The Cost of starting a Legal Retail Marijuana Business
People always claim that the aim in life is to make money while doing something you enjoy. For cannabis enthusiasts, that may mean opening a dispensary. The cannabis industry is showing no signs of slowing down, and the local shops are still bustling with customers. But why not get in on the action as well?
If you're reading this, you've most likely done some preliminary research and concluded that opening a dispensary requires a great venue, high-quality cannabis product, Seed to Sales Software, a strong team, and, eventually, a dispensary license.
The cost of starting a dispensary is listed below.
Although starting a marijuana dispensary is similar to starting any other small company, it is far more costly than one would expect due to state regulations and financial obstacles to overcome.
A cannabis dispensary will cost anywhere from $150,000 to $2 million to open. This covers the annual staffing of about $250,000, yearly rent of $100,000, and $50,000 for up-front upgrades. But, of course, everyone's budget is different, and when it comes to capital needs, there are many factors to consider. Some costs are under your authority, while others are determined by the jurisdiction you find yourself.
Let's look at the essence of these startup costs and the different factors that affect how dispensary costs differ so widely from market to market. Then we should look at some examples of cannabis retail prices in various US states.
Fees for applying for a dispensary license: Only to Get in the Game
Although prices vary by state, an accurate estimate for your license application alone would be about $5,000. So, long before selling your first gram, you've already spent a significant amount of money to get a green light. This is usually a non-refundable charge in addition to the annual licensing fee, which can vary from about $1000 to $10,000.
Real Estate Costs and Challenges: Finding a Physical Location
The importance of location cannot be overstated, but it may be in short supply. There are generally strict restrictions on how close a dispensary can be to a school and, in some cases, another dispensary. Finding a retail space that will allow your dispensary to operate on the premises is only half the battle; you also need to look for a location with good visibility and, preferably, a lot of foot traffic.
Being in the cannabis industry would almost certainly come at a cost—the cost of real estate for a marijuana shop maybe $100,000 per year. Add in the one-time expense of remodeling the room to comply with laws, align with your brand's branding, and improve store flow. It's possible that this would cost another $50,000 upfront.
Banking Regulations and Fees for the Cannabis Industry
Marijuana dispensaries operate in a grey environment in the business world because they are legally illegal in the United States. As a result, many banks hesitate to do business with dispensaries for initial investments and day-to-day needs. Our partner Green Check Verified is excellent for banking needs.
Business owners can work with credit unions or even private marijuana banks if they are available in the region to get around this. But, unfortunately, since these organizations recognize that you might have no other choice, they will charge up to $2,000 a month in holding fees.
Costs of Running a Marijuana Company on a Long-Term Basis
You'll be in a solid place to start operating after you've cleared the first collection of financial hurdles. Note that you'll need a fully compliant POS system(ServiceGanja), a security system, and inventory to sell before opening your doors.
The electronics could cost about $25,000. Stocking your dispensary with the quality product could cost $1,500 per pound in states where it's illegal for dispensaries to cultivate their own.
Your advertising budget is one of the other running expenses. Again, depending on your position and the number of competitors you have, this could quickly escalate into the $25,000 range.
It's essential to have an attorney on retainer for your business, as well as comprehensive insurance coverage in case anything goes wrong. Unfortunately, given how fragile the marijuana industry is in several respects, these annual costs may easily exceed $50,000.
You need committed and well-trained employees to run a successful company. Of course, the size of your shop will determine how many employees you need on staff, but assuming you have a few budtenders, a boss, and a store manager, you can expect your annual payroll to be about $250,000 if you pay the industry standard rates.
How much does it cost in California to open a marijuana dispensary?
You'll have to pay $1,000 when applying for a dispensary license in California. If licensed, you'll pay a licensing fee ranging from $4,000 to $120,000, depending on the estimated value of your company. You'll also need to account for real estate costs, which can range from $50,000 to $100,000 a year, as well as other startup expenses. California's cost of living is high, so plan to pay workers a little more than national averages, with budtenders costing between $30,000 and $40,000 per year.
In California, the total upfront cost to open a dispensary is between $80,000 and $250,000. Then, every month, you'll spend between $30,000 and $70,000 on operating expenses.
How much does it in Oklahoma to open a marijuana dispensary?
Starting a dispensary in Oklahoma costs between $80,000 and $140,000 upfront, with monthly expenditures ranging from $30,000 to $40,000. Since the cost of living and the minimum wage are flawed, you will usually find decent budtenders for a reasonable price. Oklahoma real estate is also less expensive than in California or Colorado. However, you might still face the same difficulties in finding a good place and a willing landlord. A medical marijuana dispensary license application costs $2,500.
How much would it cost to open a medical marijuana dispensary in Missouri?
Missouri's medical marijuana industry is still young and ripe with potential. The initial cost of opening a dispensary in Missouri is expected to be between $85,000 and $150,000. Monthly fees such as wages and rent or mortgage payments range from $30,000 to $50,000. While costs are slightly higher than in Oklahoma, living and commercial real estate are still very low.
A non-refundable $6000 application fee for a medical marijuana dispensary license is required, a $10,000 annual license renewal fee.
So, how much does a dispensary proprietor make?
The amount of money you make as a dispensary owner is primarily determined by the size of your industry, the business environment, and, eventually, the amount of revenue your dispensary generates per year. See our article on Dispensary Profit Margins and Falling Cannabis Prices for more information on how much a typical dispensary earns.
How much do you think you're worth?
Have the actual costs of opening a marijuana dispensary overwhelmed you yet? There's more piece to the puzzle, and it differs significantly from state to state.
When getting your license and permits, you must demonstrate that you have sufficient capital to stay in business. Some states don't require you to have any assets at all, while others, such as Pennsylvania, need you to have at least $2 million in assets or at least $500,000 in liquid cash.
When all is said and finished, the average cost of all above is between $250,000 and $750,000. Congratulations if you've been able to find an investor willing to put this much money into your company. Looking for more information, kindly check out our website ServiceGanja.