Are you about starting a CBD hemp farm? If YES, here is a detailed sample CBD hemp farming business plan template & FREE feasibility report. Starting a CBD hemp farm is one sure way of earning good money in the United States of America owing to the fact that the usage of hemp is now becoming acceptable in a host of states.
CBD hemp farming is known to be a profitable business and it has evolved from small scale backyard gardens to a global industry in all countries where it’s carried out. Countries in the Caribbean, South America, North America, Europe, Asia, Australia and Africa are known to be in the forefront when it comes to cultivating cannabis.
If you have an interest in starting your own CBD hemp farming business, then you need to talk to a lawyer to know if it is allowed in your area and the limit that is expected of you.
A Sample CBD Hemp Farming Business Plan Template
Table of Content
- 2. Executive Summary
- 5. Job Roles and Responsibilities
- 6. SWOT Analysis
- 7. MARKET ANALYSIS
- 13. Startup Expenditure (Budget)
1. Industry Overview
Hemp is a distinct variety of the plant species Cannabis sativa L. that grows to a height of anywhere from 4-15 ft. (1.2-4.5 m) and up to 0.75 in (2 cm) in diameter. This plant is made up of an inner layer called the pith surrounded by woody core fiber, which is often referred as hurds.
Bast fibers form the outer layer. This bast fiber is mostly attached to the core fiber by pectin—a glue-like substance. The primary fibers are used for textiles, cordage, and fine paper products. The wood-like core fiber is used for animal bedding, garden mulch, fuel, and an assortment of building materials.
Because of its similar leaf shape, hemp is mostly confused with marijuana, another cannabis plant. Although, the key difference between the two is their tetrahydrocannabinol (THC) content, the ingredient that produces the high when smoked. Marijuana can consist as much as 20 percent THC, compared to less than 1 percent for industrial hemp.
But even with this difference, some countries are redundant to legalize growing of hemp (especially the united states), since there is a fear this will make it more difficult to control the use of the drug. Most hemp varieties also have a hollow stalk that have a very high fiber content (35 percent), in contrast to marijuana varieties that usually have a solid stalk having low fiber content (15 percent).
CBD hemp farming business is a line of business that is categorized under the Plant & Flower Growing industry and players in this industry grow nursery plants, such as trees and shrubs; flowering plants, such as cannabis, foliage plants, cut flowers, flower seeds and ornamentals; and short rotation woody trees, such as Christmas trees and cottonwoods et al.
These flowery and nursery plants can either be grown under cover or in an open field. The CBD hemp farming industry is indeed a fast growing industry and pretty much active in countries such as United States of America, Columbia, China, Ecuador, Italy, France, united kingdom and Jamaica et al.
Statistics has it that in the United States of America alone, there are about 223,123 registered and licensed CBD hemp cultivation companies responsible for employing about 763,189 people and the industry rakes in a whooping sum of $6 billion annually.
The industry is projected to enjoy 28.3 percent annual growth between 2013 and 2018. It is important to state that there is no company with a lion share of the available market in this industry in the United States of America.
A recent report published by IBISWorld reveals that the CBD hemp farming industry, which includes both employer and non – employer establishments that grow hemp for medical and recreational use, flourished over the five years to 2018. Watershed legalization victories in recent years, most notably during the 2016 election cycle, proved that the cannabis industry is one of the fastest growing industries in the US.
In 2016 alone, eight states passed initiatives to legalize marijuana. According to New Frontier Data, over one-third of the US population now live in states with newly expanded access to legal marijuana. Consumer attitudes are also accelerating legalization efforts at the state level. Gallup reports that an estimated 80.0 percent of US citizens approve of legal access to CBD hemp.
In additional to the regulatory vibe, the federal legality of industrial hemp cultivation does not supersede state, county, or local regulations. It simply means a state, county, or city can impose greater restrictions than the federal government has.
Presently, about 15 states have come out with pro-hemp laws; the rest of the states are silent or vaguely neutral. Note that many states, counties, and cities simply haven’t yet gotten their respective arms around all the issues. In general, you can’t cultivate hemp in any specific U.S. county without a permit. Also, the FDA currently bars the inclusion of CBD in food products.
