Opening a dispensary can be an expensive proposition. There are many costs associated with setting up and running a cannabis business, and it's important to know what they are in order to make an informed decision about whether or not this is the right path for you.
In this article, we will break down all the factors for how much does it cost to open a dispensary. We'll also give you some tips on where to save money and where it might be best to spend a little extra. So if you're thinking of opening your own dispensary, read on!
The Cost of Owning a Dispensary
If you’re wondering how much does it cost to open a dispensary, you can expect anywhere from $150,000 - $2 million each year to run and operate the business.
The financial obligations needed to open a dispensary are much higher compared to other industries. Some costs can be managed by the owner and even optimized to reach a significantly lower amount, but other costs are managed by the state and federal regulations.
The bulk of costs will come from annual staffing, rent for the building, and any up-front renovations needed. Let's take a closer look at the different aspects of owning a dispensary and what you can expect to pay for each one.
License Application Fees
When you consider how much does it cost to open a dispensary, there are a couple of considerations like license applications fees and then the license fee that comes due every year. You can expect to dish out about $5,000 or more just for the ability to apply to own a dispensary. This amount is non-refundable, no matter if you're approved for the license or not.
Each state has different fees, so it might be a worthy endeavor to find the cheapest state to open a dispensary and start your business there. Once you are approved and open for business, the annual fee to keep your dispensary operating will be a few thousand dollars as well. These fees go towards paying for things like background checks and regulatory compliance costs.
Understanding and paying these fees is just the first step to owning a dispensary and the associated costs. You don't have to hire a lawyer in order to go through the application process, but it will almost always make the process more straightforward. Include a lawyer fee with your license application fee to get an accurate estimate of how much everything is going to cost you.
Finding Real Estate
It won't be easy to find the ideal location because unlike other businesses, you'll have to follow state and local regulations. You'll need to find a location that's zoned for a dispensary, which can be difficult and expensive because these types of properties are in high demand. You won't be allowed to be near a school or a daycare, which will limit your options even further.
You can expect to spend anywhere from $50,000-$250,000 for the real estate alone. This is one of the biggest factors to consider when considering how much does it cost to open a dispensary.
Property owners know just how valuable space is for these types of businesses, so you'll likely pay a premium on the property compared to other buyers. Which state you move to matters a lot for real estate costs. It will make a difference to find the cheapest state to open a dispensary.
Finding a location that is within regulation is just half the battle. You’ll also need to worry about foot traffic and if the location is viable for a business. This needle in a haystack might cost you a good amount of money just to set up shop, but count on other location expenses such as renovating the building.
You want to make sure the building itself follows all codes and regulations, not to mention add your brand identity. The renovations alone could cost another $50,000 added to the total cost of owning a dispensary.
Banking Fees and Rules
The major problem with the cannabis industry at this point is that it is still considered federally illegal. That means most major banking companies don't want to run the risk of handling money from dispensaries, even in the cheapest state to open a dispensary. They run the risk of getting penalized or losing money in the partnership.
There are alternatives you can use like credit unions or specialized marijuana banking institutions. The only issue with them is that they'll likely charge a big holding fee for using their services. It’s an important factor when you weigh how much does it cost to open a dispensary.
It can seem like everyone is trying to get a cut from you when you own a dispensary, and that sentiment wouldn't be far from the truth. The upfront costs of owning a dispensary are much higher compared to other businesses.
Now that you know how much does it cost to open a dispensary, you still need to consider the monthly or yearly costs to keep it running. You'll have to pay for security, advertising, inventory, packaging, and employee salaries. All of these things will play a factor in how much money you need to bring in each month just to break even, let alone turn a profit.
The best way to get an accurate estimate for these costs is to speak with dispensary owners in your state and get a feel for how much things cost in your area. You can also look at other businesses in the same industry and use their operating costs as a benchmark.
Just remember that each business is different, so use these numbers as a guide rather than gospel.
Owning Your Own Dispensary
Owning your own dispensary is a huge investment both in time and money. The process of getting everything set up can be long and difficult, but it will all be worth it in the end when you see your dream become a reality. Be sure to do your research to figure out the cheapest state to open a dispensary and to know exactly how much does it cost to open a dispensary. There are a ton of fees, and if you aren't prepared for them, you could be at risk of sinking before you even start.