How to Open a Dispensary Guide
How to Open a Dispensary (Step-By-Step)
CHAPTER
7 Questions to Get You Started
Congratulations for taking the first step towards opening your dispensary. You have placed yourself in the middle of an expanding industry and will help many people.
To get to this point, it took courage and a lot of know-how. Next steps will require a little more. You will need to have a solid business plan and a marketing strategy that grabs attention. Good relations with suppliers is also important for cannabis business owners. You will need to be prepared for unexpected events that are not covered by most retail businesses.
You did the right thing and took a step back to read this article. Let’s now look at some questions that you need to ask before you embark on your journey as an owner of a business.
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Setting the Stage: Research and Planning
It is important to step back before you begin the process of opening your cannabis shop. Before you start looking for potential locations or gathering your application materials, you need to carefully research your situation in order to make detailed plans.
Let’s take an in-depth look at each of these steps.
CHAPTER
Finding the Perfect Location for Your Cannabis Dispensary
Retail businesses of any type are subject to regulations at every level: federal, state and local. Cannabis shops have to adhere to additional conditions regarding their location. The reason why you need to choose a place early is that you may not be able apply for a permit to operate a cannabis store without listing the location.
Here are some steps you will want to follow.
CHAPTER
Securing Your License
You will need a license to dispensary before you can open it. Although the exact process for applying can vary from one town to another, there are some basic steps that are consistent no matter where you live. If you have any questions, a lawyer or business consultant can help. Let’s take a look at the main steps in submitting a request for a cannabis-retailing licence application.
CHAPTER
Drafting Your Business Plan
Your business plan is the blueprint of how your company will be launched, operated, and grown. Do not be overwhelmed if that sounds daunting. Every company that you know has a written business plan. You too can make one. These five elements make up a business planning that will help secure your business licence and get you dispensary off the ground.
CHAPTER
Financing Your Business: Estimating Costs
Retail businesses can be costly, as we’ve already said. The cost of opening a cannabis dispensary may be higher than the traditional retail business model. Here’s how you can estimate how much it will cost and how much capital you’ll require to start a dispensary.
To help you develop an idea of how much startup capital you’ll need, let’s look at nine specific categories of startup costs, with a sense of how much you might spend on each.
CHAPTER
Financing Your Business: Raising Capital
Now that you have an idea of the capital required to launch your business, it’s time to raise it.
There are fewer financial services available for the cannabis industry than in other retail sectors. This is especially true in America, where marijuana has been criminalized and banks are prohibited from doing business directly with cannabis retailers. Canadian lenders are more likely to charge higher rates to companies involved in the cannabis industry.
Access to credit is sufficient to show financial status to the business licensing authorities if you were selling toys. You can make the same case in the cannabis market with cold, hard money. These are some ways to raise capital to open your cannabis store.
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Building the Right Team
People make businesses succeed. People, not marketing, product, or technology. People. Yes, it is important to get a license and raise enough capital before you can start. However, the truth is your advisors and your employees will help you get to where you want to go.
Let’s examine each one individually.
CHAPTER
Designing the Perfect Retail Cannabis Experience
Your cannabis retail experience design goes beyond the physical blueprint. This includes how you brand your cannabis retail experience and what your customers will think. It is smart to have an interior designer and architect consult you about the final design and aesthetic of your dispensary. Cannabis stores are unique and can be more efficient than other retail outlets. While an experienced professional may be able to help, you will need to provide the vision.
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Dispensary Tech
An average cannabis shop has a much more complicated retail environment than one might think. Not only are you subject to the same performance requirements as other businesses but you also have to comply with extensive legal and compliance requirements. The right technology infrastructure can help you overcome these problems. You will need Wi-Fi, POS, and an Inventory management system in order to manage your store. You will need a website to make sure customers can find your store. An ecommerce website is required if you wish to offer online ordering, delivery and live menus.
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Sourcing Cannabis Products
There are slight differences in how cannabis is sourced in Canada and the United States. You can only buy cannabis wholesale in Canada from the provincial government. They distribute product from licensed producers. Some regions in the United States allow retailers to establish vertically integrated operations that grow their own products.
Chapter 1: Seven Questions to Get You Started
Congratulations on taking the first step toward launching your own dispensary! You’ve put yourself right in the middle of a growing industry, and you’ll help countless people in the bargain.
It took quite a bit of courage and know-how just to get to this stage. The next steps will take a bit more. As a business owner in the cannabis industry, you will need a solid business plan, an attention-grabbing marketing strategy, and good relations with your suppliers, just like any other retail company. But you’ll also need to plan for contingencies that most other retail operators don’t.
You’ve done the right thing by taking a step back and picking up this book. Now let’s look at the questions you’ll need to ask yourself before starting on your journey as a business owner.
1. Can I Afford to Open a Business Right Now?
Opening any retail business can be expensive. While a given store’s location and sector have a lot to do with startup costs, even the most humble retail operation can cost $250,000 to get off the ground. Keep in mind, there are several ways to start a hyper-profitable business in the industry for far, far less – but for this guide’s purposes, we’ll stick to legal brick and mortar dispensaries.
