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How Much Does it Cost to Open a Cannabis Dispensary?

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People often say that making money while doing something you love is the goal in life, and for cannabis aficionados, that could mean opening a dispensary. The local shops are always busy with customers, and the cannabis industry is showing no sign of slowing down. So why not get in on a piece of the action too?

If you’re reading this, you’ve probably done some preliminary research and have come to the conclusion that setting up shop takes a great location, POS technology to track inventory at your cannabis dispensary, and a solid team.

So... how much does it cost to open a dispensary?

While opening a marijuana dispensary is similar to any other type of small business, due to certain state regulations and financial hurdles to overcome, it’s a lot more expensive than one might think.

The cost of opening a cannabis dispensary is definitely not insignificant. Of course, everyone’s budget is different, but you’re likely not going to be able to launch a dispensary with less than $150,000. In jurisdictions with major capital requirements, you could easily need up to $2 million.

costs of opening a cannabis dispensary

Example: how much it costs to open a dispensary in California

In California, you’ll pay $1,000 to apply for a dispensary license, and if approved, you’ll pay a licensing fee between $4,000 and $120,000, depending on the estimated value of your operation. You’ll also need to factor in real estate, which can cost between $50,000- $100,000 annually, as well as other startup costs.

Charges Just to Get in the Game

Before you even sell your first gram, you have to spend a good amount of money just to get a green light to open up shop. One of the first steps in opening a dispensary is applying for a license and permit. While these fees vary from state to state, an accurate expectation would be to spend about $5,000 on this piece alone.

Locating a Brick-and-Mortar

Finding a retail space that will allow a dispensary to operate on the premises is only half the battle, as you also need to find an area that has good visibility and ideally high foot traffic. Annual real estate expenses might run $100,000 plus the one-time cost of remodeling the space to your liking.

Cannabis Industry Banking Rules

Marijuana dispensaries fall into a very gray area in the business world, as they are technically illegal from a federal standpoint. Because of this, many banks don’t want to transact with a dispensary for their initial investments as well as their day to day needs.

To get around this, owners will do business with credit unions or even private marijuana banks if they’re present in the area. Unfortunately, this comes with a cost as these organizations realize you might not have any other choice, and they can charge holding fees of up to $2,000 per month.

Costs to Operate Your Business

Once you’ve passed through the first set of monetary hurdles, you’re in a good position to become operational. Before opening day, remember that you’ll need a full POS system, a security system, and inventory to sell.

The electronics might run you about $25,000, and in states where it’s illegal for dispensaries to grow their own flower, stocking your shop with quality product could run at the rate of $1,500 per pound.

Other operational costs include your advertising budget. Depending on your location, and how many competitors you have, this could run into the $25,000 range before you know it.

It’s never a bad idea to have an attorney on retainer for any business, as well as having robust insurance policies should anything happen. Given that the marijuana industry is vulnerable in many ways, these annual costs might approach $50,000.

To run any business successfully, you need dedicated and fully trained employees. The size of your shop will certainly dictate how many people you need on staff, but assuming you have a few budtenders, a supervisor, and a store manager, you can expect your annual payroll to run close to $250,000 if you’re paying them at industry standard rates.

How much does a dispensary owner actually make then?

How much you’ll make as a dispensary owner depends greatly on your market size, the competitive landscape, and, ultimately, how much revenue your dispensary is generating per year. For example, if your dispensary is generating $30 million-plus annually, you could easily make an annual salary of $1 million or more.

How Much Are You Worth?

Are you overwhelmed yet by the true cost of opening a marijuana dispensary? There’s one final piece of the puzzle, which again varies dramatically from state to state.

When applying for your license and permits, you have to prove that you have enough capital to remain a viable company in the industry. Some states don’t require that you have any assets at all, but others like Pennsylvania stipulate that you have $2,000,000 in assets with at least $500,000 of it in liquid cash.

When it’s all said and done, the average cost of all of the aspects we’ve mentioned is between $250,000 and $750,000. If you’ve been fortunate enough to find an investor to hand over this kind of cash, congratulations!

Looking for more information about what opening a dispensary entails? Be sure to download our ebook to get all of the tips and tricks you’ll need to be successful.

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