There’s a lot to be said for people who open businesses - it takes a certain amount of courage, know-how, and pure risk-taking to make the jump into entrepreneurship. To be truly successful, it requires more than just a good business plan, an attractive storefront, or eye-catching signage. As a business owner, you need to plan for every contingency possible.
When it comes to opening a cannabis retail store in the United States or Canada, the planning and preparation need to be even more thorough, as it’s an industry that’s constantly changing and mired with heavy regulations. Before embarking on a cannabis journey that's complete with its own unique set of challenges, ask yourself the following questions.
Can I afford to do it?
Opening a business can be expensive no matter what industry you’re in, but there are a few key pieces of information to be aware of when talking about cannabis retail. First and foremost, it can be very challenging to secure financing from traditional methods, so it will take some creativity (and maybe even your entire savings account) to get the ball rolling. Before you even get to design your shop and open for business, there are licensing and permit fees as well as other financial stipulations to contend with. It is safe to assume that even the most modest of retail operations can easily cost upwards of $250,000 to get up and running.
Am I qualified to apply for a license?
Local governments define certain “must haves” (things that must be satisfied in order to apply for a cannabis license) and “red flags” (things that are automatically disqualifying for an applicant). Generally speaking, you must be a resident of the state or province to which you are applying and have a clean criminal record. But these requirements can vary place to place. In British Columbia, any history of involvement with organized crime is considered a red flag; in Yukon and Newfoundland, individuals with certain convictions will be automatically denied. U.S. states like Washington require spousal background checks and will deny an application if the spouse has a criminal history. So before writing a hefty check to cover non-refundable licensing fees, verify that you meet the qualifications in your target area.
Do I have a qualified location in mind?
Finding a proper location for your dispensary might be harder than you imagine. Each state and province will have their own legal mandates or zoning laws that restrict where a retail cannabis location can exist. For example, in Alberta cannabis retail stores cannot be within 100 meters of any healthcare facility, school, or parcel of land designated as a school reserve. And in California, cannabis stores cannot be located within a 600-foot radius of a school, day care center, or youth center. You will need to pay careful attention to local zoning laws wherever you plan to open your dispensary and it is wise to engage a lawyer and/or realtor that has experience placing cannabis retail stores in the area.
How will I be received by the community?
While cannabis is becoming more and more socially acceptable across North America, you should think about how your new dispensary might be perceived by both residents and fellow retailers. Take some time to study the demographics of particular areas and think about where you might find the most success. If you have your heart set on a particular location, meet your neighbors before moving in and try to gauge their level of receptivity to your business and to uncover community service opportunities.
Do I have the resources and help to apply for a license?
Applying for a cannabis license can be complex. Every U.S. state and Canadian province are likely to have a unique months-long application process. Not only will it likely require a detailed business and operational plan, but non-refundable application and licensing fees (between $5,000 to $20,0000) and thorough financial and background checks. While you can theoretically apply for a license on your own, a careless error can disrupt or cancel your chances of licensure. Though it may be costly, it is in your best interest to engage with a lawyer or consultant that has successfully filed applications for cannabis with the local government.
Am I comfortable owning a risky business?
Federal legalization in Canada will significantly lower, but not eliminate, the risk of operating a cannabis business. In the United States, however, the cannabis industry is innately filled with more risks than many other types of operations, mainly because cannabis is still considered illegal by the federal government. Many banks don’t want to work with you which might mean you operate on a cash-only basis. This can make you a target for theft from the outside or can even create internal temptations.
Do I have the expertise and team to run the store successfully?
Even the most experienced entrepreneurs need a team they can rely on. No one can work every single day, and business owners need to take time off every once in a while. Can you create and implement standard operating procedures and training programs to set all employees up for success when you are absent? Do you have the skills to discern how your personnel will handle the business when you’re not there? From hiring a store manager to supervisors and budtenders, you need to be able to count on your staff. Thankfully, certain dispensary POS systems will allow you to check your numbers remotely, so you can still keep an eye on things from afar.
Is opening a cannabis store my passion?
Like many great things in life, it takes a lot of time, money, and effort to see your dreams become a reality. Opening a marijuana dispensary is possible as long as you have the ability to finance and run the business, but is it really something you’ll live for? This might be the most important question of all before you move forward in the process.
After having a heart to heart with yourself and contemplating these eight questions, are you still excited about opening a cannabis retail store? If the answer is yes, then it’s time to celebrate and get moving toward making your dream a reality!
Opening a dispensary requires you to stay on top of a lot of moving parts, so for a clear guide that gives you helpful tips and tricks, download our e-books today.