What To Know About Opening A Marijuana Dispensary
So you want a piece of the marijuana pie? Maybe it’s high time you open up a dispensary of your own.
It’s no surprise that the cannabis business today is commonly referred to as the “green rush”: if you’re smart enough with your business, you can be rich in a few months, especially if you open a dispensary.
However, opening a dispensary isn’t for everyone. There are loads of risks and challenges that you’ll face, and there’s also a high possibility that you’ll undergo a background check. States have their own requirements to determine if individuals are fit to run a medical marijuana dispensary; some of the things that go into consideration include: age, place of residence, criminal history, current or past employment, and delinquency in child support obligations.
But knowledge is key! Let me tell you about some of the benefits of opening a dispensary:
- According to the ArcView Group, the cannabis industry is currently worth around a whopping $7.2 billion dollars. They also project that sales could reach $22.8 million by 2020. Additionally, a new study by the Tax Foundation sees that nationwide cannabis legalization can bring in $28 billion from tax revenues alone (these figures are bigger than the annual GDP of some countries combined!)
- The demand for medical marijuana is growing, with more people becoming educated about the numerous health benefits of the plant than ever before. Not convinced? Just look at the numbers: A study led by the University of Pennsylvania revealed that there is a 25% decrease in opioid deaths in states that have a medical marijuana program. AND, a new report published by the Lancet Psychiatry just two weeks ago shows that there are 10 million more marijuana users based on a study of 600,000 adults from 2002-2014. They associate this growth with a change in perceptions as more people now believe that marijuana isn’t harmful for them. So yeah, the market is pretty big.
- You’ll be able to give more cannabis jobs to people who share the same vision as you. Opening a dispensary isn’t a one-man job: you’ll need help and you’ll need many extra hands. A dispensary is a great source of employment for many people around the nation, one that doesn’t discriminate and one that can offer a stable source of income not just for owners but for staff as well.
- You will be able to help people who need the drug the most, especially in areas where there are no dispensaries. When people don’t have access to medical marijuana this can lead to an increase in crime out of their desperation to end chronic pain and other debilitating illnesses.
- Running a marijuana business, especially a dispensary, will help educate and promote awareness on the benefits of the plant for those who aren’t aware. By operating a dispensary AND earning money, you’ll be able to help create a significant shift in perceptions and contribute to a greater positive sentiment towards cannabis in the country.
What You’ll Need
Of course, the old age that “you need to spend money to make money” will also apply to opening your own marijuana dispensary. Some of the fees you will need to spend on include lease, registration, lawyer’s fees, salaries, license application, and more. If you don’t have the cash on hand, you could get a group of friends to pool in and form a company with you; or find investors. Once your business is stable, you’ll be able to earn far more than what you originally cashed out to get it up and running.
The costs of starting a dispensary will depend on where you live, although costs range from $250,000 up. Don’t go thinking that you can succeed by charging premium prices for your pot - this kind of tactic is reserved for the experienced. Remember that no health insurance company currently covers medical cannabis so all patients need to pay for their medicine out of their own pocket. If you want to make money, you’ll need to price competitively.
There’s no better time than now to open a dispensary - more states than ever have decriminalized cannabis in one form or another, and the business environment is friendly although more in certain states than others.
Now let’s get started:
Check if marijuana dispensaries are legally allowed to operate in your area. Although many states have already legalized pot in one way or another, remember that the laws can still differ by city as well as county. Some good resources to start your research include the Americans for Safe Access website and the National Conference of State Legislatures. You can also talk to the Department of Health Services where you live.
Read up on zoning laws in your area. At the end of the day, a dispensary is still a business which means that it needs to be built in a commercial zone; this means that you will need the proper permits and other documents to get started. While it might sound like fun, you can’t run a home-based dispensary business.
Be knowledgeable about your product: if you don’t know much about marijuana cultivation, you may want to consider hiring an expert. Growing your own pot at the site is an option and it's even a legal requirement in certain states. This is why it’s necessary to do your homework on growing before you get started; or at least enlist the help of someone who does. There are many techniques used to cultivate marijuana and you’ll also have to consider seasons, pests, molds, and sunlight; factors that will affect your yield.
Hire your own cannabis lawyer. ‘Nuff said. You’ll also need to hire a Certified Public Accountant (CPA) who will help you efficiently manage the sticky tax and financial side of things.
Purchase or lease a location for your marijuana dispensary. Due to the risky nature of the business, many dispensary owners and operators prefer to rent before making a serious commitment to purchasing property. Again you’ll have to be familiar with local regulations before you make your decision. There are also smart ways you can go about picking a location that will help your business, such as studying the foot traffic of a place, analyzing demographic data, checking the competition, and many more. These kinds of information will help ensure that your dispensary will get the business that it needs to succeed.
The Financial Hurdle
Running a marijuana dispensary has many things in common with retail operations from other industries. However, one major factor weeds out the cannabusiness from others: banking and finance. Credit unions and banks still won’t accept money that’s been touched by pot businesses, including dispensaries. This is because of their fear of dealing with a product that, at the end of the day, is still illegal at the federal level. This is odd, considering that so many banks have been caught with money laundering activities for illegal drug operations and cartels around the world.
But it is what it is; and this is the current state of finances with dispensaries. Because of the situation, you’ll need to deal with cash - lots of it. You’ll also need to consider hiring the right security to keep your dispensary safe. There’s some good news though; this is a serious loophole in the business, and there have been developments in the tech world to ease the financial burden for dispensaries in the form of point-of-sale (POS) software that can help you manage your cash more efficiently.
Reaching a wider audience with specific needs can be challenging if you don’t have a marketing or business background. Dispensaries don’t really enjoy the same privilege as other kinds of businesses when it comes to marketing their businesses through television, billboard ads, and other traditional forms of marketing. If you’re on a budget, online marketing is your best bet: it reaches far and wide, works while you sleep, and is inexpensive. Now, if you have spare greens that you want to invest in marketing, there are hundreds of companies that specialize in cannabusinesses. Some of these include: Cannabrand, Digital303, and Mantis Ad Network among many others.
You can also advertise in special newspapers, magazines, and websites that are used as resources for finding nearby dispensaries. Many other businesses already provide a platform for dispensaries to advertise on their websites, just like us at Cannabis.net
The most important aspect of running a marijuana business is to make sure that you always comply with the local laws. The legalities will vary depending on state and city, and may change often without your knowing. If you want to stay on the safe side, your best bet is to hire a marijuana lawyer to keep you and your business protected. As long as you comply with local regulations, avoid trafficking activities, and ensuring that you only sell to patients with a license, you should be fine.