Opening a new dispensary requires a lot of work. It’s expensive upfront; an average dispensary has to invest $500,000 in its beginnings. Furthermore, it is quite regulated, therefore business owners must make sure they have all necessary permits and licenses. You are at risk of heavy fines or perhaps having your store closed if you continue to operate without them.
We’ll cover some of the basics of how to start a dispensary in this blog, but due to legal considerations, it’s important to consult an attorney before proceeding. Hopefully, this guide will get you going and encourage you to find out more about the initial stages of opening a new cannabis store.
Plan Your Financials
The most important yet least exciting phase of opening a new dispensary is setting up your financial plan and making sure that you have a viable business in place.
In fact, state laws governing dispensaries mandate that all new applicants present documentary proof of capitalization and a specific amount of liquid cash on hand. The more, the better
It is both very expensive and fiercely competitive to open a new cannabis store. Entrepreneurs will typically face stiff competition from other candidates in the majority of states. And the amount of money available at the start is frequently a deciding factor in which enterprises get the required licenses and which don’t. The state wants to know that you have the necessary funds to start the business because most banks won’t make regular loans to dispensaries. In general, you must have at least $250,000 to be accepted.
What Is The Cost Of Opening A Dispensary?
Perhaps, you must be thinking that operating a dispensary would be similar to opening any other small business. Actually, no. There are numerous additional costs, laws, and obstacles that must be taken into consideration while operating a cannabis dispensary. Let’s continue if you aren’t discouraged by the roadblocks.
Start-up costs for marijuana businesses can be very different. You can count on one thing: the cost will be high. The average price to start a dispensary might be anything between $150,000 and $2 million! But is that it? You must factor in annual employee costs of about $250,000, rent that may be in the hundreds of thousands of dollars, and funds for repairs that may be necessary every year.
These costs won’t apply to every business; they will depend on factors like the size of your organization and your location.
Cannabis Dispensaries Banking Rules and Fees
Cannabis stores, as you are aware, have a peculiar position in the banking industry. The federal government says they’re unlawful even if they are permitted to operate in some states. Therefore, many banks are unwilling to work with them. Therefore, no luck with loans or investments.
There are workarounds for this, as smart cannabis businesses have discovered. Instead of banks, privately held cannabis banks are another option for cannabis store owners. Even while it can seem like a simple fix, you should be aware that these specialist banks and credit unions are aware they have put you in a difficult situation. Because of this, they’ll feel comfortable demanding monthly holding fees that can reach thousands.
Right Location for Your Dispensary
Dispensaries must choose their location with care, just like any other retail establishment. However, finding a place for their business and adhering to additional regulations create difficulties.
State regulations differ, but generally speaking, dispensaries cannot be situated closer than 1,000 feet to a school, church, or community center. Additionally, they must have their own building and not be a part of a mall or shopping center.
Additionally, you will have to decide between buying and renting a building. Business owners are free to use the area in any way they see fit if they choose to purchase the property outright. However, dispensaries may face stricter regulations and straight-up opposition from property owners under leases. If you do decide to rent, it is imperative that you indicate your intended use of the property in advance to prevent future legal issues.
Finally, when it comes to opening a retail location, marijuana establishments will have to deal with traditional considerations. Parking, foot traffic, nearby companies and competition, and general activity in the vicinity are some of these.
Get the Required Business Licenses and Permits
The requirements for business licenses and permits vary by state, county, and city.
The license requirements in almost all states, counties, and/or localities are different, and include the following ones:
- General Business License to conduct business in any state.
- Sales Tax License or Seller’s Permit mandatory for selling products.
- Zoning Approval (at the city or county level) this grants permission for the construction of a building or the use of land for a specific purpose.
- Special Business Licenses – For you to run a dispensary business, certain states, counties, and/or localities need that you obtain additional specific licenses.
Obtaining the required state, county, and/or city licenses will depend on the kind of dispensary business you open.
You may have to wait six months to a year to receive the state license after paying the initial licensing cost and receiving municipal approval for your marijuana business. You will pay legal fees and undergo background checks during that waiting period.
SOPs For The Setup And Success Of Your Cannabis Business
A Standard Operating Procedure is an extensive guide developed by the management of the organization that contains all written directions for how each aspect of its operation is to function.
An SOP is a perfect training tool that enables new employees to quickly pick up tasks and ensures that these employees will exercise the same diligence as the company’s most experienced professionals. This is crucial when dealing with customers at the store and inventory management. In fact, some states don’t issue licenses if you don’t submit SOPs.
The CRA may be forced to suspend or cancel a license if a cannabis business lacks a sufficient SOP library that is accessible to employees.
Every business owner wants their business to flourish after investing time and money into it, thus in order for your dispensary to be successful, you must take care of each aspect mentioned above. You don’t have to accomplish it all at once, so take your time, comprehend what is necessary, and complete it gradually.