Cannabis Break-Even Analysis: About $96K/Month to Cover Overhead

Fixed costs $96.7K/mo Payroll plus overhead

Contribution margin 82% After variable costs

Break-even revenue $117.9K/mo Monthly target

Break-even timing Month 1 Launch break-even

Break-even calculator

Use this calculator to test monthly revenue against direct costs and the fixed cost base that break-even has to cover.

Lean Base Full

Monthly revenue Revenue is the cash coming in each month before direct costs. $ Low sales High sales Variable expenses These are direct costs that rise with production and sales. $ Lower costs Higher costs

Money available to cover fixed costs $1,134,000 $1,350,000 revenue - $216,000 variable expenses

Margin ratio

84%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base contribution margin has to cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed, and which move with sales in this cannabis business?

Cost classification

Your break-even is reliable only if fixed overhead, volume-linked inputs, and staffing steps land in the right buckets. In this model, fixed overhead starts at $42,400/month before payroll, while first-year nutrients, packaging, electricity, and water total 18.0% of sales.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease and Maintenance	Fixed	Include $18,500 per month in fixed overhead across the planning range.	Treating rent as if it rises with each harvest.
Insurance Premiums	Fixed	Include $6,200 per month before calculating contribution margin.	Leaving insurance out because it is not tied to units sold.
Regulatory and Licensing Fees	Fixed	Include $4,800 per month as required operating overhead.	Spreading fees only across harvest months instead of every month.
Security Systems and Monitoring	Fixed	Include $3,500 per month as baseline compliance and site protection spend.	Modeling security as optional until sales scale.
Nutrients and Growing Media	Variable	Apply 8.5% of first-year sales, falling to 5.5% in the mature year.	Using a flat monthly budget while cultivated area expands.
Packaging Materials	Variable	Apply 4.5% of first-year sales, falling to 3.1% in the mature year.	Ignoring packaging drag when more flower and trim are sold.
Electricity and Climate Control	Variable	Apply 3.8% of first-year sales, falling to 2.4% in the mature year.	Classifying all utilities as fixed and understating break-even revenue.
Cultivation Technicians	Semi-fixed	Model salary in staffing steps: 3.0 FTE in the first year, rising to 12.0 FTE by the mature year.	Assuming payroll moves smoothly with sales instead of jumping with headcount.

How does break-even change from lean to full cannabis launch?

Scenario table

Here’s the quick math: cultivated area rises from 2 to 4, yield loss drops from 12.0% to 8.5%, and payroll plus leased land step up, so revenue grows faster than fixed overhead and the break-even cushion widens.

Planning assumptions only; actual results will move with yield, pricing, licensing, and timing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch year 1	$142,626	$25,673	$78,983	82.0%	$37,970	Small cushion; a yield or price miss could close it fast.
Base scale-up year 2	$229,217	$38,037	$85,708	83.4%	$105,472	Healthier cushion; added overhead still stays covered.
Full buildout year 3	$324,252	$50,259	$95,106	84.5%	$178,887	Strong cushion; more owned land and lower loss improve break-even safety.

What breaks the break-even plan for a cannabis business?

Stress test

The current plan has about $46,305 of monthly cushion above break-even. The real risk is a three-way squeeze: softer sales, higher overhead, and a margin drop as premium flower prices ease and payroll grows.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$96,321	$46,305 cushion	Healthy start, but price and payroll still matter.
Revenue shortfall	Sales fall 15% to $121,232 a month.	$96,321	$24,911 cushion	Still profitable at about $20,427, but the cushion narrows fast.
Fixed-cost pressure	Monthly overhead rises 10% to $86,881.	$105,952	$36,674 cushion	The business stays above break-even, but fixed-cost creep eats cushion.
Margin pressure	Variable expenses rise from 18% to 23% of revenue.	$102,575	$40,051 cushion	Price pressure shows up fast, even before sales soften.
Combined pressure	Sales fall 15%, overhead rises 10%, and variable expenses rise to 23%.	$112,834	$8,398 cushion	This is the warning case: profit falls to about $6,468.

What should you verify before you sign the lease and buy the first crop?

Founder checklist

Use this checklist before the lease, equipment orders, or first inventory buy. It tests whether the model can absorb Month 1 fixed costs, 12.0% yield loss, and Year 1 staffing without starving cash. This is operating planning, not legal or tax advice.

1Lease Fit$42.4K/mo

Confirm zoning, license path, and site fit before you sign, because facility lease, maintenance, security, and insurance already run about $42.4K a month before payroll.

2Systems StackMonth 1

Get banking, payments, POS, seed-to-sale tracking, and compliance workflows live before sales start, or delays will hit cash while fixed costs keep running.

3Input Cost18.0% var

Check supplier, testing, packaging, nutrients, electricity, and water costs against the model's 18.0% variable load so gross margin stays real.

4Year 1 Team10 FTE

Keep Year 1 hiring close to the model's 10 FTE base, anchored by 1 master cultivator, 3 technicians, 1 compliance officer, and 1 lab role, so labor grows with output.

5Yield Loss12.0%

Verify harvest timing and loss control before you buy full inventory, because Year 1 assumes 12.0% yield loss and the crop mix depends on staggered harvest months.

6Cash Cushion$866K

Hold the modeled minimum cash of $866K before launch, since the plan bottoms there in Month 1 and one crop miss or delay can drain the reserve fast.