Planning to start a cannabis testing lab?
It’s not a bad idea if you are, since having a business in the cannabis and hemp industry can be profitable. It’s one of the industries currently booming. However, you should be careful when starting a business here. Aside from the strict laws relating to the industry and its products, you also need to think about how you spend your working capital.
The amount of working capital needed to start a cannabis business is relatively high, whether you plan to set up a plantation, dispensary, or a testing lab. The last one in particular is especially costly. You need a lot of capital for it because the equipment you need is mostly expensive. Fortunately, you can start a cannabis testing lab even if you don’t have a large amount of capital. That is because you can use cannabis testing equipment leasing.
In this blog post, we’ll talk about how to start a testing lab with cannabis testing equipment leasing.
Use Cannabis Testing Equipment Leasing
You should never rule out the idea of using cannabis testing equipment leasing. It’s one of the best options to fund your cannabis testing lab.
That’s because the regulations and federal laws that pertain to cannabis and its production make most of your other funding options difficult.
For instance, most banks are hesitant to give loans to a business in the cannabis industry due to what they perceive as legal risks. Other lenders are strict about giving loans to a cannabis business as well.
That leaves startup cannabis testing laboratories with cannabis testing equipment leasing or selling off part of their company to raise money or paying cash.
But before you start looking for cannabis testing equipment leasing, you should plan your laboratory first. To help you with that, here are the steps in starting a cannabis testing lab.
Steps in Starting a Cannabis Testing Lab
Before you do anything, it’s best to study the industry.
You should study how others have established their cannabis testing labs successfully. This helps you use your own cannabis testing equipment leasing properly later on. Also, studying the industry helps you create the best business plan for your testing lab. That’s another extremely important thing to do when setting up a business like this. Having a business plan is vital whenever you’re starting a venture. It prevents you from making mistakes that cost a lot of money and delay the start of your operations. There are instances when you might spend your working capital on things that aren’t useful if you operate without a business plan. To help you avoid that, here’s how to create a business plan.
Create Your Business Plan
Outline your goals when you make your business plan. Elaborate how you’re going to reach your goals.
Having a direction allows you to achieve success easily. It prevents you from making decisions or choices that can hinder the progress of your business.
Also, doing it can help you use the cannabis testing equipment leasing to test the cannabis products wisely, as I said.
Your business plan should be detailed and full of important information. With that said, make sure to cover the following:
- Operations summary,
- Company description,
- A detailed explanation of products and services,
- Marketing plan,
- Equipment acquisition,
- Plan for operation,
- Management and organizational structure,
- Startup expenses, and
- Financial plan.
Don’t go into the cannabis testing equipment leasing yet after you make a business plan for a cannabis sample, though. After your business plan, the very next thing to do is to find a good location.
Find a Good Location
You can manage cannabis testing equipment leasing more easily if your laboratory is in a good location. That’s because you’re likelier to have more customers or be more profitable, which makes paying off equipment leasing contracts easier. Having that in mind, your cannabis testing lab should be in the states that have already legalized the use of cannabis. Apart from that, your lab should be near cannabis plantations and dispensaries too. Plantations and dispensaries are likelier to test cannabis in your lab if you’re near them. This helps you get profit quickly.
That’s how it can help you repay the cannabis testing equipment leasing quickly.
Plan Your Operations
After finding a good location, the next thing to do is to plan your operations. This helps you determine the size of the facility that you’re going to lease or build.
Among other things, that includes identifying the testing services you plan to offer. To give you an idea about it, here are some of the most common tests done in a cannabis testing lab:
- Cannabinoid potency testing.
- Pesticide contamination testing.
- Identification of strains and the presence of mold, fungus, bacteria, and terpenes.
If you have big operation plans, you need a large facility. The opposite is needed if you’re planning to operate on a smaller scale. The operations of your cannabis testing lab determine the quantity of equipment and for residual solvent analysis that you’re going to use. Also, this helps you determine if you really need cannabis testing equipment leasing.
To help you with that matter, here is the equipment often needed for a cannabis testing lab:
- Cannabis Residual Solvents Analysis with GC Headspace,
- Real-Time PCR Detection Systems for In Vitro Diagnostics,
- PathogINDICator Microbial Screening Test,
- Cannabis Analyzer for Potency i-Series Solution Package, and
- SLB-5ms 5% Phenyl-equivalent GC Capillary Columns.
Your equipment will affect the capital your cannabis testing lab requires to get set up. Note that most cannabis testing equipment and machines are expensive. Other than that, your equipment plans will also tell how many employees you’re going to hire.
That’s why planning your operations is important. It will help you decide if you need to get additional funds to get your business off the ground. The overall cost of your operations will determine your startup cost. If it exceeds your working capital, that’s when you should start looking for additional business funding.
Getting Funds for a Cannabis Testing Lab
Like I said earlier, a startup cannabis testing lab will have a hard time securing a loan from a bank.
In the first place, banks rarely give loans to startups. Also, they generally don’t give loans to businesses in the cannabis industry.
You can get funds from third-party lenders like equipment financing companies instead. They can give you funds in no time and they have fewer requirements compared to banks.
So if you’re going to use the additional funds to acquire equipment, it’s best to get cannabis testing equipment leasing. This type of leasing is the best option, especially if the equipment you’re going to use needs to be updated every three to five years and not 20 years.
Cannabis Testing Equipment Leasing
Cannabis testing equipment leasing can be acquired easily from a good equipment leasing company. It typically involves less paperwork and lower requirements than bank loans.
Also, cannabis testing equipment leasing allows you to use the equipment you need for your operations without spending large amounts of money up front. That’s because you’re going to pay for the equipment based on your agreement with the equipment leasing company.
You will usually pay for the leased equipment on a monthly basis. In addition to that, If you set it up on a FMV buyout the leased equipment won’t appear on your balance sheet, since you don’t own it. That means you have the option to replace the leased equipment at the end of your contract. You can easily dispose of the ones that need to be replaced when it’s time to update equipment.
You also have the option to do an equipment financing agreement or a sales contract or a $1 buy out lease. Where you will usually get a better pre payment option and can utilize section 179. For start ups section 179 might not be the best option because you won't have a ton of profit as you will the second and third year in business.
Get the Best Cannabis Testing Equipment Leasing
Though cannabis testing equipment leasing can have advantages, it won’t be that effective if you get it from an unreliable equipment leasing company. It’s best to get cannabis testing equipment leasing from a reliable equipment leasing company. Trust Capital is a good example.
A reliable cannabis testing equipment leasing company will help you make the most of your equipment lease. They will help you pick the best financing option to maximize your ROI on your new testing equipment. Also, a good equipment leasing company should offer flexible payment options so you can repay the equipment lease easily and put little money down.
Hence, you should look for companies with payment terms that won’t strangle your business in the future. You only need to have a good credit score (above 500) to get the best equipment lease rates for cannabis testing equipment leasing.
Final Thoughts on Cannabis Testing Equipment Leasing
In this blog post, we talked about starting a cannabis testing laboratory and how equipment leasing can help. Cannabis testing equipment leasing allows you to use the equipment you need without paying a large sum of money. This can help you preserve your capital for funding other aspects of the cannabis laboratory. But before you start looking for cannabis testing equipment leasing, you should know the steps in opening a testing laboratory.
First, you should create a business plan. Your business plan should include details like the location of your lab and its operations. The information presented in the business plan will help you determine how much capital you need. Also, it will help you decide if you need cannabis testing equipment leasing.
If you have more questions about cannabis testing equipment leasing contact Trust Capital at (866)458-4777.