And if the license fees are manageable you have to keep 2 million in escrow. 2 million just sitting there making nothing. Ridiculous rule. The 25k was supposed to be refundable in the original plans as well. I'm assuming summing they want this program dead on arrival.
-
Happy Birthday ICMag! Been 20 years since Gypsy Nirvana created the forum! We are celebrating with a 4/20 Giveaway and by launching a new Patreon tier called "420club". You can read more here.
-
Important notice: ICMag's T.O.U. has been updated. Please review it here. For your convenience, it is also available in the main forum menu, under 'Quick Links"!
starting processes for opening a Colorado retail/manufacturing cannabis shop
- Thread starter Connoisseur300
- Start date
And if the license fees are manageable you have to keep 2 million in escrow. 2 million just sitting there making nothing. Ridiculous rule. The 25k was supposed to be refundable in the original plans as well. I'm assuming summing they want this program dead on arrival.
nastynate420
Member
The state fees to start up in CO for the highest tier with the ability to have 500 or more patients cost 40.5k, so it's not that expensive. If you can grow and know your not going to fuck up a whole harvest then there's really no way you are going to go bankrupt if you're starting with 250k. Outfitting a 50 light op legit wouldn't be more than 120k including rent for the first 3 months until you harvest and have some cash flow coming in. So that's 160.5k just to get started. Now with 250k you have 90k for fuck ups and paying people. I don't want to sound like I'm lecturing but I've looked into this a lot, and if you have some balls and some cash it can be done.
also gotta keep in mind that all the startup money has to pass a financial backgound check....i think thats one of the hardest aspects and biggest hurdles for most turkey baggin green rushers.
it takes quite a while to wash that much cash into the system cleanly....much easier for those who come from wealth or know a very rich investor.
remember, no wire transfers from south america to start your warehouse! lol
it takes quite a while to wash that much cash into the system cleanly....much easier for those who come from wealth or know a very rich investor.
remember, no wire transfers from south america to start your warehouse! lol
nastynate420
Member
^true that. Although that wire transfer worked to get his license from the MMED of CO, but not for the feds.
I own a center and grow in Lakewood. We are stuck medical until January when we should be going rec/duel. I can tell you it will cost over 500k to start a small operation (mmc/opc) and many months before the first dollar comes in. Without an extra 500k to set you apart in a slightly unique way. Could be a couple to few years before you actually turn a profit as well. I started my company in 2009 with my own capitol and its been a highly competitive experience to say the least. Knowing what I know now. 1m to start would be minimum startup Capitol.
Photosynthesis
Member
I wouldn't start with less than 1 million.
This weekend I am going to speak with a Company that has a new warehouse that can handle 360 lights, but they also are wanting to expand to 4 acres of greenhouses.
They are at full capacity right now with their work force, and are only using 1 of their 5 licenses to grow with.
Why aren't they blowing all of this up right now? Money, and people that know what they are doing.
They have been at it since 2008-2009. So they are not new to this business. However Capital, and people are hard to come by these days.
Sounds like a fun project though. Building out 4 acres of greenhouses to solely grow cannabis in seems like most every growers dream.
This weekend I am going to speak with a Company that has a new warehouse that can handle 360 lights, but they also are wanting to expand to 4 acres of greenhouses.
They are at full capacity right now with their work force, and are only using 1 of their 5 licenses to grow with.
Why aren't they blowing all of this up right now? Money, and people that know what they are doing.
They have been at it since 2008-2009. So they are not new to this business. However Capital, and people are hard to come by these days.
Sounds like a fun project though. Building out 4 acres of greenhouses to solely grow cannabis in seems like most every growers dream.
nastynate420
Member
Now that it's legal I'm sure it's going to be moving more towards greenhouse since it's cheaper and the quality is similar. Indoor was for when feds were doing flyovers. Those days in Colorado are numbered.
nastynate420
Member
I'm not saying you're wrong, I just don't see how you figure those numbers. I don't think it would really cost more than 2 grand per light to set up. So fifty 1k watt's would be 100k. Let's add 20% to be safe, so 120k. Now your build is set up.
100k watts - 10k per cycle electric bill
111 lbs trim workers- 8880 per cycle
3000 sq ft warehouse- 3.6k per cycle rent
employees wage storefront- 10.2k per cycle
storefront rent- 3k per cycle
state fees for type 3 center and optional premise license w/ 2 owners and four employees- 40.5k
county fees for grow facility and shop- 11.5k
upfront cost for the first cycle and all licenses=122.68k
recurring quarterly costs= 35.68k
111 lbs @ .5 GPW every cycle@ 2200/lb= 244k per cycle
@1600/lb= 177k
gross profit per cycle@2200/lb= 208.3k
@1600/lb= 141.3k
That's with 2 people (me and my girlfriend) working "for free" as owners and for 100 lights, so you could cut the costs in half. I also did for grossing .5 gpw which is probably about half of what the growers would actually yield. That also doesn't include using a trimming machine. Pay was 12 an hour for store employees and 20 an hour for grower. I think that you can definitely start up with less than a half mil. Is that perfectly ideal? No. But with the return you get on each harvest, it doesn't really matter. The main thing is finding customers, but using correct advertisement as well as low prices that shouldn't take too long. Also I live in Pueblo, that's why the rent and pay is so low and gross profit per lb so high. I even put in a gross of 1600 per lb which in Pueblo is way under what you'd actually get.
Photosynthesis
Member
Math looks great on paper. Not so much in the real world.
You are arguing with someone that has done, and is doing what yo want to do.
