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Cannabis Proformas for Dispensaries and Grows

Cannabis Proformas for Dispensaries and Grows Vigland AdvisorsCannabis Proformas for Dispensaries and Grows

Cannabis proformas for dispensaries and grows are essential for your cannabis business plan. There are several proforma templates available online but what is a cannabis proforma and how can you make accurate assumptions about your financial flow? Today we’re speaking with a cannabis financial advisor from Vigland Advisors to discuss creating strong cannabis proformas.

Listen to it on PodCast or Watch the YouTube on Cannabis Proformas for Dispensaries and Grows.

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Cannabis Proformas for Dispensaries and Grows Vigland AdvisorsWhat is Vigland Advisors?

Cannabis proformas for dispensaries and grows are best created by an experienced accountant or financial planner. Jim Vigland created Vigland Advisors to serve the cannabis industry businesses in tax preparation, risk assessment, bookkeeping, proforma drafting, and other financial consultancies.

What is a Proforma?

“Proformas are regular financial statements except they are for future periods rather than past periods. It’s very important for any business in the planning stage to have a well thought out proforma because ultimately you’re in the business for making money and that’s your plan on how you’re going to do it.” – Jim Vigland, Vigland Advisors

Why Are Proformas Important for Cannabis Businesses?

“Cannabis proformas are very important in cannabis because one, the margins are a lot slimmer than a lot of people realize, but also many of the states in their application process require the business plan, the proforma, pretty much everything you could possible imagine in order to obtain a license. These states are looking for both the viability of your business as well as the economic impact on the area, and proformas are the best place to get that information.” – Jim Vigland, Vigland Advisors

Cannabis Proformas for Dispensaries and Grows

Written by: TRprabs

Growing cannabis and running dispensaries for the products are one of the most regulated businesses in the USA. Each state has its own set of laws apart from the federal regulations. It is a very challenging task for anyone to venture into this business of growing cannabis and dealing in cannabis-related products.

If you wish to enter the business, you will need cannabis proformas to be presented to prospective investors in your venture. Experts like Vigland Advisors can be of assistance here in offering the resources to create an effective proforma.

Your Cannabis Business Plan

Cannabis proformas for dispensaries and grows are one aspect of your business plan. When you are entering a new business however, you cannot be looking at the cannabis proforma alone. It has to be within the larger business plan that you have envisaged. There are three distinct areas in the cannabis business, the growing of the cannabis, its processing to get the products, and finally selling them. Your plans may include having a dispensary.

Within each, there will be further detailing required. You should, for example, be clear on the area you wish to grow cannabis in. You should know if you plan to grow the cannabis in the open or indoors. The process of growing is important since there are expenses linked to setting up the cannabis growing facility.

The processing part may not be very expensive, but the cost of production is critical for reporting from the legal angle as well. Then setting up the dispensary for retailing the medicinal herb in the various forms you have extracted.

The full business plan has to be prepared which is where Vigland Advisors can be of valuable assistance.

Important Elements of Your Cannabis Business Plan

Your business plan must be an impressive document and there is some important information that must figure in it.

The first few paragraphs will constitute the executive summary. Mention about the scope of the business and how much business is being currently carried on (in dollar terms).

After this, you can provide a broad idea of what your intentions are in starting the business and the major activities included. At this juncture, you must indicate the number of funds you are looking for.

The next few pages must layout the details of your business plans. These will include the products you propose to manufacture, what its uses and benefits will be, and your targeted customer base.

If your statements are supported with some numbers, it will add to the appeal. You can quote the figures from the previous year of the actual sales in the state you are operating in. It can include percentages if available. These will indicate to the investor that you have done your homework well and have a grip on your business. This portion of your plan must have maximum detail from the market and include information on existing competition. Some projections on how the business is likely to grow in the next few years should also be indicated.

These can be followed by the specific plan of your business in terms of the growth of the herb and how the products will be marketed. The last few lines can showcase the strengths, like manpower and leadership within the organization.

Cannabis Proformas

Cannabis proformas for dispensaries and grows are a critical part of the cannabis business plan. In your proforma, the first part should lay down the key assumptions used in the preparation of the proforma. There must be a table indicating the month-wise revenues for the first year of operation and the proposed expenses. Wherever you can add a colorful graphic chart, it will enhance the appeal.

This will be followed by the use of funds, how the funds will be generated and where the shortfall is after the owner has made his/her contribution.

From here on, the cannabis proformas will have detailed statements of the financial projections. Ideally, it should be for a three-year period. If you are submitting the plan now, it should have 2020, 2021 and 2022. The figures for the year 2020 can be for part of the year.

The top sheet will have a summary of the profit and loss of the business. This will contain rows of total revenues, costs and therefore the gross profit margin. Below that will be the operating expenses.

The balance sheet and the detailed cashflow statements will follow next. You can extrapolate these annual figures into monthly figures, at least for the first 12-15 months.

The Vigland Advisors will recommend that the next part of your cannabis proformas can include a further breakdown of the total figures you have given in the profit & loss statement. This means the total revenue figures can be split into individual product revenues like edibles, cannabis buds and oils. The prices and quantities will appear here. All these details will provide the prospective investor the confidence that these are authentic calculations and not something pulled out of thin air.

The final summary of the cannabis proformas should explain the balance sheet and cash flow statement in monthly detail.

These detailed statements will disclose the current assets and liabilities and the way the funds are deployed in the business. Any investor of funds into a business would be keen to know such information in advance.

Ask Financial Experts

Cannabis proformas for dispensaries and grows are best created if you enlist the services of an expert like Vigland Advisors to guide you through the preparation of the cannabis proformas in the correct format. They are specialized in the cannabis business and understand the legal implications of financial reporting by those engaged in the cannabis business. They can provide services beyond the preparation of cannabis proformas. You may need their services like accounts preparation and 280E mitigation, critical to your business.

You may be already aware that 280E is a very strict expense allocation rule and the tax authorities can come down heavily on even minor deviations.

The cannabis business is a growing one and has a bright future. However, it throws up a lot of challenges you must overcome before enjoying the fruits of your labor.

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Interested in coming on as a guest? Email our producer at lauryn@collateralbase.com.

Thomas Howard

Thomas Howard

Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.
Homegrown Cannabis Co's Cannabis Seeds
Thomas Howard

Thomas Howard

Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.

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