Opening a dispensary is a dream for some and a profitable opportunity for others. Marijuana continues to become more accepted across the United States and further afield- plus, with a Grand View Research report estimating that the legal pot market will be worth USD 73.6 billion by 2027, it’s a perfect time to get involved. However, there are some things you need to know before opening a dispensary.
Starting a cannabis business can be tough. Much like starting any business, you’re going to need a lot of capital, funding, and a solid business plan to go toe-to-toe with competing dispensaries.
However, you’re also going to face certain risks and obstacles that come with operating in the industry- especially when it comes to being legally compliant.
Here are 5 things you need to know before opening a dispensary:
1. Licensing Comes First
Before anything else, you’re going to need to register your business and get licensed. While most entrepreneurs will be familiar with the process of legally registering a business, getting a dispensary license can be a timely and costly process depending on where you choose to start your dispensary.
Licensing is essential for opening a legal cannabis dispensary, but it’s not as easy as just filling out a form and waiting for the license to come. Many states require thousands of dollars upfront for a license application alone, not to mention costly renewal fees. You could be looking at spending $5,000 or more before you even start your business.
The costs aren’t all you need to worry about either. Many states give out a limited amount of licenses and you’ll need a solid business plan to show that your dispensary is worthwhile and profitable. It’s best to get in touch with a licensing expert before you start your dispensary- services that know about cannabis licensing can help ensure you get yours so you don’t waste your money.
2. Location Is Key
Choosing your location is also an important decision for starting a successful cannabis dispensary. While choosing a good storefront location is a key decision in any kind of business, choosing where to operate can be even more important for cannabis dispensaries especially as it has a significant long-term impact.
For one, you’re going to want to think long and hard about which state you want to open a dispensary. Some states are much more 420-friendly than others, although you may face more competition in these states. Some states make it easier to get a license but some may require higher licensing costs. Consider carefully where you want to operate- you might even want to consider a Canadian cannabis business.
Finding the best state or city to open your dispensary isn’t the only big decision when it comes to location, either. You’ll also need to find the right area for your storefront. You might want to consider who exactly you’re selling to. For instance, recreational dispensaries often thrive in college towns whereas medical dispensaries might want to locate themselves in elderly communities. Do your research and find the perfect commercial property for your dispensary.
3. Getting Funding Is Tricky
Starting a dispensary is going to be costly. Although dispensaries have tons of potential when it comes to making money, you’re going to need to put a lot of money into opening your business before you see any profit. But while most businesses simply head to the bank for a business loan, getting funding for dispensaries is much tougher.
In the United States, banks won’t give business loans to cannabis businesses. Since cannabis is still illegal on a federal level, many financial institutions don’t want to get involved in the highly-regulated industry. As such, getting the funding you need to start a dispensary will be a significant obstacle.
Fortunately, there are many other sources of funding. You might want to reach out to angel investors, cannabis incubators or even consider crowdfunding. You’re going to need money for licensing, setting up your dispensary, legal costs, stock, and so much more, so plan out what you need and reach out to cannabis funding services.
4. There Are Many Rules To Follow
Compliance is crucial for cannabis businesses. While you might be used to the general legal pitfalls of running a business, many specific rules and obligations come with opening a cannabis dispensary that you might have no idea about.
Not only are there laws about what you can sell, how much you can sell, and who you can sell to, but there are also strict laws when it comes to things such as marketing, labeling products, and licensing. It’s not hard to accidentally slip-up, and if you do, you’re going to pay for it with your brand reputation as well as hefty legal costs.
Most cannabis dispensary operators reach out to cannabis compliance experts or cannabis lawyers. This helps ensure that everything operates smoothly and they don’t fall into any costly legal pitfalls.
5. You’ll Need Cannabis-Friendly Business Services
Running a business smoothly usually requires a lot of expert help.
Most startups reach out to B2B services, consultants, and experts when it comes to operations such as Accounting, Marketing, IT Services, and various other daily functions. However, this is another area where cannabis dispensaries often have trouble.
Many regular B2B services won’t help you if you’re running a cannabis dispensary. Some may be put off by the stigma around the cannabis industry, whereas others simply won’t have the necessary experience to help a cannabis business run smoothly.
As such, you’re going to need to find experienced, cannabis-friendly experts on Marketing, Compliance, Licensing, Real Estate, and various other important operations.
As exciting as opening a dispensary might sound, there are some important things you need to know before you get involved in the cannabis industry. You’re going to need a license, a solid business plan, and plenty of funding to get your business off the ground. You’re also going to need to find cannabis-friendly services that know how to help you grow and thrive