How much can you make with a Cannabis franchise? How much does it cost to invest? In honor of April 20th (420) let’s explore some of the opportunities in the Cannabis franchise space.
Looking at the Cannabis Industry? Franchise City has arranged for free consultations for qualified buyers. Your consultant has extensive experience in the Cannabis franchise investment market, is a neutral party, and will help you understand all of your options. Details below.
There are three main baskets in the Cannabis Franchise arena. 1. Retail stores/ CBD & related 2. Medicinal Cannabis Dispensary 3. Cannabis Production or Micro Growing
Let’s start with retail, again, not all states allow for retail Cannabis sales, however certain brands give you the ability to start as a CBD shop, then transition once Cannabis and THC becomes legal in the state. This way you can build up a client base and customer demand while waiting for legalization. Investment range for a small retail shop will be all-in between $120k-$250k depending on footprint size and a number of other factors. These type of stores focus on edibles, tinctures, concentrates and some brands brands in the space have a managed models for absentee owners who prefer not to work in the business. So you buy the shop, the company gets everything set up and runs the store for you. We are seeing small footprint boutique brands in this space doing up to $50k a month in sales. Why would I buy a franchise instead of starting my own independent shop? We’ll speak to that in a moment but lets look at the next category
Medicinal Dispensaries serve a different space and tend to command premium prices over standard retail. But, there is typically more licensing and regulation involved for dispensaries. Some of the medicinal franchises have wellness spas attached for additional revenue stream, great idea. Investment for a medicinal Cannabis Dispensary is a bit higher than standard retail at between $250k for a smaller store to $1.5m for a larger dispensary. How much do dispensaries earn? We have seen large footprint stores averaging over 1.7 million per month, smaller footprint stores averaging $900k per month, so if you are in the right state at the right time the industry can potentially provide tremendous cash flow.
Finally we have Cannabis production. There are actually franchises available that offer Micro-grow opportunities and there are significant benefits to micro growing over traditional large scale grows that we wont cover here, but with a micro cultivator license in Canada you are able to grow yearly up to just over 600kg, or about 1300 lbs. One of the franchises in this space has a unique cultivation model that allows for multiple harvests per year, and payouts are bi weekly. Your buyers are all in place before you even start the grow.
So investors share a large, up to 100k sq’ warehouse facility which is broken down into smaller self contained units which are owned by franchisees. Economies of scale and sharing the larger facility lowers overall costs for all micro growers in the space, and reduces production costs, allowing for higher margins. This opportunity is a completely passive model as your investment is managed by corporate, all the growing, market sourcing, employees everything is taken care of and you receive ongoing revenue. Investment is quite a bit higher at 1.2m and as no financing is available you should have that available liquid.
So why a Cannabis franchise, why not go solo? Well the reason as in most industries is even more relevant in cannabis. What licensing is required? Where do I source my products, or sell my products? What size store do I need, and what design works best? What banks will work with me? Does anyone finance Cannabis businesses? How do I market my store? A franchise has already worked out the hundreds of details that you as an independent would have to figure out on your own, as a franchisee you benefit from that experience. Also, buying power – a franchise system gets better volume pricing and often access to better quality strains, some of them actually producing within the corporation and supplying franchisees from a centralized production facility. Its not that you cant do it on your own, it is just one of the more challenging industry due to being a very new market. It makes sense to look at what is available in franchising and compare the benefits over going solo before you invest.
Franchise City has set up free consultations with our Cannabis franchise partner experts. Buyers should have have a minimum of $100k liquid capital for retail CBD, and a minimum of $300k for Cannabis concepts. Traditional business financing is generally not possible, however 401k rollovers or home equity loans might be an option.
Details here: https://www.franchise.city/cannabis-franchise-review
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