Williamstown Cannabis Cultivation Business Plan
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Williamstown Cannabis Cultivation Business Plan Davis Collison and Rosa Kirk-Davidoff We are on the stolen land of the Stockbridge-Munsee Band of the Mohican. “The legal marijuana industry has the potential to save local farms and repair a broken food system.”- Suehiko Ono, EOS Farms Introduction Averill Cook Davis and Rosa ● Who we are ● Environmental Planning ○ Senior Seminar for Environmental Studies Majors ● This project - Williamstown Cannabis Cultivation ● Questions: Best scale to start? Opportunities for a craft market? Jake Zieminski Our Clients ● Averill H Cook ○ Born and raised in Williamstown. ○ BS degree from University of Vermont ○ Owned and operated a pellet manufacturing business for 12 years ○ Traveled throughout numerous countries consulting in wood energy ○ Maintained an operated Wendling Farm in Williamstown where he grew up ○ Superior land stewardship has been paramount throughout his career Averill Cook Jake Zieminski Our Clients ● Jake Zieminski ○ Born and raised in Cheshire Ma on family dairy farm. Lived in Boston for 20 years and recently moved family back in 2018 to launch cannabis start-up. ○ Cannabis Entrepreneur ■ Current owner of CAVU Hemp, Cheshire Ma- MDAR licensed 2019 ■ 2021- CCC – Marijuana Cultivation Applicant ■ Cannabis Activist, Educator and Advisor since 2014 ○ Prior to transitioning into Cannabis industry in 2018, Mr. Zieminski was a management consultant focused in healthcare. Mr. Zieminski has spent the primary part of his career in client based performance improvement roles at PricewaterhouseCoopers(PwC), FTI Consulting and a Boston based addiction clinic start-up. ○ Education: ■ Providence College ■ BS Management and Finance Averill Cook Jake Zieminski ■ Liberal Arts Concentration Methodology ● Client meetings ● Site visits ○ Wendling Farm ● Soil tests ● Interviews ● Online Research ○ Case studies ● CCC regulatory research Interviews ● Cultivators ○ Ted Dobson ■ Equinox Farm, Theory Wellness ○ John Moore ■ Roaring Glen Farms Ted Dobson https://www.berkshireeagle.com/archives/inside-equino ● Retail x-farms-first-cannabis-harvest/article_80261c50-e6c0- 5a4b-87ec-828abffaf0bd.html ○ Donna Norman ■ Calyx Berkshire Dispensary ● Other Experts ○ Sam Milton ■ Climate Resources Group ○ Marion Mcnabb ■ President of Cannabis Center of Excellence, INC ○ Tony Kieffer ■ Arch Solar Zoom Interview with Dr. Marion Mcnabb Intro to Cannabis Cultivation https://www.instagram.com/theorywellness/ https://www.visualcapitalist.com/anatomy-cannabis-plant/ Types of Licenses ● Tier 1 (1,000-5,000 ft2)-Tier 11 (90,000-100,000 ft2) ○ Indoor Cultivation ○ Outdoor Cultivation ● Greenhouses ● Microbusiness: Tier 1 cultivation and/or product manufacturer ● Craft Marijuana Cooperative Cannabis Control Commission Business Plan Executive Summary Mission: Year 1: Tier 6 (50,000 sq ft) outdoor grow, Tier 1(5,000 sq ft) indoor Provide a sustainable and high-quality but greenhouse affordable product through the outdoor Year 2: Continue with a Tier 6, reinvest in facilities to enable cultivation of cannabis. expansion Year 3: Expand to Tier 11 (100,000 sq ft) outdoor grow, prepare application for product manufacturing and retail licenses Year 4: Tier 11 grow, continue application process and build capacity for manufacturing and retail Year 5: Tier 11 grow, begin manufacturing and retail operations Startup Summary Fence & security $200,000 Greenhouse $600,000 Labor $250,000 Plant-related expenses $150,000 Legal & licensing $200,000 Equipment $400,000 (Land) $500,000 Sales & marketing $100,000 Total $2,550,000 Financial Summary Market Overview: US Cannabis Market ● Increased legalization by states ● Possibility of federal legalization ● 280e Schedule 1 Drug ● National average price: $1,846 as of Nov. 27 ● Regional price variation https://www.nbcnews.com/news/us-news/map-see-if-marijua na-legal-your-state-n938426 Target Market: Massachusetts ● Average wholesale price for average-quality indoor marijuana: $3,800/ lb as of March 2020 ● More than 2x national average ● Demand > supply ○ 90 licensed retailers ○ 40 licensed cultivators ○ Only 4 licensed outdoor cultivators ● Complicated regulatory process ● 10.75% excise tax, 6.25% sales tax SWOT Analysis Massachusetts Regulatory Framework Williamstown Regulatory Process Marketing Strategy - Craft Cannabis ● Opportunities unique to cannabis ○ Genetic diversity ● Terroir--outdoor grown as a specialty product ● Example: Craft beer ○ There are strategies that are already in place ● Consumer education required ○ Culture of local food & drink in the Berkshires https://www.instagram.com/theorywellness/ Marketing Strategy - Certifications ● Sun & Earth ○ Earth Care & Cultivation, Human Empowerment and Community Engagement ● Sun