How To Start A Cannabis Dispensary 💬

Expansion is the name of the game in retail so operators are opening more locations than in previous years and hiring more employees. The legalization of cannabis is moving at a fast pace across the globe. With regulated markets allowing the use of medical cannabis and permitting its consumption for every adult.

The designation of cannabis dispensaries as essential businesses by many regulated markets proved to be a game-changer and allowed the cannabis retail industry to weather the storm.

As the industry grows and regulators introduce more business-friendly practices, consolidation is expected to continue in several maturing markets.

If you are thinking about opening a dispensary, the time is now because the fact of the matter is that entering the legal cannabis industry can be incredibly profitable and there are opportunities galore.

Unfortunately, the grass isn’t entirely "greener" when it comes to the business landscape, and there are multiple challenges and risks that dispensary owners must navigate and overcome.

While all of this may sound challenging, successfully opening and operating a dispensary is more than rewarding.

You’ll notice that one recurring answer in this training is "it depends" – all regulated markets have their own licensing, application, and compliance procedures, meaning the legal landscape in which dispensaries operate can vary dramatically.

We’ll try not to harp on the point, but always remember that everything needs to be cross-referenced against the policies and procedures that cover the regulated market in which you intend to operate.

Let us now dive into the initial research and planning required before taking the plunge into opening a cannabis dispensary.

Five Primary Requirements

Broadly speaking, these can be categorized into five groups: legal, compliance, social, financial, and security.

Legal: Potential dispensary owners must bear in mind that the cannabis industry operates under strict laws and regulations that set their business apart from the conventional retail operations. Stringent requirements include residency, background checks, location and zoning restrictions, etc., which can make starting and running a business quite challenging.
Compliance: You’ve surely heard of "Seed-to-Sale" tracking. Most government regulators must track the movement of all cannabis plants and products from the time the seed is sown by cultivators to when the plant or any of the products derived from it are sold to the end customer, and you will have to submit regular compliance reports to the traceability system.
Social: Just because cannabis is increasingly legal doesn’t mean that the social stigma associated with it has disappeared. Make an honest appraisal as to whether this might create any personal friction for you with friends or family. You’ll also want to gauge the attitudes and perceptions of your landlord, neighbors, and the community at large.
Financial: Even a modest dispensary can easily cost upwards of a quarter-million dollars ($250,000) just to launch, and in regulated markets, you may need up to one million dollars ($1,000,000) as an initial investment. Additionally, dispensaries often have difficulties obtaining financial services due to government restrictions leading to a heavy reliance on cash.
Security: Since cannabis retail still primarily involves cash transactions, you’ve got to be on the lookout for theft, both internal and external – as well as robbery. You’ll also have to spring for a pretty heavy-duty security and surveillance system to stay compliant with the law, as these systems are also required to ensure that you are only selling to people of legal age.

Important Initial Steps

Most regulated markets maintain a checklist of sorts on their official website that details how the application process works, which you’ll want to take a look at.

Generally speaking, however, the four (4) most important initial steps in opening a dispensary, no matter the region, can be boiled down to finding an appropriate location, applying for the legal license, raising initial capital, and drafting a solid business plan.

Licensing: Ultimately, no license means no dispensary, so this is the first step to begin your research. Work with an attorney or consultant to perform an in-depth study of all federal, and local municipal laws, along with licensing requirements. The two (2) crucial aspects to consider are “must-haves”- requirements you must satisfy to obtain the license, and “red flags” – anything that can lead to an instant rejection of your application.
Location: In most jurisdictions, having a prospective physical location for the dispensary already locked down is a prerequisite for the license application. This means that you must research in-depth the municipalities you are considering operating in, paying particular attention to demographics and additional restrictions when it comes to local-level compliance.
Financing: Simply put, getting a business loan approved for a cannabis dispensary is extremely difficult when it is possible. That means primary sources of funding and capital for “normal” small businesses just aren’t available most of the time for dispensaries in the cannabis industry. Things are changing fast but you’ll still have to be creative in coming up with a plan to raise the initial capital – this may come from personal investment or other trusted investors.
Business Plan: Your business plan is by far the most important document that you will need to draft. You will need it to help secure funds and demonstrate to the authorities that your operations plan satisfies their legal requirements. Your plan must cover finding and developing the location you intend to use, handling daily operations and security at your dispensary, financing, procurement, community development, etc.

Key License Components

Let’s examine the actual process of applying for your dispensary license, and break it down into a few easy-to-understand steps.

Here are a few key components you’ll need to successfully navigate the process, regardless of the regulated market:

Research Government Websites: An overview of government regulations, including licensing requirements and links to relevant government websites.
Avoid Potential Red Flags: Check to see if there are any red flags in your business plan that may cause your application to be denied outright. Not meeting age or residency requirements can trigger a refusal, as can past criminal convictions.
Administrative Paperwork: The next step in the process is filling out all of the forms and applications for your dispensary license. Ensure you are honest to the best of your ability and double-check that you have every one of the required elements of the application. This will include obtaining your tax number and any other required documentation relevant to your choice of corporate structure.
Investigation: Next, you’ll wait while the government licensing authority investigates your application and performs its due diligence. If any problems come up during the investigation portion of the process, the applicant will typically be notified and allowed to respond.
License Approval: Assuming all the information provided on the initial application checks out, moss approved, you will typically be expected to render license payment at this time.
Local Compliance: After the regulators grant your license, you may also be required to seek additional approval at the local level (ex. town, city, etc.). Work with the specific municipality you are considering operating in to ensure that you are fully compliant on the local level, as well as at the regulatory requirements. Local application approvals often take longer, so be sure to account for any extra time needed.
Tax and Financial Requirements: Finally, once all licensing and compliance details are handled at the regulated market and local level, there may be additional financial or taxation-related things to handle. Typically, you will need your formal license approval before you are allowed to begin applying for these types of documents.