You have already failed.
nastynate420
Member
That's what I'm wondering. What am I missing out on. I think that cutting my yield in half and my buildout by 20% should cover any incidentals. Could you be more specific in things that have set you back in the past, or things that cost a lot of money that you weren't expecting? You don't think that 250-300 grand can start up and pay for a small 50 light warehouse, shop, and employees for three-four months until harvest? I'm not trying to talk down on you, just want to hear from someone with experience in the industry.
Photosynthesis
Member
I would not even begin to think about a 50 light grow with a retail store for anything less than 500k. If someone came to me right now with 500k, and said "let's do this", I would decline the offer.
The thing to keep in mind is that you are talking about investing in an already dieing industry. Growing plants in warehouses, under electric lights.
By the time you got your shit together the greenhouses down south will be producing much cheaper then you could ever dream of doing.
I will also assume that the State will allow wholesale production by then. Thus negating the need to grow your own.
These ideas were awesome in 2009 when people got into this. Now things have evolved, and are continuing to evolve.
Buy 100 acres, and drop hella greenhouses. If not I would save your money.
The thing to keep in mind is that you are talking about investing in an already dieing industry. Growing plants in warehouses, under electric lights.
By the time you got your shit together the greenhouses down south will be producing much cheaper then you could ever dream of doing.
I will also assume that the State will allow wholesale production by then. Thus negating the need to grow your own.
These ideas were awesome in 2009 when people got into this. Now things have evolved, and are continuing to evolve.
Buy 100 acres, and drop hella greenhouses. If not I would save your money.
nastynate420
Member
Yup, I said that farther up the thread. I did the math a while ago before I figured out that greenhouse/OD is what's going to happen. So it would probably be a fair amount less setting a greenhouse up. Plus I live in Pueblo County
so that's probably what I'd want to do. How much do you think it would cost to set up a small-medium dispensary if you went the OD/greenhouse route?haha its ironic that its gotta be "legal" or "legit" money as start up capital. when a large percentage of that "legit" money is ill-gotten in some form or fashion anyways. when big biz is slave laboring people to make that money, or gus the chicken restaurant guy from breaking bad has "clean" money all day. Prop215 mentioned it already but as long as the money appears clean (washed) its good to go. ignorance is bliss for govt. agencies when getting those 6 figure deposits/fees!
Photosynthesis
Member
Yup, I said that farther up the thread. I did the math a while ago before I figured out that greenhouse/OD is what's going to happen. So it would probably be a fair amount less setting a greenhouse up. Plus I live in Pueblo County
I would still start with a minimum of 500k.
I will be down by you this weekend. Should be fun.
SirStynkalot
Member
TBH pretty much all the equipment's the same for a greenhouse as for an indoor grow. The difference price wise is more in annual operating costs.
ColoradoOG
Member
Nasty nate,your forgetting state/city inspection costs, fire marshel, mandatory security and everything else that goes with it. Growing is cheap, dealing with regulations is not. You also dont take in mind the high taxes and the time it takes you to hit your first harvest after you get your approval. After that now you got to consider marketing. I can go on and on but hopefully you get the idea. Im not trying to be a dream basher, but this isnt some run of the mill business. Its a serious business that requires serious cash. Even if you could get up and "Running" alot of shops in colorado are barely scraping by. The ones that are doing it right are already getting prices so rediculously low their starting to become walmarts(which is standard for business in america )
If you dont have 500k-1m i would strongly advise against it. At the very least talk with some of some of the industry leading attorneys and go from there. Rob cory or warren edson would be a good place to start.
Good luck regardless my friend, but please please please do your research!
If you dont have 500k-1m i would strongly advise against it. At the very least talk with some of some of the industry leading attorneys and go from there. Rob cory or warren edson would be a good place to start.
Good luck regardless my friend, but please please please do your research!
I'm wondering what the pricing is, I want to compare to our Canadian prices.
ColoradoOG
Member
Its not uncommon to find 100$ per oz..Granted its not grown the best but that's how the market works out here. People just don't care about quality. Its all about prices A lot of people will pay for junk at a lower price than some super awesome smoke which is pretty much USA standard on anything nowadays.
Also something I forgot to mention earlier. The IRS doesn't recognize your shop as a legitimate business so this prevents you from various different business write offs. I know several business owners that got spanked because of it. This kinda business falls under tax code 280E, SECTION 280E: No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted
A lot of people will pay for junk at a lower price than some super awesome smoke which is pretty much USA standard on anything nowadays.Also something I forgot to mention earlier. The IRS doesn't recognize your shop as a legitimate business so this prevents you from various different business write offs. I know several business owners that got spanked because of it. This kinda business falls under tax code 280E, SECTION 280E: No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted
nastynate420
Member
Do you have to pay for the city/state/fire marshall inspection costs yourself? Also, how often do they come? I'd assume that if you built out right in the first place, you would be up to code regardless so it wouldn't really matter after that. I do appreciate your input, I was just hoping I would be able to do it with 300k and no one else's money
. It looks like I'm going to have to look for some outside investment. It does look like the market is getting pretty saturated down here in Pueblo, but not as much as Denver though, but even at 50-75 an oz there is a large profit margin especially in Pueblo with cheaper rent and wages. It does sound like a lot of odds and ends things add up quickly. Fortunately, I have a lot of family and friends with money that would be eager to invest in the pot business, I just didn't really want to put anyone else's money on the line other than my own. I guess you can't always get what you want. I'll have to go talk to Rob and see what he says.nastynate420
Member
I would still start with a minimum of 500k.
I will be down by you this weekend. Should be fun.
500k as a minimum does seem to be the consensus :/ Anyway, anything cool going on this weekend in town that I should know about, or are you just visiting friends/family?
