you factor the labor? I understand labor will very depending on what stage of the plant is, but how do I guarantee a consistent, high-quality harvest each time? An employee at all times when the lights are on (artificial and sun)?

If, however, he's not quite up to that scale, consider investing in a consultant. I know some people who I believe do consulting, but they may have shifted their focus given MMRSA. I know that one is moving entirely away from production and is going to be a nursery and transporter under the MMRSA legislation.

I'm also assuming that you're already familiar with MMRSA and have an attorney on retainer.

Yeah, I think I might need a consultant to at least get me up and running through the first couple of harvests and to "train" my partners.

I have not read MMRSA legislation in its entirety and that might be a good idea to.

Can you go over the role of a lawyer in this? I'm not saying I don't want a lawyer, I just want to know when I have to incur that expense and what will be his/her role.

One other thing - is a shipping container a good idea for a curing/storage room? That's something I need to factor in as well.

 

[Seamaiden]

The role of an attorney is to keep your ass covered. I'm getting the idea that you haven't spoken to one, that should be at the top of your list and if you like him/her, get them on retainer ASAP. It will be their job to be apprised of the MMRSA legislation and keep you fully legal. This will cost, but I believe it'll be worth it. How much depends on the attorney, the area, and their area of expertise. For my personal cultivation I got a local criminal attorney who's known in the local courts, etc, on retainer for $1,500. I haven't had to use him, so that money sits in the escrow account, or whatever it's called.

For an operation like what you're proposing I'm going to guess that a $10,000 retainer will be approximately appropriate, but I could be quite wrong about that, it could be $20K. From there, billable hours, but that's keeping your butt well covered.

I cannot answer you regarding how to account for labor, but I do suggest giving at least a living wage, but frankly, even $15/hr won't go far, even in Coachella. A good consultant should be able to help you with that. If you haven't found anyone, let me know and I'll ask around, see if we can get you set up with someone who knows their stuff.

Will you be acquiring a nursery license, or purchasing your starts from someone else set up as a nursery? Again, I know someone who's going to be a nursery provider and transporter.

I can't recall, have you accounted for security, including of your WiFi network? Video surveillance, etc. From what I understand the production end of the new track & trace system is going to be thick and sticky.

 

[Seamaiden]

I forgot to mention that I'm not certain whether or not the MCRSA set of legislation is going to allow vertical integration, i.e.; your plan to act both as cultivator and delivery service. IIRC, each is a separate license.