They say if you do what you love, you’ll never work a day in your life. And while running a dispensary is no small task, for cannabis enthusiasts, it can be a highly rewarding endeavor.
If you’re reading this, you’ve probably done some preliminary research and realized that setting yourself up for success as a dispensary owner means finding a great location, sourcing high-quality cannabis products, investing in a dispensary point-of-sale, a solid team, and – most importantly – a dispensary or retail cannabis license. So, how much is all this going to cost you?
The truth is that opening a dispensary is probably more expensive than you may think – more expensive than launching any other type of small business. In this blog, we’ll break down the true costs involved and how they can vary depending on your location.
What is the cost of opening a dispensary:
The cost of opening a cannabis dispensary ranges from $250,000 to $2 million, depending on the size of the facility. A 2024 MJBizDaily survey found that most dispensaries are anywhere between 800 and 4,200 square feet. According to industry estimates, the average cost of opening a dispensary is around $700,000 for an average-size facility of around 1,800 square feet.
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That cost is going to include roughly $250,000 for annual staffing, $100,000 for a year of rent, and $50,000 for up-front renovations and interior design. Of course, everyone’s budget is different, and there are a lot of variables when it comes to capital requirements. Some costs are in your control, and some are tied to the jurisdiction you’re in.
You’ll also need to consider wholesale cannabis prices, which vary greatly depending on multiple factors. For instance, in January 2021, a pound of flower in Colorado was going for $1,731; by April 2023, the price had fallen to $649 per pound. Here’s a chart from MJBizDaily that shows how wholesale flower prices can fluctuate:
Let’s take a closer look at these startup costs and the other factors that influence the disparity in dispensary costs from market to market. Then we’ll review some examples of those cannabis retail costs in different U.S. states.
Dispensary License Application Fees: Charges Just to Get in the Game
While licensing fees vary from state to state, you should expect to spend around $5,000 for your license application alone. That means you’ll spend a good amount of money just to get the green light before you ever sell your first gram. This is one of the first steps in opening a dispensary, and the typically non-refundable fee is in addition to your annual license fee, which can range from $1,000 to north of $4,000.
Real Estate Costs and Challenges: Locating a Brick-and-Mortar
Location is everything, but it may be in short supply. There are usually strict zoning rules about how close a dispensary can be to a school or other place where minors congregate, and even how close it can be to another dispensary. Finding a retail space that will allow a dispensary to operate on the premises is only half the battle. You also need to find an area with good visibility and ideally high foot traffic.
You’ll probably pay a premium for being in the cannabis business. Annual real estate for marijuana store expenses might run $100,000 to $250,000, according to the MJBiz 2024 Factbook. Add to that the one-time cost of remodeling and designing the space to meet regulations, match your brand identity, and optimize store flow. That could easily be another $50,000 upfront.
Cannabis Industry Banking Rules and Fees
Marijuana dispensaries fall into a very gray area in the business world, as they are technically illegal from a federal standpoint in the U.S. Because of this, many banks won’t 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 cannabis 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.
Ongoing Costs to Operate Your Marijuana Dispensary 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 fully compliant POS system, a security system, and inventory to sell.
Electronics and business equipment 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 products could run at the rate of $1,600 per pound.
Other operational costs include your advertising budget. Depending on your location and the number of competitors in your area, you could be looking at $25,000 for advertising.
It’s never a bad idea to have an attorney on retainer for any business, as well as a robust insurance policy. Annual costs for these could approach $4,000.
Of course, to run any business successfully you need dedicated and well-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.
Costs of Opening a Cannabis Dispensary Per State
Covering your dispensary opening and operating costs requires a significant amount of revenue. Efficient operations and smart decisions will help increase profits while simultaneously reducing your expenses. Costs can vary depending on the state you’re operating in. If you open a dispensary in California, you can expect to pay the fees listed in the “High” column in the table below, while Colorado would fall in the “Medium” category. While initial license fees in New York and New Jersey are quite low, other operating costs will range between medium and high. On the other hand, dispensary operating costs in states like Missouri, Mississippi, and New Mexico would be on the low end of the spectrum.
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How Much Does it Cost to Open a Dispensary in New York?
If you want to be a dispensary owner in New York, you’ll need to budget between $500,000 and $1 million or more, depending on your location, facility size, and the type of operation you’re running. The application fee for a conditional adult-use retail license (CAURD) is $1,000, and the licensing fee if approved is $7,000. You can also apply to be a limited retail consumption facility for an additional $3,000. The application and licensing fees are 50% less for all Social and Economic Equity applicants.
One of your biggest operational expenses for a New York dispensary will be real estate. The average cost for commercial real estate in New York is $771 per square foot – but depending on the location, the price can go as high as nearly $10,000 per square foot. Likewise, the cost of renting retail space in New York can vary wildly depending on where you’re at. For instance, in SoHo you’ll likely pay between $140- $900 per square foot, while the average rent for retail space in Manhattan is around $669 per square foot.
How Much Does it Cost to Open a Dispensary in New Jersey?
