How much to lease an ETS XT70?

Hey future fam. I know this is a bit of an obscure question but any input would be much appreciated. I own an ETS XT70 & Huber cc-902. The company I work for is interested in leasing the unit from me for a few months. Does anyone have any thoughts on what a fair price would be to charge them? I am thinking a monthly rate makes the most sense but am open to hearing other suggestions.

I certainly do not want to overcharge them as they have treated me well, but I also do not want to sell myself short. I will be the sole operator of the equipment for the several months it is in use before I take it back into my possession. The equipment is used but in good working order. The company is based in New Mexico which at the moment is a thriving market. Thanks in advance for any and all feedback

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What did you pay for it all? I’d do a % of what you paid for it as a monthly payment. Make sure you get it in writing it’s a lease so God forbid something happens you have proof it’s yours ( not saying this company would do something like that but it’s ALWAYS better to be safe than sorry)

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I’d charge a per gram rate. The more they have to pay you, the more they made. You get more hours, and you count each gram that’s poured out of the machine. If you work the angle properly, you can keep the equipment there permanently and take a smaller price per gram and they’ll never need to buy a setup. And as long as they are in operation, you’ll make residual money. Even if you aren’t the main operator.

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Great advice, thank you both. I love the idea of a per gram rate as you mentioned, and I agree that presented properly they may just go for that. I am thinking I will make a proposal for a per gram rate, and make a backup proposal with a monthly lease rate in the event they don’t go for option A. Do you have any thoughts as far as what to charge per gram? I am guessing I’ll be producing roughly 5-10k grams a week to start out, perhaps more in the future as we get into tolling. Concentrates are going for roughly $50/g at the dispensaries here, and the company I’m with is vertically integrated

I might consider including a maintenance clause in your deal.

As far as a per gram price, .50 cents a gram is only 1% of their retail, and 5k a week in rent for you.

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The only issue with this is that they could tie up the machine without runningv it. I would have a minimum weekly or monthly payment as a base and then per gram. Something like $5,000/month minimum or .50/g whichever is more.

Hey it ALL in writing. The serial numbers of your chillers, complete parts list, maintenance requirements, tools you bring… This will get very entwined, very quickly.

Do you want to be able to use the machine on your own time? Get that in writing too. Get something in there about locking you out. What happens if they hire another expecting but want to keep the gear?

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Those are all great points. Thank you @Dr.stanky and @Sidco_Cat

A maintenance clause is going to be essential and thankfully has already been discussed and agreed to. Writing down the serial numbers, parts, and tools and including those in the agreement is a great thought and I am going to do just that.

I really like the .50 cents number… Seems like a good situation for both parties. A minimum monthly payment, as you mentioned, would be wise in the event that production slows. I will not need the machine for the next several months which is right in line with how long they expect to use it. I am thinking that I will make the agreement month-to-month, that way if we were to part ways I would have my equipment back in my possession within a month

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How are you gonna account for insurance if broken or stolen??

This is a seriously risky proposition without some sorta collateral.

You have to assume the absolute worst and prey for the best. Especially in this industry

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This can’t be stressed enough.

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Totally agree. I am thinking I will include a clause which stipulates that any lost, stolen, or damaged equipment or parts must be replaced by new parts directly from the manufacturer of the item. I’m sure my language there doesn’t cover all of the bases but I will be hiring a legal expert to help me write something up that does

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Good reminder is that a gram produced isn’t necessarily a gram sold, and using produced vs sold is the only times I’ve ever had issues collecting payment as there wasnt enough cash flow to cover the instant creation of 10k+ grams a week that will take months to sell

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This is a great point and brings to light the exact dilemma I was having in my head… Do I charge them per gram produced or per gram sold? I am with you that I will have an easier time getting them to agree to $/gram sold. It is a bit more risky on my end because like you said what if the products take months to sell? What would bring me comfort in this situation is that the New Mexico market is doing well right now and they own 15+ dispensaries which cover most of the state

what happens if they dont have the money to replace??

profits are shrinking in the cannabis industry and companies are going belly up on the daily…

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This is pretty tricky as your supplying it as work equipment so normal wear/tear and breakdowns would/should be expected on your part, Think about it like leasing a 100k exotic car, people will pay you around 15-20% of the MSRP to drive it for a year at a set mileage and pay fees for anything they use over that, but keep in mind that you as the supplier/dealer would more then likely have to take on responsibility to keep equipment in working order when it broke down or face the “your equipment cost me x amount of production time” best bet would be to make them take out an insurance policy for the value in case of total loss

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That is a valid point. I think there is definitely some risk vs. reward that needs to be considered here. They are a relatively large MSO, so if they go belly up hundreds of people in multiple states will lose their jobs. I am certainly not saying that is out of the question, but I am also confident that my work in the lab here alone will bring in millions of dollars of revenue in the coming months. The risk is there, but I do not think it outweighs the reward. If I were to lose all of the equipment today, while it would be a huge loss, I would still be just fine in the grand scheme of things. If I do not lease the equipment to them, it will most likely sit unused for the next several months which also carries with it some expenses and risk

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Grams sold presents the same problem for you. What if they shelve it for 2-3 months, finish having you make 100k grams, and you part ways?

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With 15 dispensaries, they should be well capitalized. I’d go with grams produced.

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I like the exotic car analogy. The difference here to me is that the company will be earning revenue from the equipment. For this reason, I think they should be responsible for any and all repairs and maintenance required during their lease. In turn, it will be my obligation to provide them with equipment that is in good working condition at the start of their lease. An insurance policy on their end is a good thought as well, and in fact they may already have a policy which this equipment can be covered by during their lease term

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Rent a storefront and you’re gonna pay to fix the ac if it breaks down.

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I agree - these guys are well capitalized. I also agree with you that I must consider the potential of them shelving product for a few months and then later trying to sell. I think the contract can be written in a way which stipulates that I will receive the agreed upon compensation regardless of the timeframe in which the product is sold, whether or not I am still employed by the company, or even if they reprocess into another sellable product

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