Grown ○ No supplemental lighting during flowering, otherwise only to extend natural daylight ● Cannabis Conservancy ○ 45 Standards of Sustainability Cultivation Plan ● Outdoor Tier 6 (50,000 sq ft) grow w/ a Tier 1 greenhouse ● Greenhouse is closed & includes HVAC, supplemental lighting ● Closed greenhouse enables keeping mothers alive through the winter ● Alternative strategy=start from seeds each year ● Use companion crops to support pollinators, limit erosion, and control smell Cultivation Risks ● Outdoor cultivation offers more risks than indoor ○ Mildew ○ Pests ○ Bad weather ● Estimated 30% crop loss per year Sustainability Energy ● Indoor cultivation is extremely energy intensive ● MA has energy standards that encourage LED lighting ● Sustainable future for cannabis is outdoor grown ● Least energy use= save seeds & start from seeds each year https://www.pharmout.net/outdoor-cannabis-crop-risks-outdoor/ Cultivation Timeline & Forecast Tier 6: 2,000 lbs Tier 11: 4,000 lbs https://www.leafly.com/news/growing/outdoor-cannabis-growing-calendar Organizational Structure Executive Co-Owner Co-Owner Partner Head Cultivator Management Management Full-time Assistant Cultivators Planting and Harvest Staff (4) Assistants (6) Manage ment Financial Plan Tier 6 Tier 11 Price/ lb $2,500 $2,500 # of lbs 2,000 4,000 Gross $5,000,000 $10,000,000 Revenue Estimates: ● Crop loss= 30% ● Local taxes= 3% ● State taxes=10.75% ● Federal taxes=based on income Startup Costs Breakdown Greenhouse— ~$650,00 ● Capital cost = $131.50 /ft2 ● Energy cost = 27.64 per ft2/yr Labor— ~$250,000 ● salaries & training for both full time and temporary labor ● Managers need background checks Fence & Security— ~$200,000 ● fence, security cameras, & storage of data required by MA regulations Startup Costs Breakdown (CONT.) Equipment— ~$400,000 Legal Estimate— ~$100,000 ● could include tractor, Plant Costs— ~$150,000 harvesting equipment, drying & ● Includes seeds, pots, nutrients, curing equipment pesticides, row cover, tags, Licensing— $16,175 testing ● Tier 6 Outdoor = Application Sales/Marketing— ~$100,000 Fee $1,700 + Annual License Land— ~$500,000 Fee $13,750 ● Tier 1 Indoor = Application Fee $100 + Annual License Fee $625 Recommendations & Final Takeaways • • • • • • • • • • • • • • • • • • • • Final Takeaways ● As currently set up, regulations in Massachusetts are very expensive for small farmers and need to be changed in order to uplift these farmers ● Strategies we’ve seen to address the high start-up costs: ○ Ted Dobson/ Theory ○ John Moore/ Roaring Glen Farms ○ Jake and Averill’s partnership ● Need strategic partnerships Alternate Strategies ● Saving Seeds (Instead of mothers/cloning) ○ Lowest cost long and short term ○ Lowest carbon footprint ■ Only need a hoop house ○ Allows for specialized genetics ○ Decreased harvest ● Craft Marijuana Cooperative ○ Allows for resources to be pooled Policy Recommendations ● National: Remove marijuana from Schedule 1 list ● State: Make licensing process easier for farmers ○ Faster process, make sure approval lines up with planting season ● Local: No limits on farm size at the local level ○ Microbusiness size is not profitable ○ Don’t further limit the options for farmers ● Local municipalities need to be strategic partners to farmers, not an additional cost or another barrier Thank you! Professor Gardner Our clients: Jake Zieminski, Averill Cook Interviewees: Ted Dobson, Sam Milton, Donna Norman, John Moore, Marion Mcnabb, Tony Kieffer Steve Fogel Agricultural Commission (And Lucas the dog) Appendix Energy Use – Indoor Marijuana Cultivation https://www.esource.com/tas-f-18/harvesting-ener gy-savings-indoor-agriculture-facilities Indoor Energy Cost Breakdown Cannabis Cultivation Innovation Driving Cost Reductions Production Cost Trends- National Data *Not adjusted for Ma Financial Estimates Breakdown (Excel Sheet) Our estimates for price National Average Price Bibliography (1) Adams, Dan. “Sky High: Mass. Marijuana Is among the Most Expensive in the Nation - The Boston Globe.” BostonGlobe.Com, 16 Sept. 2020, https://www.bostonglobe.com/2020/09/16/marijuana/sky-high-massachusetts-marijuana-is-among-most-expensive-nation/. Aguirre de Carcer, Giadha. The Cannabis Energy Report. NewFrontier Data, 2018. Application Checklist. Cannabis Control Commission. Chen, Angela. “Why the Future of Marijuana Farming Could Be Craft Weed.” The Verge, 21 Nov. 2018, https://www.theverge.com/2018/11/21/18106349/craft-weed-ryan-stoa-marijuana-agriculture-farming-cannabis-interview. Cowgill, Terry. “‘Grown in the Berkshires’: First Outdoor Cannabis Growing Facilities in the State Planned for Sheffield.” The Berkshire Edge, 8 Apr. 2019, https://theberkshireedge.com/grown-in-the-berkshires-first-outdoor-cannabis-grow-facilities-in-the-state-planned-for-sheffield/. DSouza, Deborah. “The