Ever since 2012, when the first U.S. states legalized the sale and consumption for non-medical use, the industry has become one of the fastest-growing in the nation. As the development of the legal cannabis sector has spread across the nation, the financial development of cannabis farms and processing plants for hemp drying have seen major financial gains. MG Retailer Magazine explains the growing cannabis sector is benefitting the larger growers in major facilities over smaller boutique growers.
The Financial Yield per Acre
Many aspects of the cannabis sector are of major importance to growers and you if you are looking to become involved in the industry. The first step in developing a career in the sector is to explore the financial gains that are possible for every grower who has a significant area to farm for flowers. If you have a significant area to farm, you will find yourself earning an average of more than $1.1 million per acre in the U.S. New Frontier Data reports the cannabis sector is one of the fastest-growing and most profitable with each acre yielding around $1,142 for a farmer.
Comparison to Other Agricultural Sectors
If you are considering the overall cost and profit per acre of legalized cannabis, you will be shocked at the success that can be achieved by farmers looking for legal growth. The benefits of growing cannabis in states where it is legal when compared to the cost of other crops and grains are easy to see. Among the financial benefits that can be identified is the fact the average price per acre for cannabis farmers stands at around $1,120 per pound to give an overall yield of around $1.1 million per acre.
The price per acre of cannabis is extremely favorable when compared to corn, which is sold at a fraction of the value of cannabis per acre at $644. It is easy to identify why the majority of farmers in states where growing cannabis is legal to have been trying to switch to this kind of farming as part of a larger company or cooperative. The use of soybean as a crop is worth even less than corn with the value sitting at around $400 and corn even lower at just $232 per acre.
Costs can be High
Whether you are looking at becoming a part of the cannabis industry as a farmer or processing plant, you will need to understand the high price of starting your business. Hemp drying and cannabis farming can have high overheads for a startup company that is looking to break into the market. Licenses can be obtained for a low cost in states, such as Alaska, where fees can total just over $20,000 due to the state government.
However, in other areas of the U.S., there are some high costs for licenses, including the state of Arkansas where the annual license fees can top $100,000. California offers licenses for a low fee when a special outdoor cottage industry is just $135 and a nursery costs around $4,500 to license.
Calculating the Costs of Cultivation
The costs of cultivation can be high when you are looking to create a warehouse that is around 7,700 square feet in size with a yield of around 350 pounds with four harvests of flowers and buds each year. The overall cost of the warehouse and its requirements totals around 830,000 with the costs of electricity topping around $30,000, according to the Cannabis Business Times.
Gross Profit for Cultivation
The cultivation of a cannabis crop over the course of a year can be extremely high with some growers at medium to large operations profiting more than $1.5 million per month. There are many different ways this kind of cultivation process can bear fruit for a business owner, but the majority of the business leaders working in this sector are intent on creating a better way of working that will lead to a major profit. The high-profit yield for the majority of cannabis growers has allowed many businesses to make a major profit from trading the limited number of licenses available at any time. The high price per acre can lead to major profits being made over the course of a month and year, but many costs are high as the difficult growing process is completed.
