The legalization of recreational and medicinal cannabis across many different states has led to a gold rush of businesses trying to capitalize on the craze. Yet there are many steps in between start-up and success. For those looking at opening a dispensary, the process requires planning, patience, and an understanding of how to navigate the laws in place.
The cost of of opening your dispensary can vary greatly. Depending on your plans, you could expect to spend anywhere from a couple hundred thousand up to a couple million. On average, owners spend about half a million in startup costs.
These costs are incurred by:
Don't let this deter you! There is plenty of financial support out there for entrepreneurial hopefuls, such as startup funding. Whether you need to invest in real estate, procure equipment, or purchase other necessary items, this is a path that is available to you.
You might be wondering what you can expect as you seek out this funding for your budding business. The Canna Business Financing team can help you direct you through two options, term loans and lines of credit. Through unsecured personal term loans, we seek to help you obtain the maximum amount. With Business Credit Lines, you can utilize these to start or even expand your business at any point.
Because these are personally guaranteed term loans and credit lines, it's important that you have excellent personal credit before seeking out funding. Due to the unsecured nature of the term loans and credit lines, there is no need for you to put up any collateral or asset. If this sounds like the course of action for you and your business, please don't hesitate to reach out to our team.
It's easy, and tempting, to say that opening a dispensary will pay for itself and then some. After all, the cliché is that the product sells itself, right? In reality, the cannabis business carries just as much risk, if not more, than any other business: risk of failure, risk of cash shortages, risk of losing out on valuable market share to the competition.
A business plan should have comprehensive information on your product, your marketing, your customer base, and your plans for building a winning brand. If you go into the dispensary route without a solid business plan, you not only risk creating blind spots, but you'll be unable to pitch your company's value to investors, creditors, clients, vendors, and partners. You may even need to plan on how to compete with unlicensed competition in the area.
A huge part of getting started is concocting a plan to get the word out. Like many areas of our industry, cannabis business owners can face roadblocks when it comes to advertising. It depends on where you're located and the legalization status of your state. But you can generally expect there to be restrictions on everything from the traditional TV and billboards to more new wave methods such as social media advertising. It isn't impossible, however, but there may be loopholes you need to take time and energy to figure out as you're getting started.
The reality of opening a dispensary is that an owner needs to be both an entrepreneur and lawyer at the same time; able to not just build a company but to understand the legal framework for their company. There's a ton of red tape in the cannabis industry, far more than you'd find in most other start-up businesses, and failing to adhere to the long list of regulations and laws can be disastrous.
One starting point is the Cole Memorandum, a legal document that state attorneys use to enforce cannabis laws: at just four pages in length, it isn't a long read, and provides key insights for business protocols. Familiarity with the individual propositions that legalized cannabis in your state are also beneficial.
Cannabis real estate is no different than any other commercial real estate: the biggest priority is location, location, location. This is doubly true if you need a separate facility for growing and/or processing the product itself. Finding a compliant property can be quite difficult depending on zoning laws.
Often, a dispensary cannot be located within 1000 feet of schools, churches, residential zones, or other specific properties. Worse, a property that is compliant today might not be compliant in the future if cannabis, zoning, or business laws change.
Finally, you may face an obstacle in the landlord themselves, since many may not wish to rent the space to a dispensary to avoid the headache themselves. There are several ways to find a good spot: one first step is to check the actual voting records of individual counties or districts, so that you can find spaces where residents largely voted in favor of legalization in the first place.
Just like there is fierce competition for liquor licenses in states that restrict their availability, so too have cannabis licenses become an expensive passport for a business establishment. Opening a dispensary requires a major financial commitment in many ways, but the cost of applying for a license in Colorado will cost the owner an additional $15,000.
Make certain you have the finances for the license, the compliance, the training, and the re-licensure in the future. You may also have to pay legal fees for representation by an experienced lawyer if you prefer to get professional advice on the subject, which may cost several hundred or even several thousand dollars more.
Posted by Canna Business TeamFacebook
In an industry that is constantly evolving, Canna Business Financing provides business owners with a reliable source to gather the most up-to-date information. From resources to fund the growth of your business to insights on best practices to scale, look no further!