Without knowing the law, trying to open a dispensary is like skydiving without a parachute. Marijuana is prohibited under federal law, but 45 out of 50 US states allow the sale of marijuana for medical and/or recreational use.
Where is Cannabis Legal?
Marijuana statistics show medical and recreational use of this drug are both increasing. Extensive marijuana research shows that it is the most commonly used illegal drug, with tens of millions using it every month. This is the most commonly used illicit drug according to the 2015 National Survey on Drug Use and Health. 22.2 million people had used it in the past month.
Currently, cannabis is legal in California, Nevada, Alaska, Washington D.C., Maine, Massachusetts, Colorado, Oregon, Washington, and Vermont. Below is some pertinent data from marijuana studies.
- 1973: Oregon was the first state to decriminalize cannabis
- 1975 – 1978: Alaska, Maine, Colorado, California, Ohio, Minnesota, Mississippi, New York, Nebraska, and North Carolina decriminalized cannabis
It’s not cheap to open a dispensary. Every state government imposes high taxes on cannabis companies, high licensing and application fees, high rent (state or private), and high startup capital requirements.
Application and Licensing Fees
There are two types of fees to pay to get a license to run a medical marijuana dispensary: a non-refundable application fee, and a yearly licensing fee. In every state, application fees are $5,000. Annual licensing fees vary by state, ranging from just $150 in Louisiana to $20,000 in New York (data valid end-2018).
Startup Capital Requirements
Every state applies a different capital requirement. In Arizona you need $150,000; in Nevada the threshold is $250,000. You need to be able to prove that you have this money in the bank – profit forecasts alone won’t cut it.
In reality, it takes a lot more than the minimum capital requirement to open a dispensary. When you add up all the costs, and consider the competition you’re up against, it might be hard to start one for less than $1 million.
Local laws vary in terms of the locations, where you can open a dispensary. In some cities, a dispensary cannot be located within 1,000 ft of churches and schools. In practice, this means demand for dispensary rental space usually exceeds supply, which pushes rental prices up. Considering this, be prepared to pay a premium for your dispensary rental space.
Taxes on Dispensaries
As you can imagine, different tax rates apply in each state, but one thing is universally valid: dispensaries pay more taxes than any other retail business no matter where you go. Why is this? Weed is still classified as a Schedule 1 narcotic under federal law, alongside heroin. It is considered the most dangerous kind of controlled substance.
Public opinion on this may be changing, but dispensary owners can’t deduct operating expenses like rent and payroll from their tax bill until the law changes. Recreational dispensaries also face heavier taxes than medical marijuana dispensaries.
Investing in a POS System
A Point-of-Sale (POS) system is going to be one of the most important purchases you make as a dispensary owner. Basically, a Dispensary Software is a touchscreen-enabled cash register that makes it easier to take payments and record transactions.
However, a dispensary-specific POS system does a lot more than this. A well-designed one can help with:
- Helping service staff provide helpful product recommendations
- Logging customers’ buying histories
- Keeping your dispensary compliant with state regulations
- Managing inventory and purchase orders
- Reporting sales data for different weights and strains of cannabis
Compliance with regulations is a big deal, since it is easily the biggest administrative burden you’ll have to deal with if you are operating a dispensary. It’s well-worth investing in the right POS system given that breaching state laws can lead to your dispensary license being revoked.
Unless you plan to get a special grow room climate control system, you’ll need some tips on climate control, and even if you have one, they wouldn’t hurt. Here are some important things you need to know about grow room climate control.
Cannabis plants (like plants in general) use up carbon dioxide very quickly. They won’t grow if there isn’t enough carbon dioxide in your grow room. The ratio and volume of carbon dioxide in the environment of your grow room is also something that a ventilation and exhaust system would help with. Carbon dioxide is denser and heavier than oxygen, so a ventilation system will mix it up and make sure that it gets to your plants.
Photosynthesis uses carbon dioxide up very fast, so the system needs to work the entire time you have lights on when you’re not adding extra carbon dioxide directly into the environment.
Cannabis grows best at temperature in the range of 68-77 degrees (20-25 Celsius), although it varies depending on the strain. Plant growth will start to slow down if the air temperature is significantly lower; it might even stop. Temperature maintenance is more important during the day, but there shouldn’t be major swings between day and nighttime temperature. If the temperature is higher, plant growth will speed up. Then, the plants will need more water, light, fertilizer and carbon dioxide.
Be sure to plan in advance for temperature changes and use a thermometer which is attached to a ventilation and heating system, so that the temperature is managed automatically.
You need a hygrometer to measure the humidity in the environment. The best humidity for weed is between 40-70%. An electric hygrometer is probably the best option because it’s the most accurate and often lets you adjust the humidity automatically. If humidity is too high, the plants may become infected with fungus, especially during the flowering period. If the humidity is too low, you’ll need more water for the plants. We recommend having a dehumidifier to resolve moisture issues as they arise.
We hope this article has been helpful and good luck with the dispensary if your heart is set on it. It will be costly, but when there’s a will, there’s a way!