Along with the costs of securing permits, leasing a location, and stocking the shelves, any retail owner needs to have a bit of money set aside for the inevitable bumps in the road that go along with opening a new business. All of that applies to the cannabis industry. But cannabis retailers face some unique obstacles, too.
You may find it difficult to secure traditional financing, like a business loan. Many lenders see too much risk in the cannabis industry as a whole to trust even the best business plan. Be ready to throw all of your savings into your new business, and to have some serious conversations with friends and family. When you do, be sure to put everything in writing.
2. Can I Get a License?
To open a new business, you’ll need a license from your local government. To qualify, you’ll need to meet every requirement for a new business owner and avoid every disqualifying factor.
Each community has its own standards for granting a business license, but at minimum you should:
- Be a resident of the state or province where you’ll be running your business
- Have a clean criminal record
Keep in mind, some states now prefer candidates that have previous cannabis related charges on their records*
“Clean” can mean different things in different regions. In some parts of Canada, for instance, certain minor offenses are overlooked, while involvement with organized crime is an immediate disqualifier. Most US states have their own lists of criminal convictions that prevent an applicant from getting a business license. Some, like Washington, even check spouses’ criminal records.
You can learn about your own town’s specific requirements in one of two ways: by asking your local chamber of commerce, or by getting rejected after submitting your non-refundable application fee. Don’t cut corners here: do your homework before taking any major steps.
Once you’re sure that you qualify for a license, you’ll need to go through a complex application process. Since your license is bound primarily to local and state or provincial regulations, the process itself can vary a bit. Broadly speaking, you should count on waiting a few months before your license is granted or denied. Before that point, you’ll typically need to provide a thorough business plan and a detailed description of your store’s operations, and submit to a background check and a review of your finances.
Application fees are almost always non-refundable, and can cost thousands: successful applications, which include the cost of the license itself, can run to $20,000 or more. You might think carefully about having an experienced lawyer review your application—a careless omission or even a typo can leave you back at square one, minus the application fee you forfeited.
3. Have I Found the Right Location?
Retail businesses tend to thrive when they are located conveniently and have little nearby competition. Choosing the right location for your cannabis store can be a bit more difficult than that.
Local and state/provincial zoning laws can turn a wide-open map into a muddle. For example, some states dictate that cannabis retailers cannot operate within a certain radius of any school, daycare center, or healthcare facility. Local zoning regulations can restrict things even further, whether they were enacted to constrain cannabis retailers or businesses in general.
A quick chat with a realtor might be enough to point you in the right direction. Otherwise, you might invest in a little bit of time with a lawyer: it will cost more, but getting your location right is a big investment in your company’s success.
Photo Above: One of Chronic Guru’s first dispensary locations was on a main street in the middle a very historical town. It was a nightmare to get open with all the local laws put in place.
4. What Will the Community Think?
Cannabis is finally becoming socially accepted across North America, but some people may not be happy to see a dispensary open in their neighborhood. Don’t discount the value of making sure that the people who live and work near your store are happy to see you move in. Do your homework, and when you’ve found a location that seems just right, don’t be shy about knocking on doors and discussing your plans with your prospective neighbors. Some people who are opposed to a new idea on principle can forget their objections when they meet the (kind, courteous) people who plan to implement it.
Don’t forget to introduce yourself to your new business neighbors, too. There’s great value in getting along with the local business community. When you do find a place to open your shop, look immediately into opportunities to get involved with neighborhood and city-wide service projects and other volunteer functions.
5. Am I Ready for the Risk Involved?
The cannabis industry is rapidly evolving. That means plenty of opportunity, but also plenty of risk. For one thing, you’re not the only one reading this guide: lots of other people are looking to open cannabis stores, and some of them live in your area. And despite cannabis’s long history, its widespread popularity might just be a phase, at least in some areas. Consumer tastes change.
Other risks are a bit more pointed. In the US, cannabis is still illegal under federal law, though many states authorize its sale. If the federal government decides to assert its prerogative, even the prosecution of another retailer, or a distributor for that matter, might put a chill on your store’s operations. The standing federal ban on marijuana is also enough to keep most banks from wanting to do business with cannabis retailers. As a result, dispensaries tend to be cash-intensive businesses, which makes them vulnerable to everything from accounting mistakes to robbery and embezzlement. You’ll want to know your tolerance for each of these risks, and to have a plan to mitigate them and to respond if worse ever comes to worst.
6. Do I Have the Experience and Skills I Need?
This one’s easy: no. No, you don’t have all the skills and experience you need to run a cannabis store yourself. You’ll need help. The big question is whether you can make the switch from cannabis aficionado to business executive.
- Are you ready to create the structure and procedures that keep your business running smoothly even when you’re not around?
- Are you prepared to hire people who are better at what they do—from customer service to accounting and any number of other specialties—than you are?
- Do you have the vision and perspective that lets you effectively manage those employees?
Those are just a few of the issues you’ll need to consider before you’re ready to open and operate a successful retail store of any kind, let alone one in a market this interesting. If you’re unsure of where you stand, try talking with owners of other retail stores, preferably ones that won’t compete with yours.