Also, interstate transportation of legal hemp is legal, but not all the states, counties, cities, and law enforcement agencies understand this. Banks, also, are maintaining their distance from cannabis companies, pending the possible enactment of the (SAFE) Banking Act of 2019 that prohibits federal banking regulators from penalizing banks that offer cannabis-related financial services.
Aside from the fact that CBD hemp is grown outdoors, either on natural soil or in pots of pre-made or commercial soil, it can also be grown indoors in a soil-like medium under artificial light, adding fertilizer when the plants are given water.
Cultivating cannabis indoors is more complicated and expensive than growing outdoors, but it allows the cultivator complete control over the growing environment. Plants of any type can be grown faster indoors than out due to 24-hour light, additional atmospheric CO2, and controlled humidity which allows freer CO2 respiration.
One thing is certain about CBD hemp farming business, if you are able to conduct your market research and feasibility studies, you are more likely not going to struggle to sell your produce because there is always a ready market for them.
2. Executive Summary
Rex Morgan® CBD Hemp Farms, LLC is a registered and licensed CBD hemp farm that will based in Sioux Fall, South Dakota – United States of America and we will sell our products in and around South Dakota because we know that our products will be in high demand due to the demographic composition of South Dakota.
We chose South Dakota because South Dakota Governor Dennis Daugaard on March 17, 2017 signed SB 95 into law. The law added cannabidiol to the list of Schedule IV controlled substances and excluded it from the definition of marijuana, but specified that the CBD must be a product approved by the United States Food and Drug Administration (FDA).
Rex Morgan® CBD Hemp Farms, LLC we will be involved in growing a distinct variety of the plant species Cannabis sativa L for medical and legal recreational use.
At Rex Morgan® CBD Hemp Farms, LLC we are well positioned to become one of the leading CBD hemp farms in the United States of America, which is why we have been able to source the best hands and resources to run the business with. We have put process and strategies in place that will help us employ best practices when it comes to bringing out the best in this line of business.
Rex Morgan® CBD Hemp Farms, LLC is a private registered company that is owned by Rex Morgan and his immediate family business. The company will be single handedly managed and financed by Rex Morgan and his immediate family members at least for a period of time before welcoming other investors.
3. Our Products and Services
Rex Morgan® CBD Hemp Farms, LLC will be involved in the growing of CBD hemp and cannabis plant for the United States’ market. We will ensure that we do all that is permitted by the law in the United States of America to maximize profits and achieve our business goals and objectives.
We will cultivate and supply;
- Cannabis sativa L.
- Other related cannabis and hemp plants
4. Our Mission and Vision Statement
- Our Vision is to become one of the top 10 CBD hemp farms not just in the United States of America but also on the global stage.
- Our mission is to go into full – time commercial cultivation of hemp and other similar nursery plants and flowers that will not only be patronized in the United States of America, but also exported to other parts of the world.
Our Business Structure
Rex Morgan® CBD Hemp Farms, LLC is a hemp farm that intends starting small, but hopes to grow big in order to compete favorably with leading farms in the industry both in the United States and on a global stage. We are aware of the importance of building a solid business structure that can support the kind of world class business we want to own.
At Rex Morgan® CBD Hemp Farms, LLC, we will ensure that we hire people that are qualified, hardworking, goal getters, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.
As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company. In view of the above, we have decided to hire qualified and competent hands to occupy the following positions;
- Chief Operating Officer
- General Farm Manager
- Farm Workers/Field Workers
- Sales and Marketing Executive
5. Job Roles and Responsibilities
Chief Executive Officer – CEO:
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Accountable for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
General Farm Manager
- Responsible for the planning, management and coordinating all farm activities across the various sections on behalf of the organization
- Supervises other section managers
- Ensures compliance during project executions
- Provides advice on the management of farming activities across all section
- Responsible for carrying out risk assessment
- Uses IT systems and software to keep track of people and progress of the growth of different species of marijuana
- Responsible for overseeing the accounting, costing and sale of farm produce after harvest
- Ensures that farming goals desired result are achieved, the most efficient resources (manpower, equipment, tools and chemicals et al) are utilized and different interests involved are satisfied. Responsible for preparing financial reports, budgets, and financial statements for the organization
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Handles all financial transactions for the company
- Carries out induction for new team members
- Responsible for training, evaluation and assessment of employees
- Oversees the smooth running of the daily farming activities across the various farming sections.
