How to Open a Dispensary in Minnesota

The first step to opening a medical or adult-use cannabis dispensary is understanding Minnesota's cannabis dispensary laws as laid out by the Office of Cannabis Management.

The OCM regulates all aspects of the cannabis industry, including the adult-use market, the Medical Cannabis Program, and lower-potency hemp edibles. Here is a quick overview of the primary policies relevant to opening a cannabis dispensary in Minnesota:

• Retail sales for adult-use cannabis will begin in the first quarter of 2025.
• Beginning August 1, 2023, adults aged 21 and older can possess and use limited quantities of cannabis and cannabis products.
• Minnesota will continue to have a Medical Cannabis Program, which will transition to be under the OCM in March 2025.
• Social equity provisions prioritize applicants from disadvantaged communities affected by cannabis prohibition and military veterans.

For a comprehensive review of Minnesota marijuana laws, check out our dedicated Minnesota Cannabis Law page where we dive much deeper into the application process and answer the most common questions on dispensary operations and regulatory requirements.

The Office of Cannabis Management has made significant progress in setting up the legal scaffolding for cannabis businesses in Minnesota. However, as of the time of writing, the exact application process for the general licenses (which includes the Retailer license) is still in the works.

Although the eligibility criteria for the general cannabis business license have not been published yet, we do know that Minnesota’s OCM will award license approvals for 38 Cannabis Retailer licenses in 2025.

Social equity is a central focal point of the new cannabis business regulations in Minnesota. As such, OCM’s application process will give preference to social equity applicants.

• Had a family member, dependent, or himself/herself convicted of a cannabis offense before May 1, 2023.
• Military veteran or a current/former member of the National Guard.
• Military veteran or a current/former National Guard member who lost their honorable status due to a cannabis offense.
• Has worked on a farm for at least three years, handling most of the daily labor and management, with the farm earning between $5,000 and $100,000 in the past year.
• Resident for the last five years in one or more areas with:
• a disproportionately large amount of cannabis enforcement
• a poverty rate of more than 20%
• a median family under 80% of the statewide median income
• at least 20% of households receiving SNAP assistance
• a high vulnerability population as determined by the Centers for Disease Control and Prevention and Agency for Toxic Substances and Disease Registry (CDC/ATSDR) Social Vulnerability Index

After the social equity status has been verified, applicants can apply for preapproval of one of the 9 business license types currently available, including cannabis retailers. Once submitted, applicants will go through additional screenings, and if qualified, be entered into the lottery.

Editor’s Note: As of the time of writing, October 10, Minnesota is accepting applications for social equity licenses, including the Cannabis Retailer Incense. Approvals for this initial batch of licenses are expected to be announced by the end of 2024. General licensing is expected to begin by early-2025.

A comprehensive cannabis business plan is your roadmap to success in the cannabis industry. Even though Minnesota has not laid out the application process and eligibility criteria for general licenses, you can get a big headstart by working on your business plan — OCM recommends this as well.

Your business plan should include the following components of your Minnesota dispensary:

• Market analysis and competitive research
• Financial projections, including startup costs and revenue forecasts
• Marketing and branding strategies
• Compliance and regulatory considerations
• Staffing and training plans

Your business plan will be instrumental in securing a dispensary license, looking for funding, and guiding your dispensary's growth. It should outline your goals, target market, financial projections, and marketing strategies. And the sooner you start, the further ahead you will be.

Unsure where to begin? Here are three questions that every cannabis dispensary owner should ask themselves:

Feasibility: Is my dispensary a good market fit?

With a population of over 5 million, of which, at least 1 million have consumed cannabis in the past 12 months, Minnesota presents a huge opportunity for cannabis businesses.

A feasibility study can help you tap into this market by identifying the demand for cannabis products in your specific area, popular niches, the competition you might, and more insights crucial for starting a successful dispensary. At the very least, your market research should:

• Evaluate the financial viability, regulatory landscape, and operational requirements to ensure a well-rounded business
• Assess the current landscape and identify gaps in Minnesota’s cannabis market.
• Explore opportunities for diversification, such as offering both adult-use and medical cannabis products.

Finances: How much does it cost to open a dispensary?

Opening a dispensary involves significant upfront costs and breaking down these expenses is the first step in securing funding and ensuring your business's financial stability.

To open a dispensary in Minnesota, cannabis retailers are required to pay three nonrefundable fees to the OCM during different phases of their business:

• Application fee: $2,500
• Initial license fee $2,500
• Renewal license fee $5,000

In addition to licensing fees, potential dispensary owners are looking at roughly $400,000 in upfront startup costs. For a full breakdown of startup costs, read The True Cost of Opening a Cannabis Dispensary in Minnesota.

Profitability: What's the revenue potential for a Minnesota dispensary?

Profitability for cannabis businesses in Minnesota can be substantial, but setting realistic expectations is essential. Your business plan should include detailed financial projections to estimate potential profits.