7. Am I Truly Passionate About Opening a Cannabis Store?
Opening a dispensary is a labor of love. So be sure that you really love what you’re doing. A deep sense of mission will help you make confident decisions about your store and your brand, and will help see you through the bumps in the road that every retail store experiences. Above all, a real passion for both cannabis and customer service will help you make the sacrifices and put in the long hours that are absolutely necessary to getting your dispensary up and running.
Picture Above: Founder of Sativa University, Patrick O’Brien & Business Partner Erdem S., opening the first of many dispensaries.
Chapter 2: Setting the Stage: Research and Planning
The first step toward opening your cannabis store is to take a step back. Before you start scouting locations or getting your application materials together, you’ll want to thoroughly research your situation and make detailed plans for your new business. At minimum, you’ll need to:
- Find a location
- Confirm that you can get the right business license
- Raise your initial round of capital
- Write a comprehensive business plan
Let’s take a close look at each of these steps.
Location
This might seem a bit early—why choose a location before you’ve drafted your business plan or raised the money you’ll need? But it makes good sense. In most cases, you’ll need to list a prospective location on your license application. And choosing a location, even a provisional one, can help bring the other research and planning steps into focus.
Start by casting a wide net. Figure out the broad area in which you’d like to open a dispensary, even if it includes multiple towns. Then take a close look at the zoning rules and business regulations affecting each place you’re considering. Chances are that those factors alone will limit your options pretty significantly. When you have a sense of which spots would be practical for your business, do your research on each. Is it easy to get to? What is the neighborhood like?
Chapter 7 discusses finding the right location in greater detail. For now, you should know that it’s never too early to pencil in a location or three.
Photo Above: Trying to decide if the sign was “too much” for a historical town. Come to find out, it wasn’t.
Licensing
You can’t open a dispensary without a license, so figuring out what it’ll take to qualify for one should be your next move.
Most states publish rough checklists to get you started, and the chamber of commerce in each town you’re considering should be able to supply more details on what exactly you’ll need. Don’t be tempted, though, to go it alone. This is one time that you’ll want to spend a bit of extra time and money to get professional advice from an attorney.
You can make the most of your lawyer’s advice by doing some research first. As you read through the documentation available to you, make notes of each requirement and how you’ll satisfy it—and of each disqualifying factor, and how you’ll prove that you’re in the clear.
Financing
You might know people who have taken out small business loans to get their retail stores up and running. That won’t be you. Banks simply don’t issue loans to cannabis dispensaries, and since the Small Business Administration is a federal agency, the federal laws against cannabis prohibit them from helping out.
To raise the capital you’ll need to open your business, you’ll need to dig deep and get creative. Set aside all you can from your personal finances, and consider bringing on an investor or two. Just be aware that even if your business partners are also family or friends, they may need to meet some compliance standards similar to the ones you’ll encounter when you apply for a license.
Photo Above: The Day Patrick partnered up with Erdem.
Business Plan
Your business plan is your company’s bible, its single guiding document. All the research and preparation you’ve done up to this point goes into it, and it maps all of your future moves. You’ll use your business plan to
- Secure a license
- Line up financing
- Find the best location for your business
- Establish a supply chain
- Define accounting and security protocols
- Build an effective workforce
- Guide your marketing and advertising efforts
You get the idea: if it’s important to how you open and operate your dispensary, it’s in your business plan. If you have any questions about what should go into your business plan, you might want to hire a professional business consultant.
We’ll discuss business plans in greater detail in chapter 4. For now, let’s take a detailed look at each of the steps we’ve outlined, starting with choosing the right location.
Chapter 3: Finding the Perfect Location for Your Cannabis Dispensary
Retail businesses of all kinds are subject to regulations at the federal, state, local, and even the neighborhood level. Cannabis stores face a few more conditions on where they can operate. That’s why choosing a location is so important so early on: you might not be able to request an application for a business license without listing a prospective location for your business, and you definitely won’t be able to apply without one.
Here are the steps you’ll want to take.
5 Must Haves to Apply for Marijuana Retail License
1. Have You Chosen the Right Place and Time?
Start with the broadest questions:
- Is your state currently accepting applications for new dispensary licenses?
- Is it currently issuing new licenses? (This can be a different matter altogether.)
- Will local laws and regulations allow you to open a dispensary where you’d like to?
If your state has capped dispensary licenses for the time being, you should still continue to plan ahead—after all, when things pick back up, you want to be ready to roll. But if local regulations prohibit you from moving into your dream location, you’ll just need to keep looking. Most states give counties and municipal governments a good deal of leeway as to whether they’ll allow cannabis retailers at all, and if so where they can be located.
2. Check Your State’s Regulations
State law trumps municipal law: if a state forbids something across the board, towns can’t allow it. That’s a shame, especially since states have been contravening federal law for years now by allowing cannabis retailing. But the legal relationship between state and municipal governments is far more rigid than the one between the federal government and the states.
Because of this, your first real step toward choosing a location is to know your state’s guidelines. Here are some examples of the restrictions states place on the location of cannabis dispensaries.
- In Missouri, dispensaries may not be located within 1,000 feet of schools, daycare facilities, or churches. That’s the default for local governments that do not have their own such regulations. Each town is free to increase or decrease the minimum distance from the state-defined level.
