Economics of a Marijuana Grow Operation

Hi guys,

I was talking to a friend of mine the other day and I argued to him that having a commercial grow operation is not all that more profitable that running a good legitimate business. With the care and effort involved in it and the time spent, you would just as easily start a profitable legitimate business. The Economics of Marijuana don't seem to be all that enticing anymore.

I think the only way to make money is to obviously produce in bulk and sell the bulk load to another party and not be bogged down in the day to day sale and management.

So I put it to the forum, do you think it's profitable? How would you set up your most profitable and secure grow room?

Here's what I think I'd do.

Hire an Industrial block in a small town, hopefully one in demise that doesn't have a interest from other parties. What I mean by that is I will not be competing for industrial real estate rental because there is no industry in town anymore to want the property. An example is declining of corn manufacturing factories, they are done in bigger manufacturing plants so often ex corn warehouses can be obtained pretty cheaply.

The reason industrial areas are good, is that you have a lower level of threat of intruders due to security fencing and most factories have bars on windows and other security measures. Depending on how large scale the operation, private contractor security guards.

The best cover I think would be a small chemical production company. No one really has to know what the company does other than produce chemicals.

I think as far as location goes, thats where I think would be most secure and cheapest.

In terms of actual set up on a commercial scale for equipment, I would have NFI how that would work.

The cost/profit ratio of buying equipment and how long it would take to pay off everything, I dont know, what do you guys think?

SO yeah, how would you do it forum?

sounds cool , but its been done before. pineapple express anyone? http://www.youtube.com/watch?v=Hzg97H3RhoM

Shut your face pal.

"Legitimate business" is too big of a blanket statement. Even in the same line of work the profit margins are all over the place depending on supply/demand of a given market, management style, efficiency, quality of product, operator skill, and so on. Not to mention the profit margins of different businesses put against one another. A Burger King franchise is going to make a whole lot more than someone running a mall kiosk. How about a WalMart that pulls in $300k a day in sales compared to a mom and pop that pulls in $300 a day? A heart surgeon is going to make more than a family practitioner and a plastic surgeon in Beverly Hills will make more than both combined. In order to make that kind of profit your operation would need to be huge and you would, more likely that not, meet up with the violence of the black market in the form of turf disputes, robberies, and law enforcement.

If I were planning a marijuana business, which I am for when it becomes legalized in the near future, I would decide how much profit I wanted to make and then at least double that for taxes and other overhead. From there I'd figure out how many pounds a given time period I'd need to make that happen. That would tell me how big my operation would need to be, how big my grow spaces would need to be, and how many employees I'd need. Perhaps an indoor perpetual combined with an annual large outdoor grow of the most popular strains. At the end of the day, business is business.

MrBlanco said:

"Legitimate business" is too big of a blanket statement. Even in the same line of work the profit margins are all over the place depending on supply/demand of a given market, management style, efficiency, quality of product, operator skill, and so on. Not to mention the profit margins of different businesses put against one another. A Burger King franchise is going to make a whole lot more than someone running a mall kiosk. How about a WalMart that pulls in $300k a day in sales compared to a mom and pop that pulls in $300 a day? A heart surgeon is going to make more than a family practitioner and a plastic surgeon in Beverly Hills will make more than both combined. In order to make that kind of profit your operation would need to be huge and you would, more likely that not, meet up with the violence of the black market in the form of turf disputes, robberies, and law enforcement.

If I were planning a marijuana business, which I am for when it becomes legalized in the near future, I would decide how much profit I wanted to make and then at least double that for taxes and other overhead. From there I'd figure out how many pounds a given time period I'd need to make that happen. That would tell me how big my operation would need to be, how big my grow spaces would need to be, and how many employees I'd need. Perhaps an indoor perpetual combined with an annual large outdoor grow of the most popular strains. At the end of the day, business is business.

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Yeah I get what you mean but it's not going to be legal like that in the near future. Being realistic it would be an illegal jingle. Looking now it only consists of people renting cheap housing and running several small rooms in the house as grow rooms.

That's a typical illegal set up I think really.

Not really. People around here do the whole warehouse thing. They make it profitable by cutting corners. Usually though, they pump as much product out of one warehouse to make a profit, then they shut it down before they get caught, take the equipment, and go somewhere else a year later. I havn't done it myself, but I have friends of friends that have.

The more 'legitimate' you want it to be, the larger the cost. Buying a factory or house is better than renting, end then you have security issues, not to mention employment issues. You also need to keep a lawyer on retainer, which isn't cheap.

That's not even getting into the cover business. Your chemical idea isn't a good one. EPA and a laundry list of other government agencies need to investigate chemical production operations. Go with something else.

Anyone that would have a large illegal grow and could lose the property.The light bill would bust them.A large grow would have to be in the country on a generator.Or in a legal state.

interesting thought though.

I would recommend you do some research. Most pot heads are too lazy, but it would make the difference between someone who got busted and someone who makes out ahead.

Start with the Tennessee Pot Cave, then start searching newspapers in your area for drug busts. Eventually move your way out. Everytime someone gets busted, write down how. Keep a running list. Some areas use electricity rates to bust people, others sort through trash, and some only use helicopters. Knowing how the police are operating can help you out alot.

If you can get buddy buddy with the local hydro shop, try talking to them if they have heard about any busts lately, and how it happened. Most employees won't be willing to discuss the information, so heads up.

GaryOak said:

Hi guys,

I was talking to a friend of mine the other day and I argued to him that having a commercial grow operation is not all that more profitable that running a good legitimate business.

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You have to be kidding. If you are growing illegally, you are not paying any taxes on the profits. If you are in a legitimate business, you are going to pay taxes on that income. The more you make, in general, the more you will pay in taxes. That is why growing, and dealing, are so lucrative.
NO TAXES.

I would open up a "welding shop" in a texas oilfield town where there are probably a hundred actual welding shops. A welding shop would use tons of power and make tons of heat. Its not unusual to be open 24 hours a day. If anyone ever came in you could say your not taking new work because your two weeks behind and they would believe you. In texas power is pretty cheap and rent is considerably cheaper than most states.

Hidden Dragon said:

You have to be kidding. If you are growing illegally, you are not paying any taxes on the profits. If you are in a legitimate business, you are going to pay taxes on that income. The more you make, in general, the more you will pay in taxes. That is why growing, and dealing, are so lucrative.
NO TAXES.

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SIMPLE LOGIC!!! kiss-ass

hcgm said:

I would open up a "welding shop" in a texas oilfield town where there are probably a hundred actual welding shops. A welding shop would use tons of power and make tons of heat. Its not unusual to be open 24 hours a day. If anyone ever came in you could say your not taking new work because your two weeks behind and they would believe you. In texas power is pretty cheap and rent is considerably cheaper than most states.

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Ha that's a way cool idea!

I don't think there would be any questions at all. That's probably how its being done!

The problem with any legitimate business is that you are going to have annual or semi-annual visits by the fire marshall. He will be looking for compliance things like exit signs, etc... However, you have to be able to fool him into thinking what you have going is legit...