ACMPR / Cannabis Act Business Plans
Check out this infographic from Marijuana Business Daily that illustrates the types of problems you may face when seeking funding (click on the image to see the full sized infographic).
Cannabis/Marijuana Business Plans
“A plan that is not written down, is not a plan…It’s a dream.”
With legalization of recreational cannabis on October 17 2018, is it too late to get into the industry? NO. Demand for high quality cannabis is expected to exceed supply for the next few years. It is very unlikely that Health Canada’s quality standards will be relaxed, because the Canadian quality brand is probably the world leader in quality cannabis. The currently licensed producers will probably aim a lot of their product towards the recreation market, so there may well be shortages in both the medical and the recreational markets. If you are thinking about opening a retail outlet for cannabis, aka a dispensary, check out the information in our Dispensary pages.
If you are thinking of applying to become a licensed producer under the Access to Cannabis for Medical Purposes Regulations (ACMPR formerly MMPR) for a license to produce cannabis or marihuana (Health Canada’s spelling of marijuana), you need a business plan. Your business plan is an essential part of your production licence application and we have produced over 40 business plans for organizations applying for their license. (We have also written business plans for non-ACMPR cannabis businesses.)
There’s a lot that you need to cover in your license application:
- Storage Facility
- Record Keeping
- Standard Operating Procedures (SOPs)
- Quality Assurance
You need to provide information about the building(s) that you’ll be using to grow, dry, store and distribute marijuana. You’ll need detailed site plans that show the entire property. Detailed descriptions of the security systems and processes. An in-depth description (and preferably evidence) of a sophisticated tracking and recording system that can track the seed or clone all the way to the (no bigger than 30 gram) container that’s delivered to a specific customer.
You’ll need to engage a quality testing service to analyze the specifications of each batch of cannabis. Every batch of every strain. There are regulations about container size and specifications, labelling, etc.
Of course, since you’re dealing with the federal government it’s not just the marijuana regulations that you need to worry about. You have to take into account the Health Canada Directive on Physical Security Requirements for Controlled Substances and the Guidance Document — Building and Production Security Requirements for Marijuana for Medical Purposes. Did you know that Health Canada has determined that the value of a kilogram of cannabis is $10,000? That’s $10 per gram!
How about the Controlled Drugs and Substances Act…75 pages plus its 21 pages of regulations. Then of course, you have the Food and Drug Act. It’s only 40 pages…phew! However, the consolidated regulations that form an essential part of the Act are another 1,250 pages. You want to get into the medical marijuana business without professional help?
If you want your license application to succeed, you should be prepared to invest many tens of thousands of dollars in preparing that application and the documentation that has to accompany it. (No. We don’t charge that kind of money for an ACMPR business plan.) Yes, the potential profits from a cannabis growing or extraction business are huge, but you do need a decent investment to get into it. When you’re investing, you need a business plan. The business plan should help you break down your costs, so you know how much it will take to get into the medical marijuana business. We also understand that Health Canada will be reading your business plan, because it is an essential component of your application. So we make sure that we satisfy THEIR interests as well as yours and your investors.
Our business plan will also tell you the individual cost components for each gram of product, how your business will operate and show you the potential profits from that business. Our plans include a financial model that allows you to change variables like yield, CO2 cost, hydro rates, order size, and selling price and immediately see the impact on your bottom line.
A typical 2,000 square-foot flowering room with a rolling bench growing system and a retail price of $5 per gram can easily yield $300,000 worth of marijuana every 70 days. That’s over $1.5 million a year in potential revenues from just 2,000 square feet, a very small commercial operation. Variable growing costs should be under $1 a gram and if you’re leasing the premises, capital expenditures could be under $400,000. The profit potential is amazing; just do the math. You’ll probably need a lot more space than a single 2,000 foot flowering room for a full-scale license, as Health Canada does not seem to be approving very small operations. (Micro-cultivation licenses are a very different story.)
When you’re applying for a cannabis producer’s licence, Health Canada wants to know that your business is going to be run like a business that manufactures narcotics. You have to demonstrate that you understand personnel security requirements, physical security, detailed record keeping and stringent quality assurance protocols. Yes, the licence application has to detail these and other mandatory requirements, but it’s your business plan that ties everything together in one concise document. Health Canada insists that their suppliers (you) have a viable business plan so that they will stay in business for the long term.
Over 20% of the applications received by Health Canada are either rejected or withdrawn by the applicants because obvious requirements were not met. Nearly 45% of the applications are returned as incomplete. Only one third of the applications received are even being reviewed at this time, so two-thirds have already failed the test. Do you think they had a decent business plan?
We are experts at writing business plans and have prepared business plans for many different types and sizes of business, including marijuana businesses. We’ve prepared over 40 business plans for people and organizations applying for their ACMPR license. As professional accountants, we make sure that the financial statements show a good picture of the business and that all of the numbers tie together and make financial sense. After all, you do want the business to actually make you money, don’t you?
Many people who prepare business plans use a cheap software package that does all of the work for them, so they can churn them out quickly. If you are only quoted a few thousand dollars for a business plan, it is almost certain that you’ll get a document generated by one of those business plan software packages. We do it right. We will challenge your assumptions and make sure that your business plan makes business sense.
We will work with you to prepare a professional document — a business plan that works for you.
We’ve researched, prepared and presented hundreds of business plans, strategic plans, budgets, forecasts and business cases. For small businesses and large corporations. Our audience has been managers, business owners, bankers, investors and Boards of Directors. When you need help with a business plan, call us at ++1 (800) 661-9842