- In Michigan, cannabis dispensaries may not be located in any zone reserved exclusively for residential use, and cannot appear within 1,000 feet of any K-12 school. As in Missouri, local governments can change the distance requirement and add their own restrictions.
- Illinois has a completely different approach. Its Bureau of Labor Statistics divides the state into 17 regions, each of which is assigned a limited number of licenses. This lets you get started before you have chosen a location, provided that you open your dispensary in the zone for which you have applied. Cannabis dispensaries must meet the standards typical of retail establishments in Illinois, and cannot be located within 1,500 feet of one another.
Photo Above: Patrick fighting for fair cannabis & hemp regulations – Helping write policies for the Department of Agriculture’s new cannabis & hemp bill in Florida.
3. Study Your Town’s Zoning Code
Within each town that allows cannabis retailers to operate, zoning regulations determine exactly where you can open your business. Zoning dictates what kinds of buildings can be placed in which neighborhoods, and what they can be used for. Some examples of zones include:
- Single-family residential
- Multi-family residential
- Commercial
- Mixed-use commercial and residential
- Industrial
- Mixed-use commercial and industrial
And so on. Each of these types of zone may be broken into smaller, more narrowly defined subzones. Some commercial zones may only allow certain types of businesses; others may allow each storefront to occupy a certain maximum square footage. Every zoning code is determined locally, so each one is different. You’ll need to study yours in depth.
Start by looking for zones that allow businesses to operate. Then narrow your search by eliminating zones that don’t suit your business. While you’re at it, learn about the zoning rules governing cannabis dispensaries in particular. Your state, county, and/or local governments may have imposed restrictions on how far a dispensary can be from schools, daycare facilities, hospitals, and the like.
4. Do Some Market Research
At this point, you have an idea of where you can’t open your dispensary. The next step is to look at each possible location and choose the ones that best suit your needs.
How would you describe your ideal customer base? Is it representative of the wider community—is the neighborhood generally cannabis-friendly? If not, you might be asking for headaches that could keep your business from thriving. If the neighborhood itself seems receptive enough to the idea of a dispensary, ask whether each location on your list is located conveniently for your target customers.
5. Be Upfront with Potential Landlords
You’ll almost certainly be renting the space in which your dispensary operates. Before you sign a lease, you’ll need to tell your landlord about your store. When you do so, be straightforward. This isn’t the time to second-guess a prospective landlord’s intentions or to obscure your store’s purpose by calling it a hemp retailer or an alternative-healing shop. It’s a cannabis dispensary, full stop. Your landlord will figure that out sooner rather than later. It’s best that they learn it directly from you.
If one landlord doesn’t like the idea of having a dispensary on their property, shaking hands and walking away will save you mountains of problems down the line. And who knows? Maybe one landlord knows another who’s a better fit for you.
Chapter 4: Securing Your License
Before you open your dispensary’s doors, you’ll need to have a license to sell marijuana. The exact application process can vary from town to town, but some key steps are the same no matter where you are. Be sure to get help from a business consultant or lawyer if and when you need it. In the meantime, let’s look at the major steps involved with any application for a cannabis-retailing license.
1. Know Your State or Province’s Licensing Procedure
Cannabis licenses are issued by states and provinces, so your first step is to learn about how they handle license applications where you live. We’ve compiled an overview of state regulations to get you started. This guide describes licensing requirements for the following states and provides links to relevant websites:
- Alaska
- California
- Colorado
- Illinois
- Michigan
- Missouri
- Montana
- Nevada
- Oklahoma
- Washington
2. Check Your Documentation for Red Flags
As you research your state’s application processes, make a list of the factors that might disqualify some applicants. These might include age limits or residency requirements along with your criminal record (if you have one, take a close look to see if your specific convictions are enough to deny you a cannabis license).
3. Write Your Business Plan and Line Up Your Financing
Your business plan will reflect the conditions of your license, and you can’t apply for a license without a business plan. The same goes for financing: you’ll need to start the licensing process to be sure of how much capital you’ll need, and you’ll need proof of that capitalization to complete your application.
The next three chapters focus entirely on writing a business plan and securing financing for your dispensary, so we won’t go into any more detail here.
4. Complete the Paperwork
This is the fun part. Some states have surprisingly quick and straightforward applications, others get a bit lengthy. Whatever the case, be sure that you respond clearly and honestly to all prompts, and double-check your work. You’d hate for an otherwise perfect application to be delayed or even denied because of a typo.
In the US, this will include getting a FEIN, or Federal Employer Identification Number, from the IRS. You’ll be paying taxes on your net proceeds, after all. Don’t worry about this step: obtaining a FEIN is quick and easy.
Typically, you’ll be asked for the following information at a bare minimum:
- Business plan
- Proof of capitalization
- Complete list of team members
- Location
- Security and surveillance plans
5. Wait
This might be the most difficult step of all. Everything you wrote in your application must be verified by state licensing officials, and that can take some time.
If the licensing authority has questions about your application, they will typically contact you rather than taking any immediate action. If you’ve done a good job of listing any potential red flags, a little inquiry is about the worst you should expect here. As with your application, be prompt, honest, and complete in your response to questions from the licensing authority.
