Used for various purposes, cannabis is mostly known for its medical properties and effects that may soothe symptoms of some conditions. As a result, new businesses are opening in the industry, growing rapidly, and dispensaries are the most popular among all of them.
Here we want to take an objective look at the process of opening a cannabis dispensary and what to consider. The thing attracting retailers to choose cannabis is that this business can be highly profitable. According to the report, the global legal cannabis market size reached USD 17.8 billion in 2021 and is suggested to expand at a compound annual growth rate (CAGR) of 25.3% from 2022 to 2030.
Unfortunately, the cannabis business requires knowledge and expertise since you may face many challenges and risks that dispensaries must successfully navigate and overcome. These challenges can be divided into four groups:
Knowing these challenges can help you be prepared during the process, which we will describe below.
8 Steps to Open Cannabis Dispensary
Ask Yourself First
Opening a business, especially in the field where you are a newbie, could become a real-life challenge. It not only takes a certain amount of courage, knowledge, and pure risk-taking to open your business but also investment and time. As a cannabis business owner, you will need to plan every step and consider all laws before you are ready.
So before you open your business, you have to ask yourself if you are ready, have enough time and money, have a proper team, and so on.
Estimate Dispensary Costs
Even though starting a marijuana dispensary is similar to launching software or any product of a small business, it may take much more money than you think due to certain state regulations and financial hurdles to overcome.
It is hard to name the average cost of opening a cannabis dispensary, but it usually ranges from $150,000 to $2 million. This price also includes primary costs of around $250,000 that you will spend on annual staffing, $100,000 in first rent, and $50,000 for further renovations, according to the dispensary in San Diego. You can control and reduce some costs while others are tied to the jurisdiction.
Market Research & Planning
The next step in the process is research and market analysis. More specifically, many websites showcase checklists detailing how the application process works, which can be highly beneficial for anyone starting their cannabis business. However, you will also need to choose the sub-niche and find your client, which will allow you to get a clear picture of the process, make it easier to achieve your goal, and reduce money spent on unneeded things.
The Licensing & Application Process
Before you can open doors for your future clients, you'll have to apply for a cannabis retail license successfully. We've already mentioned that you can google the application process, but it hugely depends on your location. We also recommend you hire an expert in this field who will handle the process or at least help you with laws and regulations.
Develop Your Business Plan
In order to open a successful cannabis retail shop, it's crucial to develop a detailed business plan containing all the key elements and things you need to achieve the goal. The plan will also illustrate the market research and your ICP. It is an essential step if you want to raise capital, while it will also provide strategic guidance that covers every aspect of ownership from preparation to operations.
Whether you decide to develop the plan on your own or hire a professional, it is best to add the following key elements that will help you transform an idea into a business plan:
- Financial Plan
- Compliance & Security
Create a Professional Team
Just knowing how to open a cannabis dispensary isn't enough to achieve success. It requires you to create a team of professionals with relevant experience and knowledge to help you establish the dispensary in the industry and not fail with any common issues that only experts know in advance. In addition, you will need to provide a vast selection of cannabis buds and a dialed-in POS system.
When it comes to creating a team possible at your shop, you need to hire two types of individuals that will cover both your professional support and your day-to-day staff. Make sure that both groups are made of qualified experts to guarantee your success.
Choose the Ideal Location
In most countries in 2022, if the cannabis retailer wants to just fill out the license application paperwork, the business owner will likely have a physical location for the dispensary, which is already locked down. Therefore, you will be required to perform detailed research on the vast list of municipalities you want to operate in, but paying the closest attention to local demographics.
Sourcing Your Cannabis Flower
The final stage is getting the cannabis you are going to sell. However, it is also the most important step in the process. Make sure you have chosen qualified and trusted cannabis suppliers, considering the process of sourcing marijuana that differs in each country. You can also choose the option where you are the one responsible for growing and sourcing cannabis to guarantee its quality.