Learn To Be A Fix and Flip Investor: How Much Will I Need in Cannabis Business Loans in Arizona to Start a Grow Operation?

Saturday, March 9, 2019

How Much Will I Need in Cannabis Business Loans in Arizona to Start a Grow Operation?

If you’re planning to use Cannabis Business Loans in Arizona to start a wholesale cultivation company, the last thing you want is to run out of money midway through the launch. Break down all the anticipated expenses to get a clear idea of how much you’ll need.

Naturally, the total amount of you’ll need in Cannabis Business Loans in Arizona will vary based on the size of your operation and whether you’ll be growing indoors or out. An outdoor will be less expensive, at somewhere between $10 and $17 per square foot, according to the Marijuana Business Factbook. However, outdoor growing may not be practical in all regions and will generally produce lower-quality plants. To tap into year-round cultivation, produce multiple crops, and possibly charge a bit more for your product, you’ll need to move indoors, which can climb as high as $75 per square foot.

One of your biggest expenses will be the physical location. It may be tempting to base your costs off renting unused warehouse space, but bear in mind many landlords will charge you more than the going rate because you’re in the marijuana industry. As you build out your estimates, call around and verify whether landlords would rent to you and if they would charge you more. In some cases, the cost increases more than $10 per square foot purely because you’re cultivating marijuana. In these cases, it often becomes much more cost-effective to purchase your own property and skip the landlord altogether.

Some sources say you can place as many as eight plants under one light—anything more than that and you’ll diminish the yield so much you might as well have never added the extras. However, some growers will do as little as one plant per light, ensuring each one as ample space. If you’re going with LED grow lights, these alone will run $250-350 each, depending on the wattage and area covered. Fans, humidifiers, and vents will also be necessary, and these usually run around $2,500 per setup. Then, there’s dirt, pots, watering systems, nutrients, electricity, and licensing.

Beware: The Banks Probably Won’t Fund You

While conservative estimates put startup costs around $20,000 if you’re able to find a landlord who will rent to you and aren’t outright buying, banks don’t usually offer Cannabis Business Loans in Arizona. That’s because most are FDIC-insured, and the federal government still hasn’t legalized marijuana even though individual states have.

Alternative lending can give you a helping hand as you launch your marijuana startup.

The good news is, you can get Cannabis Business Loans in Arizona to cover your property/ building/ land and equipment, but you’ll need to look outside banks. Hard money, for example, can get you started and enable you to make interest-only payments for a period of time; perhaps long enough to harvest a crop or two. Generally speaking, wholesalers are making a little over $1,000 per pound right now, but there’s a huge variance in weight per plant—each could be little more than one ounce, or you could grow a single huge plant per grow light, which could potentially give you more than a pound per plant. Do the math. It may be expensive to start, but with margins like that, you could have your full operation paid off in no time and be bringing in serious cash.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.