Ocean Grown Blog

A source of information for a cannabis entrepreneur


The Best Cannabis Business Plans

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Why does a cannabis company need a business plan?

A business plan is key for a new company in any industry. It serves as your company’s playbook and helps you chart your course. Starting a new company without a business plan is akin to building a house with no blueprint, or sumitting Mt. Everest with no map. It greatly increases your chances of success.

In the cannabis industry, a business plan is even more important. Partners and investors want to know that you’ve done your homework and are equipped for success–that you’re legitimate, in other words. A cannabis business plan proves you know the size and scope of your target market, competitors and their weaknesses, and projected revenue and expenses.

Angel Plan Sample – Green Organic Farm

A good business plan takes hundreds of hours and thorough research. Estimates say writing one will take the average entrepreneur 250 hours, which is a major time commitment when you have other pressing matters at hand, like obtaining the proper licenses and permits, or obtaining that ideal plot of land. Here’s the good news: you don’t have to do it yourself. You have enough on your plate! Trust your cannabis business plan to the experts at Masterplans and save yourself valuable time.

Here’s what goes into a solid cannabis business plan, section by section:

Executive Summary: This is a high-level overview of your entire marijuana business plan and should be completed last. It summarizes everything that follows in a compelling one- to two-page narrative. Assume that if people don’t read the rest of the business plan, they’ll still learn everything they need to know here. It should include financial highlights at the end.

Company Summary
: This part answers the questions, what is the name of your company? What’s the company structure–LLC, Inc., SP, etc.? Where is your business based? Who owns the company, and if more than one person does, what percent does each own?

Products and/or Services: Cannabis businesses can run the gamut, from a typical brick-and-mortar dispensary or grow operation to more complex service-based companies like cannabis industry legal advice or professional marketing services. Describe your cannabis company’s main offerings in detail, adding photos and diagrams if necessary.

Market Analysis: Anyone can find cannabis industry revenue with a quick google search–but your marijuana business plan needs more details than that. If you’ll be opening a dispensary, incorporate local demographic data from a geographic information system like ESRI that lays out how many people live near your location and how much discretionary income they have. Also include annual industry revenue growth from a market research firm like IBISWorld, which will break down revenue among various product and service segmentations. The more relevant and specific your data–not to mention timely; it should be from within the past year or two–the more convincing your cannabis business plan will be.

And don’t forget a detailed look into your competition: who they are, where they’re located, revenue if you can find it, and definitely strengths and weaknesses. What niche will your cannabis business fill? What are your competitors overlooking or doing wrong that provides an opportunity for you? Include a SWOT analysis if it makes sense.

Strategy & Implementation: How are you going to market and advertise your marijuana company? How will you stand out from the crowd? What are your short- and long-term goals for the business? All of that goes into this section. The research in your Market Analysis section should help illuminate how best to reach your target audience.

Management Summary: Get your updated resume ready! Here’s where you weave your professional experience, qualifications, education, certifications, and honors into a compelling biography that hopefully clearly lays out why you’re the perfect person to run a cannabis business (and smoking a lot of pot doesn’t count). To make your bio the strongest it can be, try to include concrete numbers, such as the percent you increased revenue at your last place of employment, the number of high-profile clients you managed, or the impressive acreage of the farm you last ran. If you’ve attended cannabis industry trainings or seminars, include those too.

Also include bios of key staff, such as your top-level manager or business partner. If someone is going to manage your greenhouse, include his or her qualifications as well.

Financials: Another critical piece of your cannabis business plan. Your financial section should include an annual revenue forecast broken down among your first five years of doing business. This will be based on “unit assumptions,” which are the pricing estimates and calculations of how much product you will sell each year and at what cost. Next is a personnel forecast with your anticipated hires over the first five years, including title and salary for each one. Then comes your pro forma profit and loss, which includes your annual expected revenue, expenses broken down by category, profit before tax, tax, interest, EBITDA, and net profit. Your break-even, cash flow statement, and balance sheet should follow. (Eyes glazing over yet? Masterplans can do the hard parts for you.)

Appendix: Finally, here you have your Year 1 financials broken down by month. This is the nitty-gritty info for true finance nerds. It may seem unnecessary, but lenders and investors will be glad it’s here. Again, outsource this to a finance pro if you’re not particularly comfortable with numbers (we understand!).

Last, don’t forget your name and contact information, so potential investors and lenders can get in touch with you! And once you’re done with your cannabis business plan, make sure an eagle-eyed friend or professional proofreads it to correct any pesky spelling or grammar errors–because nothing says you’re unprofessional like misspelling “marijuana” or “dispensary.”