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Defines job positions for recruitment and managing interviewing process
- Carries out staff induction for new team members
- Responsible for training, evaluation and assessment of employees
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Responsible for financial forecasting and risks analysis.
- Accountable for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the company
- Serves as internal auditor for the company
Farm Workers/Field Workers
- Responsible for carrying out core activities such as; Seedlings – Vegetative Growth – Cloning – Sexing – Flowering – Harvesting – Curing – Producing Seeds – Pests and Pest Control –
- Handling common plant problems
- Handles Sod installation / hydro – seeding
- Handles weeding or fertilizer and / or pest control application
- Handles farm maintenance services
- Assists in transport working tools and equipment from the office (store) to site and back to the office
- Works closely with the General Farm Manager to achieve the organizations’ goals and objectives
Sales and Marketing Officer
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Models demographic information and analyze the volumes of transactional data generated by customer purchases
- Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
- Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
- Documents all customer contact and information
- Represents the company in strategic meetings
- Helps to increase sales and growth for the company
6. SWOT Analysis
As a world – class CBD hemp farming business, we look forward to maximizing our strengths and opportunities and also to work around our weaknesses and threats. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Rex Morgan® CBD Hemp Farms, LLC;
Our strength as a CBD hemp farming business is the fact that we have healthy relationships with loads of major players in the industry. We have some of the latest farming tools and equipment that will help us grow these plants in commercial quantities with less stress.
Aside from our relationship (network) and equipment, we can confidently boast that we have some the most experienced hands in the CBD hemp farming business in the whole of Sioux Fall – South Dakota under our payroll.
Our weakness could be that we are a new CBD hemp farming business in the United States; it might take some time for our organization to break into the market and gain acceptance especially from well – established companies who are the leading buyers of hemp plants and seeds. Another weakness is that we may not have the required cash to promote our business the way we would want to.
The opportunities that are available to us cannot be quantified, research shows that the United States cannabidiol (CBD) oil market size was treasured at USD 3.36 billion in 2015 and it is anticipated to witness a predictable growth rate of 9.0 percent from 2016 to 2024.
This industry is a thriving industry, and as a matter of fact, there are about 200 different types of cannabidiol (CBD) oils that are used all over the world, and the United States of America plays a main role in total demand.
Going forward, the additional health profits of cannabidiol (CBD) oils are anticipated to trigger their demand in pharmaceutical and medical applications. We are ready to take advantage of any opportunity that is available in the industry.
CBD hemp plants and products generated from the plant or seed struggle to compete with conventional healthcare products due to the alternative and unconventional nature of their treatment. External competition from traditional drugs and healthcare providers is expected to grow in 2018, representing a potential threat to the industry.
So also, economic downturn is a threat for our business. It is a fact that economic downturn affects purchasing/spending power. Another threat that may likely confront us is the arrival of a new CBD hemp farming business in the same location where our target market exists.
7. MARKET ANALYSIS
- Market Trends
A notable trend shows that prior to the establishment of the first legal cannabis market in Colorado, United States, growers of the plant in the American State of Washington experimented with the use of cannabis waste for pig food.
In early 2013, potent cannabis waste products were mixed into the feed of four pigs during the last four months of their lives, resulting in a weight increase of 20 pounds (9.1 kg) to 30 pounds (14 kg) that was registered before the pigs were sent to slaughter in March 2013.
Washington State’s draft regulations prescribe that cannabis waste must be “rendered unusable prior to leaving a licensed producer or processor’s facility,” and adds that mixing it with food waste is acceptable. The European Food Safety Authority reported in 2011 that “no studies concerning tolerance or effects of graded levels of THC in food-producing animals have been found in literature.”
It is on record that revenue generated by CBD hemp cultivators/plants industry has maintained positive growth because in recent time, a growing number of individuals earned additional income, resulting in high demand. External factors such as demand from dispensaries impact industry performance.
Another common trend in the CBD hemp farming business is that most players in the industry are no longer concentrating only on cultivating CBD hemp plants. They now find it easier to run their own CBD oil extraction business.
8. Our Target Market
As you would expect, the end users of CBD hemp and those who benefit from the business value chain of the marijuana grower industry is all encompassing. In view of that, we have created strategies that will enable us reach out to various individuals and businesses that would need our hemp plants and seeds.
