March 12, 2013

Rhode Island Projections Shed Light on Dispensary Startup Costs, Annual Revenues

News about medical marijuana banks and cannabis industry finance

Want to get an idea of startup costs, revenue potential and other financial data tied to launching and running a medical marijuana dispensary?

Look to Rhode Island.

Documents filed recently by two groups planning to open dispensaries in the state – the Thomas C. Slater Compassion Center and Greenleaf Compassion Center – provide a snapshot of the financial side of the medical marijuana business. The documents feature updated business plans that include everything from expected startup expenses, revenues and breakeven timelines to estimated number of patient visits annually.

The Slater center plans on a relatively large operation with a substantial grow operation, while Greenleaf is going much smaller and is buying its initial cannabis inventory from caregivers.

Here are some highlights from their estimates: (Note – For a detailed overview of financial information and exclusive data about the MMJ industry, check out MMJ Business Daily’s Marijuana Business Factbook 2013, which will be released March 20.)

Initial startup expenses

Slater: $1.6 million, including $660,000 in build-out costs, $500,000 in working capital and $440,000 for equipment

Greenleaf: $120,000, including $56,000 for payroll and $25,000 to purchase 200 ounces of cannabis

Startup expenses during ramp-up

Slater: $1.1 million

Greenleaf: $535,541

Sampling of startup expenses during ramp-up

Slater: Security ($434,375), payroll ($291,120), cannabis growing and processing ($97,200), leaseholding expenses ($73,333), community outreach ($72,842) and utilities ($28,800).

Greenleaf: Payroll ($241,872), leasehold expenses ($50,000), office expenses ($26,130), supplies ($20,800), equipment ($10,088) and consultants ($7,280).

Funding strategy

Slater: $1.6 million loan from investor/board member

Greenleaf: $200,000 loan from principals/management team

Revenues in first full year

Slater: $2.6 million (including $2.4 million in cannabis sales to registered patients and $240,800 in sales of paraphernalia and other goods)

Greenleaf: $1.25 million (including $1.24 million in cannabis sales to registered patients and $12,000 in sales of paraphernalia and other goods)

Revenues in second full fiscal year

Slater: $3.9 million, or 50% growth

Greenleaf: $2.15 million, or 50% growth

Breakeven (note: the centers are nonprofits)

Slater: Second full fiscal year

Greenleaf: First full year

Number of patients in first full fiscal year

Slater: 1,000

Greenleaf: 550

Number of patient visits in first full fiscal year

Slater: 4,300

Greenleaf: 9,900

Size of center

Slater: 13,750 square feet, including 5,000 for retail cannabis sales and 5,600 for cultivation

Greenleaf: 2,800 square feet

Number of full-time equivalent workers (first full year)

Slater: 23

Greenleaf: 9.25

Rhode Island initially approved three dispensary applicants, but the state’s governor halted the program in 2011 over concerns that it conflicts with federal law. Now the program is back on track, and Greenleaf and the Slater center are gearing up to open soon.

Both centers recently submitted changes to their initial applications from several years ago, providing detailed updates to their business plans as required by the Rhode Island Department of Health.

While startup costs and other financial data vary greatly depending on many factors including location, local regulations and the scope of the operation, these projections provide insight into the financial side of an industry where there’s a dearth of such information.


4 Comments:

  1. Did the estimated number of patient visits between greenleaf and slater get mixed up? Wouldn’t slater have the larger number of visits due to their higher patient number?

  2. Nope. We thought the same thing at first.

  3. WHAT IS THE PROFIT MARGIN AND NET INCOME LEVEL??

  4. This data really raises more questions than anything. For example, as it’s obvious they can’t expect rake in $1.24m of revenue with only the 200 initial ounces, what is their turnover going to be? Any projections on actual sales volume? Markup?

    I would love to dive into financial data like this but unfortunately it’s severely lacking in this industry so far, to the point where even basic ratios are impossible to calculate with any accuracy.

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