One of the hottest topics across the nation is cannabis. Legal? Not legal? How do you start a cannabis business? If you’re allowed to in your state, how do you open a cannabis dispensary? There are many questions circling around.
But before you spend a ton of money just to watch your business go up in smoke, you need to make sure you can even open a cannabis dispensary where you live. While the cannabis industry is estimated to be valued at over $10.4 billion, that doesn’t mean all you need to do is start an LLC and you’ll be a millionaire overnight.
Here are some things to consider.
Can You Open a Cannabis Hemp Business in Your State?
Just because you’ve smoked cannabis for years doesn’t mean you know how to run a cannabis hemp business successfully. The medical marijuana industry is probably one of the more difficult industries to break into simply because of all the legislation and regulations surrounding it. It’s not as simple as buying a location and inventory and then selling through.
As is stands at the time of writing this article, there are around 30 states that allow you to open a cannabis hemp business. With that being said, there are many laws, restrictions and regulations that you need to understand with each state. To get a full list, as well as state medical marijuana laws, check out the NCSL website.
How to Open a Medical Cannabis Dispensary
Once you have figured out if you’re legally permitted to start a cannabis hemp business, the next step is the HOW. Those who strategize and do their homework before jumping in with both feet could end up burning bud, while those who enter the space thinking they’ll make a lot of money without doing their research will only be left burning money.
If this is your first business, Incfile has a resource that can help you streamline the process of starting your business. Check out our free Complete Guide to Starting a Business.
The biggest hurdle you may need to jump through when opening a cannabis business is the funding. Unless you have a substantial amount of money, your dream of opening a cannabis dispensary could end before it even had a chance to begin. It’s estimated that the costs associated with opening a cannabis hemp business can be anywhere in the ballpark of $250,000 to $750,000.
In addition to the high funding, there are a few other hoops you will need to jump through before you can open the doors.
Where you live will dictate how many licenses you need. Be prepared to spend a long time working on compliance and getting everything figured out. In addition, licenses can be expensive (some licenses can be over $5,000), and the fact that you may need multiple can rack up the costs and barrier to entry quite a bit.
And we haven’t even gotten into the legal expenses to work with an attorney who specializes in this field (you can expect upwards of around $20,000 just for the attorney’s help pushing everything through and answering questions).
Once everything is approved and you get your licenses, there are more potential roadblocks ahead.
Just because you have your license doesn’t mean you can set up shop just anywhere. Not only do you need to do some research on different areas to find out where you’ll get the most foot traffic, but you also need to make sure you are far enough away from places like churches, schools and/or playgrounds.
Are you going to rent or buy? Will the person you're renting from allow you to sell cannabis in their storefront? You’ll need to be upfront and make sure they know what type of business you will be conducting and if they are comfortable with you doing so.
Your location should also be easy to find, have convenient parking and be near major roads or highways for the best access and visibility.
Securing a Bank Account
You may find that many banks turn you down as they don’t want to take on the risk of a cannabis business — mainly because it’s still considered a Schedule I narcotic. Banks also look at the deposit of funds from such “narcotics” as money laundering.
What do many entrepreneurs do in this circumstance? Many are forced to open their doors with a “cash-only” policy in place where the only way a transaction can take place is if the customer is willing to make a purchase using cash. While this is not ideal, it may be the only way to sell any product until a business bank account can be secured.
As you can imagine, being a cash-only business will severely limit how much someone may be purchasing at your store since many people don’t carry around a lot of cash.
Guess what else that means if you can’t secure a bank account? It means you’re paying your employees with wads of money in an envelope rather than a direct deposit or check. Sound like a headache? It is. And there’s a lot of risk in doing so since there is no paper trail.
When you own a cannabis hemp business, you can't simply go down to the corner and buy your inventory from some random person (drug dealer). Not only will you not know what you’re getting, but that’s 100% illegal since the person you are buying it from is not a legal cannabis dispensary.
Depending on where you live, you may need to grow your own cannabis to sell. With that being said, whether you are forced to grow your own or are able to outsource, that doesn’t mean you need to stick with selling just the typical form of cannabis. You have the ability to also sell concentrates, oils and edibles. This can extend your portfolio of products for sale and have something for everyone’s needs.
If you still need help opening a medical cannabis dispensary, check out DispensaryPermits.com. In addition to having a wealth of information on how to open a medical cannabis dispensary, they also provide current state statuses on whether you can open a cannabis hemp business and all the restrictions of the state.