6. Meet the Licensing Board
Once the information on your application is confirmed, you’ll typically be invited to meet with members of the licensing board face-to-face. Every partner in your business will need to be there. Consultations are formal, but they aren’t deep investigations, just conversations to help the licensing board make its final determination.
If your license is approved, this is also where you’ll pay for it. You might also be asked to provide a bit or two of additional information, and to allow yourself to be fingerprinted.
7. Meet Local Licensing Requirements
Remember, most states and provinces give municipalities a good deal of flexibility when it comes to approving cannabis licenses. Even if your license is approved at the state level, you may still have to make some changes or supply some extra documentation to comply with local regulations.
Chapter 5: Drafting Your Business Plan
Your business plan is a complete blueprint for how you will launch, operate, and grow your company. If that sounds a bit overwhelming, don’t worry. Every company you know has a business plan, and you can write one, too. Here are five elements of a business plan aimed at securing your business license and getting your dispensary up and running.
1. A Unique Business Proposition
Opening a competitive business of any kind means more than just doing what seems to be working for everyone else. Dispensaries are no different, and the sheer growth of the cannabis industry means that you should prepare yourself for more and more competition over time. That means identifying your business’s unique character: the things that you do better than anyone else, and the problems you solve in distinctly helpful ways.
Be sure to research any local companies that might compete with yours, and make note of broader trends in the cannabis industry and beyond. Who are your target customers? What will you do that the competition doesn’t? How will you take advantage of growing opportunities in the cannabis market and hedge against looming risks?
This element of your business plan will help guide you as you start your company and market your services. It will be even more valuable to potential investors, who want to know that their money is in safe hands. That means showing anyone who reads your business plan that you have a unique vision that appeals enduringly to a significant customer base…and that you’re not likely to take any wild risks with investors’ funds.
2. An Operations Plan
Having a vision is nice and all, but can you deliver? Your business plan should spell out in detail how you plan to execute your ideas.
Typically, the operations section of a business report contains three areas of focus:
- Your marketing and sales plan, including community outreach (which is crucial for cannabis retailers)
- The locations and facilities included in your company, along with detailed descriptions of each phase of operations. This is a big section, so we’ll break it down further:
- Location: You don’t need to have signed a lease to complete this section. Just describe the areas and properties you feel would make the best locations for your business. Go into some depth here: list any capital improvements that might be needed, and confirm that each location meets local and state guidelines, from state-level distance restrictions to local zoning codes.
- Operations: Describe how your dispensary will run on a typical day. At a minimum, provide details on each of these areas:
- Staffing, including job descriptions for each role
- Hours of operation
- Supply chains
- Security policies
- Accounting and cash management protocols
- Technology infrastructure
- Finally, you’ll need to define the metrics you’ll use to gauge your company’s performance. Be sure to include descriptions of how you will gather, store, and use the information supporting each metric. For now, focus on key performance indicators, or KPIs, including:
- Sales per square foot
- Sales per in-store traffic and digital traffic
- Average transaction value
- Gross margins
3. Your Company’s Structure
Describe your company’s structure in two ways.
- Its legal structure: the license under which you operate and the type of business entity your company forms. In the US, you will likely form one of these entities:
- An LLC
- An S-Corp
- A C-Corp
If you have any questions about the legal entity that’s right for you, sit down with an experienced attorney. Only someone who knows a bit about you and your business can point you in the right direction.
Its management structure: the people who form your leadership team, along with the stakes each has in the business and the specific roles they will play in its operation. Be sure to include a brief bio of each member of your management team, listing relevant experience and skills.
4. A Financial Plan
Everything we’ve discussed so far will reassure licensing authorities and potential investors that you know what you’re doing. Your financial plan shows that you know how to bring all of those good ideas to fruition.
You’ll want to highlight three elements here:
- Forecasts: draw on market research and verified examples of other companies to predict how your company will perform in its first quarter and its first fiscal year.
- Financing: specify exactly where you’ll find the capital needed to get your business off the ground, and how you’ll spend each dollar.
- Future projections: essentially a longer-term version of your forecasts. Think about how you’d like to grow your business, and describe what that looks like in terms of financial performance.
Be sure to have a financial planner or accountant review your financial plan. Speaking of which, this might be a good time to hire an accountant for your company. You don’t need to be making revenue to benefit from the insights of someone who knows their way around the books.
All of this information is just for planning purposes. The next two chapters discuss how to actually estimate your operating costs and secure financing.
5. Cannabis-Specific Stuff: Compliance and Security
You’ve chosen an interesting field, and by now you know that cannabis retail comes with some extra regulations and restrictions. You’ll need to address every last one in your business plan.
Make a list of every single federal, state/provincial, and local requirement under which you’ll operate, from the things you addressed in your application for a license to the local ordinances and zoning rules that govern your location and day-to-day operations. Then describe precisely how you comply with each requirement, and how you’ll ensure that your business remains compliant in the future.
Also describe your security protocols, including any steps you’ve taken in addition to those required by the licensing authority. Include security equipment like locks, safes, and cameras, and address how they support both the customer-facing side of your business and any cannabis-storage areas you might maintain. Do the same for any security personnel you retain. Also be sure to describe how you assess, interview, and hire new employees, including the background checks you run on each potential hire.
