How to open a Dispensary

Interested in breaking into the cannabis industry but not sure where to start? You came to the right place.

Cannabis is a dynamic and growing market with a multitude of opportunities. For those interested in the plant-touching side of the business, dispensaries enjoy a healthy profit margin. Most new cannabis retail operations are in the black within their first year of operation.

As more states move to legalize, more markets open for new cannabis entrepreneurs. Thirty-seven states and D.C have some form of legal cannabis program, and 17 of those have legalized adult-use cannabis. According to a Leading Cannabis Business Daily, nationwide cannabis sales in 2020, generated over $17.5B, up from $12.1B in 2019. Nationwide cannabis sales are projected to generate over $22B in 2021 and $30B in 2023.


1. Know Your State

While every state and local municipality with a cannabis program has its own idiosyncrasies and regulations, understanding these rules and cannabis compliance is one of the most important elements to the success of securing a dispensary license. As one of the most highly-regulated and competitive markets, its essential to start building a foundation for your cannabis business even before the license application process, and it starts with education.

Do you know the status of cannabis legalization in your state?

Here’s a breakdown:

Recreational States

States that have legalized adult-use (recreational) cannabis

Medical States

States that have legalized medical cannabis for medical use only

CBD States

States that have legalized low-THC, high-CBD medical cannabis

Dry States

States with no form of legalization whatsoever

Some states only issue a limited number of cannabis business licenses while some do not. For states with limited licensing, the application process for a license is typically only open for 30 – 90 days. For example, in Pennsylvania, applicants had from April 5, 2018 – May 17, 2018 to submit their application for only 26 dispensary licenses to be issued. For states that do not limit the number of licenses issued, local municipalities (cities/counties/townships) have the authority to regulate cannabis businesses. Applications to submit for a dispensary license in a state with unlimited number of licenses are typically “checklist” based and can be submitted at any time, which can make it easier to secure a license.

With that being said, knowing if your state is accepting applications for dispensary licenses is important. If you’ve done your research and know that your state is accepting applications for cannabis dispensaries, this course is for you – get ready to submit.

2. Start a Business Plan

A business plan is essential to starting and maintaining any business, especially in the cannabis industry. Your plan is designed to provide structure and serve as a roadmap. Ultimately, your cannabis business plan will help you to save time, money, and energy. It can also be used for a variety of purposes: to secure investors, seek local government approval, part of your application for a license, or to launch your business.

3. Build Your Team

When selecting your business partners, knowing their motive is essential. It’s not about dollars and cents. Look for partners who are fair, have a background that will contribute to your venture, and someone you trust! At a minimum, you want the following individuals on your team:

  • Local Business/Community Leaders who truly understand the community and the state as a whole.
  • Cannabis Operators/Consultants who have experience with submitting and winning applications/licenses, as well as opening and operating a cannabis business. Ask your consultant what state(s) they have worked in. This is especially important because every state’s program is different and while a consultant might have worked in California, the East Coast states run their programs differently.
  • Legal Counsel to lend advice throughout the application process with a focus on local laws.

4. Real Estate

Some states require cannabis dispensary license applicants to secure real estate before licenses are issued. This could mean providing letters of intent, a draft lease or ownership of the property. Before moving forward on a location, it’s important to know whether that community or township will be open to your business. This means understanding local municipality laws, making sure you have a population base, and choosing a building that is easily accessible.

5. Financial Funds/Capital for Applications

Starting a dispensary retail operation requires liquid capital. Because cannabis businesses cannot get a traditional business loan you will be responsible for raising capital on your own. You will need at least $50,000 for your application. Most applications can cost upwards of $250,000 including professional services, state and/or local municipality application fees, real estate investment, and legal counsel. Put a three to five-year financial projection together to understand your opening and first year operational costs to determine funds needed.

6. Start Prepping your Application

Each state application process is different. Some are entirely online, while others must be submitted in person or by mail. Give yourself ample time to prepare your application and understand what documents are required. Most applications will request Business and Operational Plans, as well as plans for Inventory Control, Dispensing Procedures, Security, Recordkeeping, etc.

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