Opening a dispensary in New Jersey will cost you between $500,000 and $750,000 upfront, with ongoing costs between $50,000 and $75,000. Your application fee, application approval fee, and licensing fee will run anywhere from $1,500 to $12,000, depending on whether you’re a microbusiness or a standard business (a microbusiness has 10 employees or less and 2,500 square feet or less of operation space). Much like New York, the bulk of your dispensary startup costs in New Jersey will be associated with your real estate. The average price per square foot for commercial property in New Jersey is $22,936, with the average retail property going for $2.2 million. If you’re renting, you can expect to pay between $15 and $40 per square foot on average.
How Much Does it Cost to Open a Dispensary in New Mexico?
In New Mexico, opening a cannabis dispensary costs between $250,000 and $450,000 in upfront expenses and between $32,000 and $42,000 per month in ongoing costs. You’ll pay a $2,500 licensing fee each year, plus a $1,000 annual fee for each licensed location. As for real estate, the average cost per square foot for commercial property in New Mexico is $6,480, and the average retail property goes for just over $1.5 million. Commercial real estate rent prices depend on which district you’re in, as well as whether you’re renting Class A or Class B property; typically, you’ll pay around $20 per square foot in rent.
How Much Does it Cost to Open a Dispensary in Minnesota?
If you’re opening a dispensary in Minnesota, you should plan to budget roughly $380,000 to $420,000 in upfront capital, depending on your real estate costs. Your ongoing costs could be $25,000- $75,000 a month, again depending on your rent or commercial mortgage payments. In Minnesota, you’ll pay a $2,500 cannabis retail application fee, as well as a $2,500 initial licensing fee and a $5,000 annual license renewal fee. When it comes to property, the average cost per square foot for commercial real estate in Minnesota is $216, but it can range as high as $2,684. If you’re renting, the average cost is around $32 per square foot in Minneapolis, while St. Paul’s average is $24 per square foot.
How Much Does it Cost to Open a Dispensary in California?
The average up-front investment to open a dispensary in California is between $80,000 and $250,000. Ongoing operating expenses will cost you between $30,000 and $70,000 each month.
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. The cost of living is high in California, and you can expect to pay employees a bit more than the national averages. For instance, budtenders will cost around $30,000- $40,000 per year.
How Much Does it Cost to Open a Dispensary in Massachusetts?
The estimated up-front cost of opening a dispensary in Massachusetts can range between $325,000 and $1 million. Ongoing operational expenses like employee salaries and lease or mortgage payments will average around $70,000 to $100,000 per month. Commercial real estate prices can vary dramatically depending on where your dispensary is located. Opening a dispensary in Boston would be significantly more expensive than opening up in a rural Massachusetts town. Although the application fee for a cannabis retail license in Massachusetts is only $300, once approved, the annual license will cost you $5,000. Massachusetts has lowered fees for social and economic equity applicants and has even introduced special programs for them.
How Much Does it Cost to Open a Dispensary in Oklahoma?
Getting a dispensary off the ground in Oklahoma costs between $80,000 and $140,000 upfront, with ongoing monthly expenses of $30,000 to $40,000. The cost of living and minimum wage are relatively low, so you can probably hire good budtenders at a bargain. Real estate in Oklahoma is also less expensive than in states like California or Colorado, though you may still face the same challenges finding a good location and a willing landlord. The application fee for a medical marijuana dispensary license is $2,500.
How Much Does it Cost to Open a Dispensary in Missouri?
The estimated upfront cost of opening a dispensary in Missouri is between $85,000 and $150,000. Ongoing expenses like salaries and lease or mortgage payments average around $30,000 to $50,000 per month. Slightly higher than Oklahoma expenses, but the cost of living and commercial real estate prices are still quite low. The application fee for a medical marijuana dispensary license is a non-refundable $6,000, and the annual license renewal fee is $10,000.
How Much Does it Cost to Open a Dispensary in Michigan?
Overall, the cost of opening a dispensary in Michigan is comparatively low, with an upfront investment of between $47,000 and $136,000. The state’s bargain real estate and lower staffing costs help keep ongoing costs to between $24,000 and $48,000 per month. The application fee for both medical marijuana and adult-use cannabis retail licenses is $6,000. For provisioning centers (the state’s term for medical marijuana dispensaries), there is a regulatory assessment fee of $44,000. For an approved adult-use retail license, the initial fee is $25,000.
How Much Does it Cost to Open a Dispensary in Illinois?
To open a cannabis dispensary in Illinois, you’ll need to budget between $75,000 and $180,000 for upfront costs. Ongoing costs can range from $26,000- $71,000 per month. Those costs are largely dictated by real estate lease rates which could be as high as $20,000 per month in high-demand locations.
For a new adult-use dispensary license, the non-refundable application fee is between $2,500 and $5,000, depending on whether you qualify for the state’s Social Equity program. Once approved, a license will cost you $60,000 for two years, or $30,000 if you meet the Social Equity criteria.
How Much Does a Dispensary Owner Actually Make?
How much you’ll make as a dispensary owner depends on your market size, the competitive landscape, and, ultimately, how much revenue your dispensary is generating per year. You can learn more in our comprehensive blog about how much a dispensary owner makes.
How Much Are You Worth?
There’s one final piece of the dispensary-cost puzzle – and once again, it 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 million in assets with at least $500,000 of it in liquid cash.
When it’s all said and done, the average cost of all the aspects we’ve covered 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!
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