More importantly, your plan should focus on key factors that influence a dispensary’s profitability, including:

• Market demand and competition: Minnesota's cannabis market is projected to reach $1.5 billion by 2025, with initial demand expected to outpace supply in most regions. However, competition will increase as more licenses are issued, making location selection and market differentiation crucial for long-term success.
• Pricing strategies: Successful dispensaries employ a strategic product mix and pricing tiers while keeping prices competitive with both legal and illegal markets. Historically, consumers are particularly price-sensitive during a state's first year of legal sales.
• Operational efficiency: Implementing automated systems for inventory tracking, employee scheduling, and customer management can reduce operational costs by 15-20% while reducing administrative overhead.

Also Read: How Much Money Does a Cannabis Dispensary Owner Make?

With cannabis’ restricted status at the federal level, securing funding is often a significant hurdle for aspiring dispensary owners, even in legal states like Minnesota.

To maximize your chances of securing funding for your dispensary, you must search early and search wide. Explore various funding options, including personal savings, loans, investors, or partnerships.

The most common source of raising capital for cannabis dispensaries is self-funding, including through friends and family. While arguably the easiest way of securing funding — self-funding is, unfortunately, not possible for everyone.

Though banks may soon be willing to work with cannabis businesses with the DEA getting closer to potentially rescheduling marijuana, for now, crowdfunding and angel/private investors are the primary sources of loans for cannabis businesses. If you do go down this route, make sure to:

• Develop a detailed business plan to attract investors
• Explore state and local grant programs or incentives for cannabis businesses to reduce your liability
• Seek financial advisors with experience in the cannabis industry

Also Read: Cannabis Dispensary Financing, Funding, And Loans

Whether you’re filing your cannabis retailer license application or reaching out to investors for funding — you’ll need a detailed plan on how you intend to make your vision into a reality. This plan will include 6 key areas of focus, as laid out below:

Selecting the right location for your dispensary is crucial for success. Consider zoning regulations, proximity to your target market, and accessibility when choosing your storefront. Do a cost analysis early on to ensure the location is within your budget.

Dispensary owners should also take the following into account when choosing the dispensary location:

• Local zoning laws and distance restrictions from schools and other sensitive areas
• Foot traffic and accessibility for your customers
• Potential for expansion and growth in your chosen location

Different markets like different products — selecting the right products to stock in your dispensary will be essential for attracting and retaining customers early on.

A diverse range of products that cater to various preferences is a good, safe approach but you should also:

• Offer a variety of strains, edibles, concentrates, and accessories.
• Stay informed about emerging cannabis products and trends.
• Price your products competitively while considering your profit margins.

Implement robust security measures to protect your dispensary, employees, and customers while complying with state regulations.

Here are some security measures to implement at your Minnesota dispensary:

• Surveillance cameras with recording capabilities.
• Access control systems and alarms.
• Employee training on security protocols.

Implementing the right cannabis technology can streamline your dispensary's operations and ensure compliance with Minnesota state’s regulations.

Invest in the right cannabis point-of-sale system, inventory management software, and security systems, and understand the cost of ownership of the POS system before you choose one.

Crucially, ensure that the POS you choose has the following features:

• Sales tracking and inventory management.
• Seed-to-sale tracking systems for compliance with state regulations.
• Security systems integrations, including surveillance cameras and alarm systems.

Your dispensary staff plays a vital role in providing excellent customer service and ensuring compliance. While planning your finances, you need to take into account staff salaries and training expenses. Here are three staffing tips for your future cannabis dispensary:

• Prioritize hiring employees with expertise in cannabis products and their effects.
• Develop training programs that cover product knowledge, customer service, and compliance.
• Consider the staffing needs for security and regulatory compliance.

Effective cannabis marketing and advertising are essential for attracting customers to your Minnesota dispensary. Although cannabis advertising is subject to strict regulations, there are some marketing strategies you can still deploy, including:

• Develop a strong online presence with a user-friendly website.
• Engage in community outreach and educational events.
• Utilize social media platforms compliantly and within state regulations.

In this short guide, we covered the critical phases of opening a cannabis dispensary from understanding the state's laws and creating a solid business plan to securing funding and prioritizing compliance and security.

Opening a cannabis dispensary in Minnesota presents a promising opportunity for budding entrepreneurs… but as the cannabis landscape evolves, it also presents dispensary owners with new regulatory and logistical challenges.

Staying up to date with the changes published by Minnesota’s OCM helps but the real difference maker is partnering with a Minnesota-compliant cannabis technology provider like Cova.

As a dispensary Point of Sale, Cova is loved by dispensaries across North America including New York, thanks to advanced features including:

• Cashless payment solutions and integrated eCommerce help retailers grow their business
• Advanced inventory tracking and seamless traceability reporting to help New York retailers meet cannabis license requirements
• Intuitive sales tools that are easy to use, making it easy to train new budtenders and serve customers efficiently

To top it all off, Cova’s vast ecosystem of integrations includes leading tech partners in the cannabis industry, like Leafly, Weedmaps, Headset, KayaPush, SpringBig, and many more.