Opening (and Running) a Cannabis Dispensary & Retail Store


With most U.S. states and the entirety of Canada now permitting the usage of cannabis, a new green rush is sweeping the nation.

Over 95% of the U.S. population lives in an area where marijuana is legal to some degree, over 25% in states where recreational use is permitted, and Canada has ended prohibition and federally legalized recreational cannabis. New businesses in the industry are springing up quite literally like weeds - grow operations, processing facilities, and dispensaries, to name just a few.

Today we’re going to take an objective look at both the potential benefits as well as the risks involved in opening a dispensary*, and walk you through the entire process; we’ll cover everything from obtaining your initial funds, to applying for your license, all the way through opening your doors for business.

The fact of the matter is that entering the legal cannabis industry can be incredibly profitable. With sales in 2018 nearing $10 billion, and projected to triple by 2023, cannabis is poised to soon pass the NFL in terms of revenue. Dispensaries do enjoy a healthy profit margin, and most new dispensaries are in the black within their first year of operation, with over 75% profitable or at least covering their operating costs.

Unfortunately, the grass isn’t entirely green when it comes to the landscape for starting a new dispensary; there are a number of significant challenges and risks that dispensaries must successfully navigate and overcome. Broadly speaking, these challenges can be categorized into four groups: legal, financial, social, and security- related.


Dispensaries face a much higher standard than the average business when it comes to legal compliance. The cannabis industry is highly regulated in all states and provinces, and you (and everyone associated with the dispensary, even investors!) are going to have to satisfy some stringent requirements when it comes to residency and criminal background checks, and will face an ongoing struggle to ensure you remain legally compliant at all times.


To take full advantage of the green rush, you’re going to need to be able to raise a lot of green currency. Even a modest dispensary startup costs can easily be upwards of $250k+ to open the doors. Additionally, dispensaries often have difficulties obtaining financial services due to federal banking restrictions related to the criminal classification of cannabis, which leads to an overly heavy balance of cash transactions.


Just because cannabis is increasingly legal doesn’t mean that the social stigma against it has disappeared. Make an honest appraisal as to whether this might create any personal friction for you with friends or family (though these days, you’re probably more likely to be congratulated or admired). You’ll also want to pay attention to the attitudes and perception of your landlord, neighbors, and the community at large.


Finally, as a dispensary owner you have some significant security concerns to deal with. When thousands of dollars of your cash or product can easily be stuffed into a pocket you’ve got to be on the lookout for theft, both internal and external – as well as robbery. You’ll also have to spring for a pretty heavy duty security and surveillance system to stay compliant with the law.

While the list of challenges in opening a cannabis dispensary is certainly formidable, so are the rewards for successfully doing so. In the next few sections we’ll take a look at some of the initial research and planning that needs to be performed prior to taking your first steps towards opening a dispensary business.

Here are the 12 Chapters to our HOW TO OPEN A DISPENSARY GUIDE:

Questions to Ask Before Opening a Dispensary

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 cannabis business owner, you need to plan for every contingency possible.

Before embarking on a cannabis company journey that's complete with its own unique set of challenges, conduct a quick self-check with these 8 questions to see if you are ready for this exciting journey.

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Researching & Planning

The first steps to starting your dispensary are to research and plan. Most states and provinces actively maintain a checklist of sorts on their official websites that details how the application process works, which you’ll definitely want to take a look at. Generally speaking however, the four most important first steps in opening a dispensary, no matter the location, can be boiled down to finding your location, making sure you’ll get your dispensary license, raising your initial capital, and drafting a solid business plan. Let’s take a look at an overview of each item here.

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The Licensing & Application Process

Before you open the doors at your very own shop and start raking in the revenue, you’ll have to successfully apply for a marijuana retail license. Exactly how arduous an application process you’ll go through will depend largely on your location. But no matter where you choose to operate, there are a few major elements of applying for a cannabis retailer license common to all states and provinces.

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Writing Your Business Plan

Before you open the cannabis retail shop of your dreams, it’s essential that you create a detailed dispensary business plan. It is a crucial tool when it comes to raising capital, and will provide strategic guidance covering every aspect of ownership from preparation to operations.

No matter if you decide to draft your own or hire a professional, there are going to be several core elements that should always be addressed within your plan. We have identified six that are of particular importance for new dispensaries and closely examined each of them in this practical guide to develop your business idea into a business plan.

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Estimating Dispensary Costs

While opening a marijuana dispensary is similar to launching 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 ranges from $150,000 to $2 million. That includes key costs of around $250,000 for annual staffing, $100,000 in yearly rent, and $50,000 for up-front renovations. 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; others are tied to the jurisdiction you’re in.

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Securing Financing

One of the most unique features of the marijuana industry is the relative lack of financial services. Most traditional sources of capital are unavailable to cannabis entrepreneurs. In the United States, access to professional financial services is restricted due to the federal status of cannabis. As a result, the state usually insists that you have available working capital on hand to pay for daily and monthly business costs as a condition of the licensing process. Even in Canada, where marijuana is federally legal, you’ll likely pay premium interest on any money borrowed from the bank. In Ontario, retailers must demonstrate access to a line of credit before applying for a license from the government.

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Finding the Ideal Dispensary Location

In most jurisdictions, in order to even fill out the paperwork related to your license application you’ll need to have a prospective physical location for the dispensary already locked down. This means you’ll need to research the various municipalities you are considering operating in, paying particular attention to local demographics and possibly additional hurdles when it comes to compliance at the local level.

Read more about five specific factors to keep in mind when evaluating the suitability of potential locations:

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Building Your Dream Team

Knowing how to open a dispensary requires more than nice decor, a great bud selection, and a dialed-in POS system; in fact, some say that how well a business performs has more to do with its people than its products or services.

When it comes to building the best team possible at your shop, you need to think about two types of individuals - your professional support and your day-to-day staff. If both groups contain trustworthy and skilled people, you’ll be on the fast track toward success.

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Designing Your Dispensary and Retail Experience

Designing your cannabis retail experience goes beyond your physical blueprint. It includes how you create your brand and shape your customer experience. Bringing in an architect and interior designer to consult with you on the final design, aesthetic, and layout of your dispensary is smart; cannabis stores have unique features that differ from other retail operations, so configuring your space to deal with these ahead of time will increase your efficiency and save funds in the long run. An experienced professional can help, but you need to supply the vision.

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Choosing the Right Dispensary Technology

The average cannabis shop is a far more complex retail environment than you might initially imagine. Not only do you face the same performance burdens as other businesses, you have to deal with significant legal and compliance requirements. Choosing the right technology infrastructure for your store can go a long way toward mitigating these challenges. At a very basic level, you’ll need Wi-Fi network, computer, and POS and Inventory management system to run your store. To make sure that customers can find you, you’ll also need a website and if you want to offer the ability to order online, delivery, and display live menus, you would need an ecommerce website.

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Creating a Dispensary Security Plan

The primary purpose of a cannabis security plan is to provide a safe and secure environment for the store’s employees, customers, and visitors, while abiding by all legal requirements. Let’s take a look at the three most important components of any retail shop security plan.

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Sourcing Your Cannabis Flower

Sourcing cannabis in Canada and in the United States are slightly different processes. In Canada, you can generally only purchase cannabis wholesale from the provincial government, which distributes product sourced from licensed producers. In the United States, some regions allow retailers to have vertically integrated operations and grow their own product.

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