Licensing & Application Checklist

A customer explores various cannabis strains in a retail dispensary.
Business Plan: You aren’t getting anywhere without one.
Financing and Capitalization Proof: Be able to demonstrate possession of the appropriate capital to the licensing authority.
Full Team List: For background checks and fingerprinting purposes.
Location: Make sure your selected location is fully compliant with all local zoning laws.
Security and Surveillance: Having a security plan for your facility is a critical part of the licensing process.
Execution and Compliance: Point-of-Sale (POS) and technology systems you’ll use to ensure your retail sales are always compliant and to submit legal reports.

Social Equity Opportunities

With an aim to make the cannabis industry more diverse and inclusive, most regulated markets have implemented social equity programs with special provisions for applicants from minority and disproportionately impacted backgrounds.

These programs attempt to ensure that people of color, and those with cannabis offenses prior to legalization, be afforded an opportunity to participate in this burgeoning industry. Check with your cannabis industry regulators to determine your eligibility for such programs.

Business Plan Components

The business plan is the single most important document an owner needs to create during the process of opening their dispensary.

To keep things simple, we’ve identified seven (7) critical areas of focus that your plan should address to gain licensing approval and attract potential investors.

Real Estate and Store Design: There may be legal mandates or zoning laws in place which restrict potential locations for dispensaries (your attorney and realtor will advise you on this). Select the municipalities you are most interested in, get a feel for costs, and pay careful attention to any needed capital improvements.
Financing: Outline how much capital you need to raise, and where it will come from. You’ll need to address licensing and/or application costs, working capital requirements, the cost of your initial flower stock, wages for your staff, technology costs, real estate, and several other factors. You’ll need to be very specific as to who the investors are to ensure successful licensing.
Business Model: Last but not least, your business plan must include the retail model for your cannabis dispensary. You could just be planning to operate a single independent store or perhaps a multiple-location enterprise or franchise business. Learn more about the different cannabis retail business models before you decide to choose one.
Team: Due to the enhanced legal scrutiny of the cannabis industry, dispensaries perhaps depend more on their staff for success than most other businesses. You’ll need to get top-notch professional services, including legal and financial advice, and put together an excellent team, including dispensary technicians, security, and administrative support. Ensure that you are hiring as per social equity, diversity and inclusion, and local community guidelines set by authorities.
Sales and Marketing: This section of the plan should outline what you intend to do to differentiate yourself from the competition. This could include a greater focus on customer service, enhanced online ordering or delivery capabilities, a superior design aesthetic that better appeals to your customer base, or providing a more personalized shopping experience in your locality. Delivering a superior customer experience is key to success, and you must have a cannabis retail marketing strategy to help you in that.
Operations: This part should focus on how your dispensary will operate on a normal daily basis. Talk about your hours of operation, logistics, concerns related to sourcing your flower, who will be on your staff and what roles they will fill, the technology your dispensary will utilize, inventory auditing, "Seed-to-Sale" tracking, how you will submit your compliance reports to authorities and other concerns of this nature.
Security Measures: The security plan must include details on your security surveillance system, security personnel, the vetting process for employees (ex. background checks, etc.), and how and where you will keep cash and cannabis products securely. You also must mention how you will verify the identification of customers and ensure you are selling only to people of legal age.

While this should get you off to a great start, it only scratches the surface of what your full business plan should cover.

The more detailed, thorough, and complete your plan is, the higher the likelihood your licensing application will be approved.

Tags: Cannabis Dispensary Business Plan, Cannabis Dispensary Licensing Requirements, Cannabis Dispensary Marketing Ideas, Cannabis Dispensary Real Estate Tips, Cannabis Dispensary Security Plan, Dispensary Startup Costs, How to Start a Cannabis Dispensary, Opening a Marijuana Dispensary, Seed-to-Sale Tracking Systems, Social Equity in Cannabis Business

Article Content

Five Primary Requirements

Important Initial Steps

Key License Components

Licensing & Application Checklist

Social Equity Opportunities

Business Plan Components

Cannabis Horticulture (Free Trial)

Cannabis Horticulture

A Carefully Curated Cultivation "Crash Course" On Everything You Need To Crank Out High-Yielding, "Cannabis-Cup Winner" Flowers That'll Generate HUGE Crops All-Year Long

Edible Cannabis Products (100% FREE Training)

Enthusiasts Face Challenges Navigating An Ever-Expanding Array Of Cannabis Products & Delivery Methods From "Raw Flower" Smoothies To Infused-Edibles, Cannabinoid-Based Drinks + MORE.

Article Content

"GC Insider" Newsletter

Responses

Do NOT Grow Another Plant Until You've Enrolled Into This! 💯

Cannabis Horticulture

A Carefully Curated Cultivation "Crash Course" On Everything You Need To Crank Out High-Yielding, "Cannabis-Cup Winner" Flowers That'll Generate HUGE Crops All-Year Long

Crafting Cannabis-Infused Edibles Takes MORE Than Ingredients... 🍽️

Edible Cannabis Products (100% FREE Training)

Enthusiasts Face Challenges Navigating An Ever-Expanding Array Of Cannabis Products & Delivery Methods From "Raw Flower" Smoothies To Infused-Edibles, Cannabinoid-Based Drinks + MORE.