Green Rush Review

Want To Open A Dispensary? Here’s What It Will Cost.

As legalization continues to spread, investors, business people, and entrepreneurs around the country are getting in on the “green rush.” One of the biggest ways to make money in the legal cannabis industry is to open a dispensary.

Like with any other business, there are a variety of startup costs that go into preparing to open a dispensary. But because the cannabis industry has its own unique sets of rules and regulations, there are some extra costs involved in running a weed business. Here’s a breakdown of what it will cost to open a dispensary.

State Proof Of Capital Requirements

The biggest challenge to starting a dispensary is meeting the startup capital requirements. These figures change state-to-state, so be sure you check the rules in your state. In general, though, plan on getting together some significant cash before applying to open a dispensary.

To give you a sense of what you will be looking at, here are the startup capital requirements in a few of states:

  • In Nevada, you need $250,000 in capital to start a medical marijuana dispensary.
  • Massachusetts wants to see proof that you have at least $500,000 in liquid capital before you apply for a license.
  • You’ll need to prove that you have access to $150,000 in capital if you want to open a dispensary in Pennsylvania (the state’s medical marijuana program won’t go into full effect until 2018).

Obviously, this is not intended to be a complete list of states. But it does give you a more concrete sense of what capital requirements look like. To be safe, you should plan on having access to somewhere around $200,000 before applying to open a dispensary.

Application and Licensing Fees

When you’ve got your startup capital all lined up, you can move on to actually applying for a license to own a dispensary. Once again, the fees required for this step vary based on the state in which you want to operate.

There is a surprisingly wide range of licensing fees. On the low end are states like Louisiana, where you have to pay a $5,000 application fee along with a $150 licensing fee. The upper end includes states like New Jersey, where it costs $20,000 to apply for a license to open a dispensary.

As with other requirements, you need to confirm the specific application and licensing fees in your state. But on average, plan to have around $12,000 or so to cover application and licensing fees.

Operational Costs

Beyond the upfront costs of startup capital requirements and licensing fees, there’s also the day-to-day operational costs of running a dispensary. To be successful, you need to have a good idea of what this will cost you, and you should have enough funding before you start to cover at least a few months. Here are some of the primary operational costs to keep in mind.

Rent

Before you can open a dispensary, you need to know how much you will pay for rent. The range of possible rents is too wide to really list here since it changes so much according to the specific location in which you want to run your business. In any case, you should have enough money to pay for the first and last month before opening up shop.

Marketing

To start a successful dispensary you need to invest in marketing and advertising. As a bare minimum, plan on $2,000 to get things started. But obviously, the more you invest in good marketing, the more you increase your chances of success. We suggest having closer to $10,000 for marketing and advertising.

Employees

One of the good things about the legal cannabis industry is that it creates new jobs. To pay your small core of employees, it’s best to have between $4,000 and $10,000 set aside. This will cover at least a couple months’ worth of wages. Of course, this too will vary based on where you’re business is located. Be sure you spend time figuring out what the living wage is in your area and use that as your guide for how much to pay your employees.

Security

Cannabis businesses have to invest more in security than other businesses. This is especially true since most dispensaries operate as cash-only enterprises, given the difficulty they have finding banks and credit companies willing to work with them. Along with an electronic monitoring system, plan on using cameras and security guards. All told, you’re looking at another $15,000-$20,000 on security to get things up and running.

Interior

To open a successful dispensary you need to have a store that looks good. You’ll need display cases that will highlight all that killer bud you’re about to start selling. You’ll also need refrigerators and other places to store your product to keep it all fresh and potent. Plan on $10,000 for all this.

Inventory

We’ve covered a lot so far, but we haven’t talked about the most important thing yet: cannabis. If you want to open a dispensary, you’re going to need enough funding to cover the inventory you need to get the business started.

Since you’ll be a retailer, you will be buying weed in bulk. Probably by the pound. To give you a sense of what that will cost, the wholesale price of cannabis fell last year so that at the beginning of 2017, cannabis ran around $1,000 per pound. Market prices will constantly fluctuate, but this is a good starting place.

Figure out how big your dispensary will be, and how much bud you want to have in stock. Keep in mind that cannabis is perishable, so you can’t have too much in backstock that it starts going bad. As you consider how much money you need to get your store stocked, use $1,000 per pound as your baseline.

The Final Hit

So far, we’ve covered a lot of the main startup costs involved with opening a dispensary. Obviously, there are a whole variety of miscellaneous costs that will also arise throughout the process. And the primary startup costs outlined here will vary widely depending on your specific location.

But to give you a general sense of what it will cost to open a dispensary, we suggest using $300,000 as a starting place. This will cover most startup capital requirements as well as licensing fees. In most cases, it will also leave enough for you to get your day-to-day operations up and running.

More initial funding lets you build a stronger foundation for your business. Just keep in mind that cannabis business owners face unique struggles when it comes to funding, primarily because banks remain hesitant to work with the cannabis industry. But if you can access the funds you need to open a dispensary, you can get in early on a market that is expected to see explosive growth in the next few years.

