What you need to know about opening up a dispensary

Even though marijuana is legal for recreational use in a handful of states, opening up a dispensary is still one of the most challenging businesses to get off the ground. Many people want to approach running a dispensary as a fun side-business, but for it to be successful, it has to be taken seriously as a business. There is a lot of red tape to go through, and you must comply with many state laws and regulations.

If you have the money to invest, and don’t mind going through the bureaucratic process of getting approved and opening your doors, then there are a few other things to keep in mind.

Before you spend money or taking serious steps to move forward, here are a few more things you need to know before you commit to opening a dispensary.


First and foremost, you need to be in a state where medical or recreational marijuana is legalized. If it still illegal, then it’s a very bad idea to attempt to open a dispensary, even if you think legalization is on the horizon. You’re going to have to invest a significant amount of money in opening a dispensary. Doing it illegally will lose you a lot of money and could risk potential jail time.

If you are in a legal state, you must also understand local laws about marijuana sales and have a finger on the pulse of laws that might be coming up. Reading the Cole Memorandum is an excellent resource and gives you input on how to better understand marijuana laws. Additionally, The National Organization for the Reform of Marijuana Laws, or NORML, is a database that includes a lot of detailed information about marijuana laws and regulations state-by-state.

It’s also recommended to take a look at past ballots in your area. Even if your state is legal, if there was a lot of resistance from your local county against legalization, you might have opposition from the local community. Community support is crucial to the success of a dispensary.

Assess your eligibility

In a lot of legal states, background checks are still required to determine your eligibility to open a dispensary. Anyone who is going to be associated legally with the dispensary, including investors and employees, must take and pass a background check. Before you make any financial decisions, make sure you are eligible to own a dispensary. Go through a background check and guarantee that you meet all of their requirements.

It would be very unfortunate to go through the steps to secure funding and find a location and then find out that you are not eligible to legally own the entity.

Write a business plan

A dispensary is a business just like any other. For it to succeed, you need to have a solid plan of action for the future. The marijuana industry is becoming very saturated, and the novelty of dispensaries is wearing off as more and more open every year. To stand out from the competition, you need a solid business plan, as well as a marketing plan, to execute on. In the plan, include goals and milestones as well as opportunities for growth, industry data, projections and an analysis of local competition.

If you are not serious about running a dispensary as a legitimate business, then it’s not advised to get involved, period. Many dispensary owners want to open one as a hobby or side project and end up losing a lot of money due to not taking it seriously as a real business.

Secure capital

There are still a lot of barriers when it comes to getting loans or funding to open a dispensary. It’s essential to think about funding as early as possible and to know that you can’t rely on the bank for lending to open the business. You also need to keep in mind that dispensaries have very high overhead both for stock and for employees. It’s likely that it will cost much more than you anticipated in the first year while you’re still learning.

It’s highly recommended to have a savings or a personal fund that you use to fund your dispensary. Relying on investors can also get tricky as they will then have a stake in the business, which could affect future growth and decisions.

Get Licensed

Acquiring a license to open a dispensary is a costly and challenging process in most states. Aside from the application fee, which can cost as much as $15,000 in Colorado, you will likely need to pay a few thousand dollars in legal expenses to make sure that you are doing everything correctly and according to state law. The entire process can take up to a few years to go through successfully.

Before you start thinking of location and product, it’s essential to keep these five things at the forefront and handle all of the legalities and technical aspects of opening up a dispensary before you get to the fun stuff.

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