As of May 8, 2019, there was seismic change in Canada’ Cannabis laws. A license applicant must now, have a fully build out Cannabis facility before filling an application for a Cannabis licence.
The cost of building out a Cannabis cultivation or processing facility can cost many millions of dollars. The critical issue is how to fund the capital expenditure for the build out.
There are a number ways to fund the project some of them are obvious such as equity, debt, and equipment lease financing. We can help you with some these. You will require a business plan for funding the capital expenditure, the equipment lease finance and for the Health Canada’s license application. All these financial options will require a business plan.
Here is an example; the project is a micro cultivation license with floor plan of 4500 sq feet and a growing area of 1250 sq feet, this is a small facility but because the facility has to be built to Health Canada’s high regulatory standards. The capital expenditure including equipment is $1.4 million dollars. The client has $500,000 in the bank has a shortfall of $900,000. Friends and family raise $300,000, bringing funds available to $800,000 that is a shortfall $600,000.
After the business plan with 5 year forward looking financials has been drafted with the clients core management team and with Growth West managing the project, a practical financial plan has been development which has resulted in a partial build out with a savings of $600,000 with a business with a early break even date and good profitability. After the license grant the license is now worth a million dollars or more and used as security to borrow funds for working capital, and also to complete a 100% build out. Thereafter the exiting license is amended taking into account increased production adding further shareholder value to the business.
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In conclusion, allowing us to assist with the entire business plan process will aid you to achieve the desired funding in your business, eliminate stress with the complexities of the application process, answer questions about the process and requirements that you are not aware of yet and most importantly, save you valuable time and money.
If you are interested in proceeding with a Business Plan or you would like more information on the process and how we assist our clients in this field, contact us to schedule an initial consultation.
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