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How Much Does it Cost to Open a Dispensary?

How Much Does it Cost to Open a Dispensary?

Source: Green Rush Review

Green Rush Review

While marijuana legalization gets the headlines, hemp shows potential for explosive growth in sectors ranging from the auto industry to pharmaceuticals

By Bruce Kennedy, The Cannabist Staff

Much like marijuana entrepreneurs dealing with stoner stereotypes, hemp advocates have to cope with their own crop of cliches.

Mention hemp to most mainstream consumers and they may respond with images from a natural foods store: hemp snacks, oils, soaps and skin care products. Or, they may reach for hippie conventions of yore, referencing hemp fiber’s reputation for rough-but-sustainable clothing and textiles.

While food and skin-care products are pillars in the hemp portfolio, they don’t touch the plant’s full potential. It’s used in such a surprising variety of products that some financial analysts say hemp could become one of the hottest commodities in industrial and medical fields.

Sales of hemp-based products in the U.S. are projected to rise from just under $1 billion this year to around $1.8 billion by 2020, said industry analyst Sean Murphy, founder and publisher of the Hemp Business Journal.

In contrast to the stereotypes hemp struggles to overcome, one of the biggest challenges the plant faces is that it has so many different commercial applications that it is hard to define it in any particular category.

“Because there are so many uses for hemp, it’s not like another crop or a different product — whereas we know that those avocados are avocados all the way through,” he said.

Related:
American hemp has a tumultuous history. Now it’s coming out of marijuana’s shadow.

Hemp products booming, but U.S. farmers hampered by its Schedule I status

A brief overview of hemp’s industrial uses show the plant’s versatility.

This is a completed hemp house constructed in a workshop under the guidance of
Tiny Hemp Houses founder John Patterson. (of Tiny Hemp Houses founder John Patterson.
(Ron Sweetin Photography)

It’s strong enough to be used as both an insulator and construction material in homes.

The auto industry is capitalizing on hemp’s strength-to-weight ratio to shave pounds from high-end cars. BMW is mixing hemp with plastics in the interior paneling on its all-electric i3, Lotus’s Eco Elise features a hemp hard top and Key West-based Renew Sports Cars is making full body panels out of hemp. (See video below.)

The Canadian entrepreneurs behind Hempearth are even building small airplanes out of the plant.

Meanwhile, researchers at the University of Connecticut report that hemp biodiesel could someday power those cars and planes.

Hemp may also end up storing energy. A scientist at New York’s Clarkson University says the waste fibers from hemp can be turned into a powerful, energy-storing supercapacitor that’s “better than graphene” and which can be produced at a fraction of the cost.

Murphy sees huge potential in hemp’s industrial applications–just not in the very near term.

“It takes investment and infrastructure and big processing to do industrial-sized applications,” he said citing hemp-based bio-plastics as an example.

“Everybody wants (plastics) replacements made out of hemp bio-plastics, but they are technologically advanced,” he said.

That’s not to say the prospects for near term growth aren’t promising. Murphy said that hemp’s immediate growth potential revolves around cannabidiol, or CBD, a non-psychoactive cannabis compound that is currently being researched as a potential treatment for a wide spectrum of ailments.

Consumer sales of U.S. hemp-based CBD products are projected to grow from $5 million in 2016 to around $20 million this year and will reach over $80 million by 2020, according to Hemp Industry Journal.

“If we saw the kind of company growth that we’re seeing in CBD in another industry, then everyone would be talking about it,” Murphy observed.

But he warned that all CBD’s ascension is playing out against the background of “very interesting market dynamics,” including an incredibly uncertain regulatory landscape.

Last year, the U.S. Drug Enforcement Administration (DEA) issued new coding for “marihuana extract,” classifying CBD oil and other cannabis extracts as dangerous Schedule I substances. The move sent shock waves through the cannabis industry. It also spurred a lawsuit by the Hemp Industries Association (HIA) and several other groups, who claimed the DEA ruling had overstepped the agency’s bounds.

(Provided by Marley Natural)

“The DEA must stop treating hemp, hempseed and hempseed oil, which is a nutritious ingredient, as something illicit,” HIA executive director Colleen Keahey stated in a February press release. “We have to address the challenges that thwart the domestic industry’s progress and especially those that mislead state Departments of Agriculture and limit entry of legal hemp products into the marketplace.”

In spite of current federal prohibitions on hemp production in the United States, cultivation is growing. Last year, Colorado and Kentucky surpassed all but four European nations in the amount of hemp acres cultivated, according to Hemp Business Journal’s analysis. Their early estimate for 2017 project as much as 21,000 acres will be planted across the U.S.

Murphy is cautiously optimistic when it comes to investment in the hemp sector, which he sees as being in the same place legal marijuana businesses were before the “Green Rush” that started with 2012 legalization of adult-use marijuana in Colorado and Washington.

The opportunities are there, he said, but hemp still shows the signs of a brand-new industry, such as a lack of good data that investors use to make decisions.

“There are as many not-good companies as good ones coming online,” he added. “I would say, ‘look with discretion.’”

Source: Green Rush Review