As of late, the cannabis industry has been exploding, leading many to wonder if they should get it on all the fun. Who wouldn’t want to get in on an industry whose sales, according to recent studies, are projected to rise 40% in 2020 alone and near 34 billion by 2024? While a piece of this pie would most certainly be sweet, it will be anything but easy to attain.
Starting your own marijuana business from scratch is not a task for the faint-of-heart. It’s going to take a lot of time, money, and effort to even get to the point of having anything to open. That’s not to mention the running-cost of the dispensary and taxes. While all of this can be said for any business, opening a cannabis dispensary isn’t like opening any other type of business, it’s not necessarily a traditional business model. So your experience from running any other type of store won’t help you much here. .
That being said, opening a cannabis dispensary isn’t impossible. Clearly, it has been done before and it will be done again. The key to ensuring the success of your cannabis dispensary is in the early stages of the process before you even open your doors. Once you set yourself up correctly, you’ll be able to take what you’ve already done, market it, build your ideal customer base, and watch your dispensary grow. But how do you set your dispensary up for success? How do you even open one?
In this article, we will take you from hatching the idea of opening a dispensary to selling your first gram. We will discuss:
In discussing this, we will also be looking at springbig’s new “greenhouse package.” The greenhouse at springbig is a program designed to give up and coming retailers the flexibility and tools they need to begin the process of building a database before they open their doors. Crafted based on our experience helping hundreds of retailers launch their loyalty and text messaging strategy.
Before we get ahead of ourselves, let’s first go over the general steps you’ll want to take in opening a dispensary.
The first step in opening a cannabis dispensary is to assess your motivations. Why do you want to open a cannabis dispensary? Is it because you have a passion for cannabis and want to share it with the world? If so then you can check this box. But if you’re starting a dispensary in order to make some quick cash, then you might want to try something else because running a cannabis dispensary isn’t a get-rich-quick scheme. Building a dispensary from the ground up will take a considerable investment and most of all time.
The next step is to assess your eligibility. There are a number of restrictions regarding who can open a dispensary, where it can be, and what you need in order to even apply to be a dispensary owner. The following are broad guidelines depicting who is eligible to apply:
If you’re eligible and your mind is in the right place, then it all comes down to probably the most difficult part of deciding whether or not you’re going to be able to open a dispensary: evaluating the costs and risks.
Opening a dispensary presents a lot of potential for financial gain, but it also poses some considerable risks. It is important that you understand these risks before jumping into the process so you can avoid putting yourself in any financial binds. For starters, you will likely be unable to secure any money from banks considering that cannabis is illegal federally. That means you’ll be relying largely on angel investors and your own investment when it comes to funding. Banks even bar cannabis dispensaries from running their transactions through them.
Because of this, you’ll have to think outside the box when it comes to finding funding, and the burden may fall mostly on you to fund the project. The capital you’ll need to open a dispensary could be anywhere between $250,000 and $750,000 depending on where you’re located, and that doesn’t even include the annual running costs. It’s a big investment, so make sure you’re prepared for that.
The cannabis industry is unfortunately burdened by regulations and legal issues that can make things harder than they need to be. Cannabis is still considered a Schedule 1 drug, and thus it can only be suggested, not subscribed. With this, it is still illegal federally, which makes it hard for dispensaries to know how to stay within legal parameters. Seeing as the legality of running a cannabis dispensary, even in legal states, is cloudy it may be best to have a lawyer close-by just in case you need one.
In entering the cannabis industry, you’ll want to make sure that you’re educated on all things cannabis. That means you not only want to know about all the federal laws and state laws regulating the industry, but you’ll also want to be an expert on cannabis itself.
Many of your customers may be anxious if it is their first time buying dispensary cannabis, or they may have been using cannabis since before it was cool – either way you’ll want to make sure you and your staff are experts on the topic to ensure that you don’t lose business from lack of knowledge.
If you can talk about the cannabis products you’re selling and even educate your audience about cannabis, then you’ll establish trust between you and your customers and make your cannabis business come across as more reputable and legitimate. It may even be worth your money to take a dispensary training course to teach yourself and your employees about cannabis.
Obviously, you’ll want to know about the medical marijuana and adult use laws and regulations within the cannabis industry as well. The marijuana industry is governed by even more laws and regulations than a normal business, and dealing with these can get complicated. What makes things more complicated is that the laws differ from state to state.
It’s important that you make sure you understand the laws of your respective state before you open your doors so you can avoid any unwanted legal issues. It may be best to hire a lawyer onto your team just to be sure your business is always compliant and protected. Click here for more specific information about specific state cannabis laws.
Now that you’re aware of the risks and know more about what you will be doing, you’ll need to write a business plan. According to the Small Business Association, your plan should include the following:
Your business plan isn’t just to pitch to investors. While your main goal should be to convince the reader of the potential of your dispensary, it should also be used as a guide as you go through the process of actually getting the dispensary off the ground.
The capital required to open a cannabis dispensary isn’t anything to play around with, and acquiring it can be difficult because traditional channels, i.e. through a bank, are generally off-limits due to the fact that cannabis is still illegal federally. Despite this, it is still possible to get cash flow and funding, you just might have to put a bit more effort into your financial plan.
Equity funding is a great way to do this, where you sell shares of your company for cash. And if your credit score is up to par, you could even look into taking out a personal loan to start your dispensary
The management team you build around your dispensary will be key to its success. As the backbone of any dispensary, ensuring you recruit the right people onto your team is key to putting your dispensary on the track to success. The two main areas of your team you’ll want to focus on is your professional support and your everyday employees.
When it comes to professional support, you’ll want to make sure you have experts where it matters. That means hiring an accountant to keep track of your numbers, and a compliance offer to ensure your business is compliant.
On top of this, you’ll want to think about marketing platforms, POS software, and more. Luckily, springbig has you covered in these areas.
Just as important as professional help is hiring your everyday employees. This includes employees and associates such as:
Now that you’ve got everything else lined up, you’ll need a license to sell cannabis and a location to do it out of. Getting a license can be a costly and time consuming endeavor, and may differ from state to state. There are also different kinds of licenses, so if you want to be a recreational cannabis retailer, make sure you don’t apply for just a medical license. Make sure you do your due diligence on the application process before you jump into it.
You’ll also need a location to run your dispensary out of. Unfortunately, this isn’t as simple as finding a location that speaks to you and renting it out. You’ll have to make sure that your location is compliant with the law regarding where marijuana dispensaries can be located.
In order to be sure that your property is compliant, you may want to look for properties on sites dealing specifically with 4/20 friendly real estate such as 420 property and Cannabis Real Estate Consultants.
Now that you’ve made it this far, you’re ready to go! Now, you’ll need to market your brand and start the process of customer acquisition and retention. Luckily, springbig is here to help you. With marketing and customer retention software, and helpful marketing tips and tricks in our blog, you’ll have the help you need every step of the way. Click here to see for yourself!