Chapter 6: Financing Your Business: Estimating Costs
As we mentioned earlier, it costs a good chunk of money to start any retail business. It can cost a bit more to open a cannabis dispensary. Here’s how to get a sense of how much things will cost, and how much startup capital you’ll need.
Let’s get the sticker shock out of the way first. You should be prepared to bring at least $150,000 to the table before you start talking with landlords or suppliers. Some cannabis dispensaries spend millions in startup costs alone. Each location is different, and each entrepreneur has a unique vision, but everyone needs to start out with a bit of ready money.
Some of the cost of opening a dispensary is common to all retail operations. You’ll need a storefront, a staff, and some sort of marketing capability just like anyone else. Other costs are simply greater for the cannabis industry. You’ll want the advice of corporate legal counsel, and you’ll find yourself consulting your attorney more frequently than if you were operating, say, a shoe store. Even the cost of money itself is greater for cannabis shops: you won’t find a bank to give you a traditional loan, and the alternatives may offer less generous terms.
To help you develop an idea of how much startup capital you’ll need, let’s look at nine specific categories of startup costs, with a sense of how much you might spend on each.
Licensing: $2,000 – $30,000
The low end of the spectrum here is really just an average. If you’re in Washington, you’ll only pay $250 as of this writing to apply for a dispensary license. In other states, you might pay $6,000. In Illinois, early approval of a license to sell recreational cannabis will set you back a total of $30,000.
The cost of your license itself will typically be a bit higher than the application fee. Consult your state’s official documentation for the application and licensing process, and be sure to note any extra fees that might be tacked on to the baseline charge for applying and/or receiving your business license.
Real Estate: $25,000 – $100,000+ per year
Your lease will probably be your single biggest expense. The low end of this range is very hopeful: $25k is about what you’d pay in a favorable market, for a space that needs few renovations. Count on spending twice as much in a competitive market, and on spending upwards of $25,000 more to update the look and feel of your store. If you need extra equipment, or if the space needs work to accommodate more parking or accessibility features, those expenses will add to the total.
Financial Services: $1,000 – $2,000 per month
It is very difficult to open a retail business without a loan or another form of debt financing, but as we’ve mentioned, some of those doors are closed to cannabis dispensaries. You might find a credit union willing to work with you, but another route is to join a private marijuana bank. You’ll have access to debt financing options that other institutions don’t provide, but in exchange you’ll need to pay a monthly holding fee.
Professional Services and Insurance: $50,000 per year
Throughout your career as a cannabis entrepreneur, but especially when you’re just getting started, you’ll need an experienced lawyer to guide you. The same goes for an accountant if you don’t already have one on staff. The last thing you need is a well-intentioned mistake when filing your taxes—cannabis-related businesses get far fewer deductions than other companies. This estimate also includes the cost of insurance covering your business operations.
Personnel: $250,000 per year
In most markets, you can expect to pay roughly $12 per hour for budtenders, $16 for managers and supervisors, and $25 or so for store managers who oversee all day-to-day operations. At an average of $20 or so per hour, the cost of a six-person staff comes out to a quarter million dollars per year.
Capital Investment: $25,000 – $50,000 per year
Assuming that you’ll be starting with a strictly retail operation—no growing or processing, just selling—you won’t be on the hook for much in the way of ongoing capital expenditures. You’ll definitely need to install and maintain a security and surveillance system that meets state and local requirements. Your technical infrastructure can add up just a bit, too. Most new dispensaries use industry-standard software to run their operations, typically paying a monthly fee. You’ll also need a payment-processing solution, accounting software, and the hardware appropriate to each platform.
Marketing and Advertising: $25,000 – $100,000 per year
Your marketing strategy will probably be split between tangible advertising like merch and participation in community events on the one hand, and a robust digital presence on the other. Cannabis retailers cannot legally advertise on mainstream media like television and radio. If you or someone on your staff is especially good at web design, great. Otherwise, the cost of a professional website will be more than worth it. Count on maintaining a significant social media presence, too, even if that means hiring a professional freelancer to keep the content flowing.
Product: $1,300 – $1,700 per pound
For our purposes, we’ll assume that you’ll be purchasing your product from an authorized supplier, not growing your own. Some states do not allow dispensaries to incorporate grow operations at all. If your state does allow you to bring more of your supply chain under your own roof, be sure to include a grow operation in your strategic plan.
The wholesale cost of marijuana is prone to serious fluctuations, but as of this writing, something in the neighborhood of $1,500 per pound is a reasonable expectation for most popular strains of cannabis. If your business plan calls for you to carry rare or low-yield strains, adjust this estimate upward.
Capitalization: $50,000 – $300,000 per year
Most states require cannabis retailers to keep a certain amount of cash at hand. This is good practice for any business, and in the cannabis market it helps to ensure that retailers can make it through the inevitable bumps in the financial road without turning for help to entities that aren’t entirely on the up and up. That’s not an unwarranted fear: cannabis retail is a cash-intensive business and a young one, without much history to suggest which months are anomalies and which are par for the course.
Your specific capitalization requirements will depend on the state in which you operate. In Alaska and Missouri, you needn’t show any available funds. Illinois requires up to $100,000. In Arizona, you’ll need $150 in ready cash, in Nevada $250, and in Michigan $300.