Below is a list of the people and businesses that we will market our products to;
- Pharmaceutical companies
- Alternative medicine practitioners that use cannabidiol (CBD) oil
- Cannabidiol (CBD) oil merchants
- Small scale businesses that make use of cannabidiol (CBD) oil as part of their raw material.
Our Competitive Advantage
Rex Morgan® CBD Hemp Farms, LLC is fully aware that there are competitions when it comes to selling hemp/cannabis plants and seeds, which is why we decided to carry out thorough research so as to know how to take advantage of the available market in Sioux Fall – South Dakota.
We have done our homework and we have been able to highlight some factors that will give us competitive advantage in the marketplace; some of the factors are effective and reliable farming processes that can help us sell our produce at competitive prices, good network and excellent relationship management.
Our competitive advantage lies in the power of team and we have healthy relationships with loads of major players in the industry; both suppliers and buyers within and outside of the United States. We have some of the latest CBD hemp farming tools and equipment that will help us grow these plants in commercial quantities with less stress.
Aside from our relationship and equipment, we can confidently say that we have some the most experienced hands in the CBD hemp farming business in the whole of Sioux Fall – South Dakota under our payroll.
Another competitive advantage that we are bringing to the industry is the fact that we have designed our business in such a way that we will operate an all – round CBD hemp farming business that will sometime in the nearest future also engage in CBD oil extraction and hemp processing.
Lastly, all our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and objectives.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Rex Morgan® CBD Hemp Farms, LLC is in the CBD hemp farming business for the purpose of maximizing profits hence we have decided to explore all the available opportunities within the industry to achieve our corporate goals and objectives.
We will generate income for the business by growing CBD hemp plants and other related plants for medical recreational use.
10. Sales Forecast
From the survey conducted, we were able to discover that the sales generated by an average CBD hemp farming business depends on the size of the farm, and other related plants that they are involved in.
We have perfected our sales and marketing strategies and we are quite optimistic that we will meet or even surpass our set sales target of generating enough income/profits from our first year of operation and build the business from survival to sustainability.
We have been able to examine the plants and flower grower industry cum CBD hemp farming business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the projections that we were able to come up with for the first three years of running Rex Morgan® CBD Hemp Farms, LLC;
- First Fiscal Year (FY1): $240,000
- Second Fiscal Year (FY2): $450,000
- Third Fiscal Year (FY3): $750,000
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown that can impact negatively on household spending, bad weather cum natural disasters, and unfavorable government policies. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
We are quite aware that the reason why some CBD hemp farming companies hardly make good profits is their inability to sell off their farm produce as at when due.
Our sales and marketing team will be recruited based on their vast experience in the CBD hemp cultivation industry and they will be trained on a regular basis so as to be well equipped to meet their set targets and the overall business goal of Rex Morgan® CBD Hemp Farms, LLC.
Our goal is to grow Rex Morgan® CBD Hemp Farms, LLC to become one of the leading CBD hemp farming businesses in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with not only in Sioux Fall – South Dakota but also in other cities in the United States of America.
In summary, Rex Morgan® CBD Hemp Farms, LLC will adopt the following strategies in marketing our cut flower;
- Introduce our CBD hemp farming business by sending introductory letters alongside our brochure to businesses that make use of hemp and cannabis plants and seeds.
- Advertise our business in relevant business magazines, newspapers, TV and radio stations
- List our business on yellow pages’ ads (local directories)
- Attend relevant international and local expos, seminars, and business fairs et al
- Leverage on the internet to promote our business
- Engage direct marketing approach
- Join local chambers of commerce and industries with the aim of marketing our products
- Encourage word of mouth marketing from loyal and satisfied clients
11. Publicity and Advertising Strategy
Any business that wants to grow beyond the corner of the street or the city they are operating from must be willing to utilize every available means to advertise and promote the business. We intend growing our business which is why we have perfected plans to build our brand via every available means.
Below are the platforms you can leverage on to boost our CBD hemp cultivation brand and to promote and advertise our business;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our business
- Install our Billboards in strategic locations all around Sioux Fall – South Dakota
- Distribute our fliers and handbills in target areas
- List our CBD hemp farm in local directories / yellow pages
- Advertise our CBD hemp farming business in our official website and employ strategies that will help us pull traffic to the site.
- Ensure that all our staff members wear our branded shirts and all our vehicles and trucks are well branded with our company logo et al.
