How Much Does it Cost to Open a Dispensary?
Opening a dispensary is an exhilarating adventure that can open the doors to a life of entrepreneurship for cannabis enthusiasts. For people who recognize the healing powers of cannabis, opening a dispensary is one of the biggest steps you can take. The cannabis industry is one of the most booming lines of business today. In fact, the cannabis industry is projected to accumulate over twenty-one billion dollars by the end of the year.
February 28, 2020
With an industry experiencing such heightened periods of growth, it’s safe to say that the world of cannabis is anything but over-saturated. There’s plenty of space for you and your dream of owning a dispensary, but before you dive headfirst into that adventure, you’ll want to get familiar with what opening a dispensary entails.
One of the biggest questions people have when thinking about opening a dispensary is, “How much does it actually cost to open a dispensary?” It’s always wise to be prepared for the financial side of business, rather than being blindsided and surprised by a dollar amount that you can’t afford to cover.
There are many individual costs that you’ll accumulate as you start to get ready to open a dispensary. In order to fully understand the cost of opening a dispensary, it helps to familiarize yourself with an itemized list of what you should expect to pay for in the beginning.
Everything You Need to Know About the Costs of Opening a Dispensary
A lot of behind-the-scenes work goes into opening a cannabis dispensary. Before you can set your opening date and let yourself get excited about welcoming customers into your shop on opening day, you’ll need to start from the very beginning.
Like all small businesses, there will be rules and regulations that you’ll need to adhere to when opening your marijuana dispensary. These laws are set forth by the state you reside in, and so be sure to look into your state’s specific laws regarding opening a cannabis dispensary.
Start-Up Costs of Opening a Dispensary
On average, many dispensaries cost anywhere between $150,000 USD to over $2 million USD. Please don’t think that you’ll have to drop over two million dollars on opening your cannabis dispensary because this is quite a range, and the likelihood of you spending that much money on opening a dispensary is very slim.
It all comes down to your budget, and you can open a dispensary for less when you take a look at what you choose to prioritize. While there might be location-specific costs that you cannot minimize, there are other factors that you have a say in, and you can find ways to minimize costs wherever possible.
The average total of startup costs for opening a dispensary is about $656,000 USD. The startup costs account for applying for a license, purchasing real estate for the business, paying for professionals to help with the process, hiring employees, ordering equipment for the store, installing security systems, hiring marketing directors, ordering products from wholesale distributors, and adhering to capital requirements in your area.
There are a lot of startup costs to think about at one time, so let’s take a closer look at each of the nine categories we’ve listed. Doing so will give you more clarity about what those startup costs entail, and you can then figure out how to minimize costs so that the startup costs fit into your budget!
Annual Marketing and Advertising Fees
In our modern world, it is important that every business — cannabis or not — has a solid marketing strategy to help boost sales. Not only will you need to advertise your dispensary by way of physical signs and flyers, but online marketing strategies will need to be implemented as well.
If you have room in your budget to hire a digital marketing agency, you can hand off this responsibility and let the team of marketing professionals handle the advertising side of your business. Just know that this will cause you to incur higher annual marketing fees overall.
Applying for a License
Prior to opening a dispensary, you’ll need to secure a license that permits you to operate a dispensary in your respective state. Every US state has its own licensing and application fees for dispensaries.
It is fair to assume that your dispensary license will cost about $5,000. Remember that many dispensary licenses must be renewed on an annual basis as well.
On top of paying the application fee, before opening a cannabis dispensary, there will probably be a fee associated with simply opening your dispensary. Typically non-refundable, this fee is an additional cost tied into your annual application fee.
Annual Rent for Dispensary
Though many companies are turning to e-commerce as a way of selling products, opening a dispensary requires that you have a storefront. As a brick and mortar store, you’ll need to purchase real estate that suits the needs of your dispensary.
Usually, this looks like signing a lease and paying rent on a monthly basis. Not everyone has the budget to buy an entire building that they then own. However, before you sign a lease, know that It’s important to have money in a savings account that you can draw from when rent is due.
Rent prices will vary from one place to the next. Depending on the size and location of the space you find, monthly rates could fall anywhere between $3,500 and $10,000 or more.
Rent is a variable that you can set a budget for, too. If you only wish to spend around $4,000 per month on leasing a space for your dispensary, then you can rule out buildings that cost more than your budget.
Renting a space for your cannabis business is actually a very wise move, but paying rent every month is actually the easy part. The difficult part is finding a landlord that will allow you to rent space for the sake of opening a dispensary.
Not everyone is comfortable with leasing their space to marijuana businesses. Not only do you need permission from a landlord to run a dispensary, but you’ll also need to be centrally located in a part of town where customers can find you with ease.
It’s not impossible to find somewhere to rent, by any means. It is totally possible, but make sure you plan ahead and take time to find the right place for your dispensary.
Building Staffing Costs
Before you can open the dispensary, you will need to hire employees to work the storefront of your cannabis business. In order to afford a fully-staffed dispensary, you’ll need to set aside part of the budget for paying your employees.
Before the application process can even be considered, it’s imperative that you make sure you have the capital required to open a dispensary in your state. Each state in the US has its own requirement, so we highly recommend familiarizing yourself with the local marijuana laws in your area.
Capital refers to your assets, and the state needs to know that you have a certain dollar amount in capital before permitting you to apply to open a dispensary. To give you an idea of the range, states such as Arizona require that you have a start-up capital value of at least $150,000 USD, as does Pennsylvania. In Massachusetts, you may be required to have upwards of $500,000 in capital, whereas Nevada asks that you have half of that value, with capital equaling $250,000 USD.
Where Can You Open a Dispensary in the United States?
Dispensaries can only be opened in places where cannabis is legal on a recreational level. Even if your state has legalized medicinal marijuana, if weed for leisurely purposes, is still illegal, then a dispensary is not going to be in the cards.
Do you know if your state has legalized marijuana in its entirety? Just in case, here is a list of all US states where marijuana is legal, both recreational and medicinal…
- New Jersey
- New Mexico
- New York
- Rhode Island
- Washington DC
How to Figure Out Exact Opening Costs
When it comes to opening a dispensary, the truth of the matter is that each and every dispensary’s exact costs will be unique to the business. It is hard to provide an exact dollar amount and say with unwavering certainty that it will cost you that much money to open a dispensary.
However, it helps to look at the ranges provided and then take a closer look at the requirements of your state. The amount of money you can anticipate spending on opening your dispensary will become clearer when you look at your state’s regulations.
A good plan of action is to plan on spending around $250,000 when opening your dispensary because this is the median cost. The best case scenario is that you’ll be happily surprised and not spend that much in the end! –