Chances are that you don’t have that kind of money lying around. Don’t worry: there are plenty of ways to raise the capital you need.
Chapter 7: Financing Your Business: Raising Capital
Now that you have a sense of how much capital you’ll need to get your business off the ground, all you have to do is raise it.
The cannabis industry is supported by fewer financial services than other retail sectors. This is especially true in the US, where marijuana’s criminalization under federal law prevents banks from doing business with cannabis retailers. Even in Canada, lenders tend to charge higher rates for companies operating in the cannabis sphere.
If you were selling toys, access to credit would be enough to prove your financial standing to business-licensing authorities. In the cannabis market, you make the same case with cold, hard cash on hand. Here are some ideas about how to raise the capital you’ll need to qualify for a license and open your store.
Self-Funding
For your first round of capitalization, look no further than your own bank accounts. Be wary of tapping your retirement accounts for startup cash: you’ll almost certainly incur steep penalties for pulling funds too early.
Friends and Family
Every startup seems to get its start with support from friends and family. The cannabis industry isn’t an exception, but given the narrow range of financing options available to cannabis entrepreneurs, funding from the people closest to you is even more important. It’s not a bad idea to draw up a statement reflecting the terms on which you’ve borrowed from loved ones, and have everyone sign it.
Business Loans
As long as federal policy remains the way it is, you won’t find support from any major US bank. Credit unions are another story. Traditionally a reliable source of startup capital on reasonable terms, credit unions have begun to loan money to cannabis retailers. Be prepared to support your loan application with a strong business plan.
Canadian businesses have a much easier time with traditional loans: major banks do issue loans to dispensary owners, and the Business Development Bank of Canada will now help fund entrepreneurs in the cannabis field.
Business Partners
Not everyone who wants a piece of the cannabis action has the time or temperament to open their own store. Private investors are out there who are happy to support your business with capital while you do the heavy lifting. Many of them have experience in business development, accounting, law, or other fields that can add a lot of new capabilities to your leadership team when they come aboard. Have a lawyer review any agreement between you and a potential new business partner, just to be sure that everyone’s interests are protected.
Photo Above: Finding the right business partner can make or break your venture. Ribbon cutting ceremony with Patrick & Erdem.
Investment Groups
Investment firms and asset-management companies have begun to seek opportunities in the cannabis field, opening up an important and growing new source of funding for entrepreneurs. A few words of caution apply here. You might be offered less generous terms than you’d get from a bank if you were opening a more traditional retail business. And some investors seek equity in the companies they support, either as a condition of a loan or as an option they can convert at their discretion. Be sure of what you’re getting yourself into.
Some investment groups that have demonstrated serious interest in the cannabis market include:
- The Arcview Group
- JW Asset Management
- Poseidon Asset Management
- CannaHedge
Capital Brokers
An investment firm puts its own money on the line when it lends money to an entrepreneur. Capital brokers are middlemen, matching investors with companies who need to raise capital. They were around long before legal cannabis dispensaries, but capital brokers might as well have been designed for the retail cannabis industry.
One last note about raising capital. The retail cannabis market is growing so quickly, and has matured so significantly, that it may only be a matter of time before major financial institutions find ways to enter the market. A reconciliation of federal and state laws would change everything, but even more modest developments might open up funding avenues tomorrow that are unthinkable today.
The bottom line: stay informed, and take advantage of funding opportunities as they develop.
Chapter 8: Building the Right Team
Businesses succeed because of people. Not marketing, not product, not technology. People. Qualifying for a license and raising enough capital will get you started. The professionals you consult and the employees you hire will get you where you want to be.
Let’s look at each of those groups individually.
Professional Consultants
If you would like, you can book a strategy call with our cannabis consulting team and we’d be happy to discuss how to get you to where you want to go step by step.
In the early stages, your legal counsel will be your most important professional guide. This is true of any retailer, and of nearly every new business. Try to build a relationship with a lawyer who knows the cannabis industry well. They’ll help you apply for a license, assess locations, and ensure compliance with every relevant regulation. Above all, a good attorney will save you time and quite possibly money in the long run. Plus, if you find yourself on the wrong side of an issue, you’ll have a solid relationship with someone who can represent you well.
Your accountant runs a close second to your attorney in terms of their importance to your fledgling business. If you don’t have the means or the workload to justify hiring a full-time accountant, don’t worry: you probably don’t need one. Most cannabis startups, and many established cannabis retailers, use CPAs.
An in-house compliance officer can keep your business running smoothly and on the right side of even the trickiest regulations. This is more of a role than a profession: most retail businesses delegate compliance duties to an office manager or someone with a similar job. When you’re just getting started—before there’s an office to manage or an office manager to do so—you might ask around and find someone with experience in the cannabis industry to advise you on compliance matters.
Your security consultant can help you develop a security and surveillance system that protects your business while keeping it in compliance with all relevant guidelines. Security is a complex enough matter—involving personnel, technology, logistics, and maintenance—that an expert’s guidance can end up saving you time and money. Even if you never have to review a second of security footage.