12. Our Pricing Strategy
Some of the factors that will help you sell your harvested CBD hemp seeds and plants at the right price is dependent on your strategy while some of the factors are beyond your control.
We are quite aware that one of the easiest means of penetrating the market and acquiring loads of customers for all our CBD hemp seeds is to sell them at competitive prices hence we will do all we can to ensure that the prices of our farm produce are going to be what other farmers would look towards beating.
One thing is certain, the nature of the hemp farming business makes it possible for farmers to place prices for their farm produces based on their discretion without following the benchmark in the industry. The truth is that it is one of the means of avoiding running into loss. The easier you sell off your harvest the better for your business.
The fact that we are going to be offering our farm produce at cheaper prices does not in any way means that we will sell unhealthy plants. Selling our CBD hemp plants and seeds at a lower price than what is obtainable in our competitors farm means that we will only reduce our profit margin and gain sales margin.
- Payment Options
The payment policy adopted by Rex Morgan® CBD Hemp Farms, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payments options that Rex Morgan® CBD Hemp Farms, LLC will make available to her clients;
- Payment via bank transfer
- Payment via online bank transfer
- Payment via mobile money
- Payment via Point of Sales Machines (POS Machines)
- Payment via check
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our clients make payment for farm produces purchase without any stress on their part.
13. Startup Expenditure (Budget)
From all available statistics and facts available to us, we have been able to come up with an estimate of what we intend spending in the bid to establish our CBD hemp farming business in Sioux Fall – South Dakota. This is what it would cost us to setup Rex Morgan® CBD Hemp Farms, LLC in Sioux Fall – South Dakota, U.S;
- The Total Fee for incorporating the Business (CBD hemp farming business) in United States of America – $750.
- The budget for key insurance policies, permits and business license – $2,500
- The amount needed to hire business consultants – $2,000
- The amount needed to acquire/lease a farm land – $50,000
- The amount required for preparing the farm land (for the cultivation of hemp / cannabis seedlings and fencing et al) – $30,000
- The cost for acquiring the required working tools and equipment / machines / flower pots et al – $200,000
- The amount required for purchase of seedlings and mineral nutrients solutions – $20,000
- The Cost of Launching an official Website – $600
- The amount required for payment of workers for a period of 3 months – $100,000
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,000
Going by the report from detailed research and feasibility studies conducted, we will need an average of $300,000 to start a medium scale but standard CBD hemp farming business in the United States of America.
The nature of CBD hemp farm does not require an office space, most people that run CBD hemp farms operate directly from their farms. But we have decided to open a small liaison office; a place where administrative jobs will be carried out.
Generating Funds/Startup Capital for Rex Morgan® CBD Hemp Farms, LLC
No matter how fantastic your business idea might be, if you don’t have the required money to finance the business, the business might not become a reality. Finance is a very important factor when it comes to starting a business.
Rex Morgan® CBD Hemp Farms, LLC is a family business that will be owned by Rex Morgan Cephas and her immediate family members. They decided to restrict the sourcing of the startup capital for the business to just three major sources.
- Generate part of the startup capital from personal savings and sale of stocks
- Generate part of the startup capital from friends and other extended family members
- Generate a larger chunk of the startup capital from the bank (loan facility).
N.B: We have been able to generate about $100,000 (Personal savings $70,000 and soft loan from family members $30,000) and we are at the final stages of obtaining a loan facility of $200,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
14. Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting Rex Morgan® CBD Hemp Farms, LLC is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to sell our CBD hemp seeds and plants a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Rex Morgan® CBD Hemp Farms, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner of our business strategy.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of six years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts : Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Leasing of farm land in Sioux Fall – South Dakota: Completed
- Conducting Feasibility Studies: Completed
- Startup Capital Generation: Completed
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Design of The Company’s Logo: Completed
- Printing of Packaging/Promotional Materials: Completed
- Recruitment of employees: In Progress
- Building of beddings and fencing for the farm: In Progress
- Purchase of the needed farming tools, machines and equipment: Completed
- Creating Official Website for the Company: In Progress
- Creating awareness for the business (Business PR): In Progress
- Farm land Treatment, Health and Safety Arrangement: In Progress
- Establishing business relationship with key players in the industry (CBD hemp seeds and plants merchants, transporter/haulage and suppliers of seeds, mineral nutrient solutions, pesticides and insecticides): Completed