Industrial Hemp Business

Open cultivators produce at least one harvest per year in the fall. Under perfect outdoor conditions, it is possible to yield up to 1 pound per plant. Hypothetically, the longer a hemp plant grows vegetatively, the more biomass it will produce by the end of the season. Germinating plants early in the season allows them to grow much larger, and germinating seeds indoors allows growers to control temperature and humidity. Biomass yield per plant is also affected by plant spacing, and wider plant spacing results in wider plants, however it has a reverse effect in a per-acre basis. At the same time, higher densities can reduce air flow within and between plants and may lead to increased disease. To maximize yield on a per acre basis, farmers should transplant plants as early as possible and choose between-plant spacing to achieve not only higher yields, but also higher quality plants.

Our scenario here is for a 10 acre industrial floral hemp growing business. Fiber and grain estimates are given in the following article:

How Much Does It Cost to Grow Hemp Fiber and/or Hemp Grain?

How Much Money Do You Need to Start a Hemp Farm?

The cost of starting a hemp farming business varies, but estimated average costs are around $35,000 per acre, excluding land acquisition costs, that can range from $5,000 to $300,000 per acre:

• Insurance and legal fees, including licensing
• Land acquisition or renting, preparation
• Farming equipment (planting, harvesting)
• Drying and storage facilities
• Transportation vehicles

One-time initial costs include land clearing ($1,000 per acre), fencing ($5 per foot of perimeter), installation of an irrigation system ($1,500 per acre), tractor ($50,000), planting equipment including transplanter ($110,000), about $200,000 for 10 acres or about $35,000 per acre for full investment. If you decide to buy used equipment, the full investment to cover all costs until the positive cash flow, will be around $10,000-$15,000 per acre.

In our scenario, we assume outsourcing hemp harvesting services at a cost of $15,000 ($1,500 per acre).

Other operational annual costs ($13,005  per acre):

• Soil testing $500
• Transplants $60,000
• Plastic mulch $2,850
• Fertilization $2,500
• Fertigation $500
• Weed control $3,000
• Irrigation system maintenance $3,700
• Drying materials $500
• Supplies $2,000
• Fuel $1,500
• Transportation $3,000
• Labor $50,000

Non-operational annual costs ($1,110 per acre):

• Land rent $1,500
• Licensing fee $350
• Testing fee $1,500
• Inspection Fee $700
• Security $350
• Interest $5,200
• Other $1,500

Total costs: $156,150 ($15,615 per acre)

Hemp Flower Yield per Acre?

In the United States, the average yield for 2022 floral hemp in the open was estimated at 954 pounds per acre (down 281 pounds per acre from the previous year), with the highest at 2,360 in Kentucky. The value of utilized production floral hemp grown in the open totaled $178.9 million or $29.1 per pound (down 26.5% from the previous year) with a price range of $1.46 to $615 per pound.

• Projected CBD % of dry material: 10%
• Price per % CBD oil: $2.91
• Plants per acre: 1,500
• Total harvested dried material per acre: 954 lbs.

Hemp Farm Annual Profit

Based on the assumptions, sales can be forecast at around 9,540 lbs. per year:

• Revenue + $277,614
• Costs – $156,150 (56%)
• Returns Before Taxes = $121,464 (44%)

How Much is an Acre of Hemp Worth?

These figures are for reference only and are based on the best available data for 2022/2023.

Hemp Growing Calculator

Calculate hemp farming costs and profits with our pre-populated hemp cultivation financial model. All you have to do to get started is enter the size of your hemp farm. The model will help you estimate how much it costs to start and operate your own hemp growing business, build all revenue and cost line-items monthly over a flexible seven year period, and then total the monthly results into quarters and years for an easy view into the various time periods.

Hemp Farm Financial Model Sample (Indiana)

Hemp Farm Business Plan

We also offer Word document and PowerPoint pitch deck templates for your hemp growing business.

Industrial Hemp Business FAQs

How much does it cost to grow cannabis?