Professional Consultants
To run your dispensary’s day-to-day operations, you should hire a retail store manager with plenty of experience in a related market. Smaller startups like dispensaries typically bring the store manager into something of an executive role. In this capacity, they advise on everything from the new store’s layout to its supply chain, along with managing the rest of the staff and coordinating their efforts. You might give a budtender or even a security guard the benefit of the doubt, but prepare to be choosy when it comes to selecting a store manager.
Your budtenders are the public face of your store. You can invest tens of thousands in your store’s furnishings and décor and thousands more on slick marketing campaigns, but if your customers feel let down by the service they receive, all of those investments can go down the drain.
Good budtenders are like sommeliers at a high-end restaurant (the good ones, not the show-offs). They’re passionate about cannabis and stay informed. Above all, they love learning about each customer’s needs and using their knowledge to help meet those needs. They’re also responsible. Mishandling money or product, or selling to underage customers, can put your business in jeopardy no matter how well you’ve handled every other detail.
Unless your dispensary is very small, you should name a dedicated inventory manager to conduct daily audits of your stock, address any anomalies, and manage inspections and reporting requirements by state and local regulatory agencies. Your inventory manager can also help keep business humming by monitoring inventory levels and advising your leadership team on which products are selling well and which are languishing on the shelves. Finally, your inventory manager will be your store’s main point of contact with suppliers. When those relationships are solid, your entire operation will benefit, so look for someone who’s both diplomatic and effective. Some smaller cannabis retailers merge the store-manager and inventory-manager roles, but for those of average size or above, there’s plenty to justify hiring a full-time employee for each role.
You might not like to think about it, but security officers are a good investment for many dispensaries. You might even be required to hire or contract for a security guard as a condition of your license. In either case, experience is helpful, but the right approach—focused but friendly—can go even further.
That’s your personnel squared away. But what about your store itself? We’ll tackle the retail experience in the next chapter.
Photo Above: There is plenty of talent to pull from within the cannabis industry. You just need to know where to look. Sudents learning to trim at Sativa University.
Chapter 9: Designing the Perfect Retail Cannabis Experience
Your retail experience includes how your shop is laid out and decorated. It also extends beyond your store to include branding and merchandising. When these elements come together, customers get a strong first impression of your business, an impression that deepens with time, encouraging better conversion rates and greater sales. You should consider hiring an interior designer to get your shop just right, and an experienced branding expert to help you define your company. As you think about how your store’s design supports a great customer experience, consider these factors.
Public and Private Spaces
We’ll start with a straightforward layout issue. It only makes sense that some areas of your store are available to the public while others, like your storage area, are not. Be sure to draw a firm line between your store’s public and private spaces, and to create a layout that meets all of your jurisdiction’s requirements. Some of your layout decisions will be mandated by law or best practices. You don’t want a locked vault sharing an external wall, for example.
Medical and Recreational Areas
If you sell both recreational and medicinal cannabis products, check to see if your jurisdiction requires you to separate the two physically. You might even do so on your own, just to give yourself an opportunity to support each market differently. Or you might choose a hybrid approach, merging some functions, like display-case positioning, and separating others, like sales.
Traffic Flow
Your customers won’t be thinking about your products if they’re constantly stepping on each other’s toes. Sit down with a sketch of your dispensary’s space, and identify bottlenecks. These tend to happen around the checkout desk and the order-fulfillment area. Plan for plenty of extra space around those spots, and do your best to project where people will go when they’re browsing. You might even expand your fulfillment area or provide an express checkout line, especially if your shop is on the smaller side.
Décor
As cannabis settles into the mainstream, cannabis dispensaries should follow suit. A few Grateful Dead posters and a Wailers album playing in the background won’t send the right message any longer. Most of your customers want the same things from your space that they want from most other retail stores: a sense of professionalism, comfort, and safety.
Study how other dispensaries are designed, and try visiting other stores that serve your core demographic. Believe it or not, bookstores can hit the spot for some dispensaries. Both bookstores and cannabis shops encourage browsing and self-education, and they both benefit greatly from setting a relaxed tone for their customers. You’ll have your own ideas about which stores to study.
We mentioned Bob Marley a moment ago, but not entirely in jest. Music can be an important part of your dispensary’s overall aesthetic. Consider letting your budtenders choose what to play, even if it’s from a limited selection that you curate—you never know what music people are into, and unless you’re going for a very specific vibe, five hours of death metal probably won’t set the tone you’re after.
Creating Your Brand
Your brand is more than a logo and an interesting font. It’s a complete experience that people enjoy so much that they’re reminded of it every time they see your name on a t-shirt or a lighter. When you consider how to develop your brand, focus on these three core factors.
Create the Right Atmosphere
You might have fond memories of your old head shop, but that’s not the market you’ll be in with your new dispensary. The clutter and kitsch—and suffocating levels of incense—that tended to define those places should give way to a cleaner, more professional tone.
With that in mind, you’re free to make your store and your brand what you’d like it to be. Bright and airy? Go for it. Subdued and relaxed? That can work perfectly well, too. This extends all the way to the tone your budtenders set with customers. Let them know by your words and your example whether you want them to be chatty and proactive with customers, or attentively laid-back. Everything about your store should be true to your brand.
Deliver Excellent Customer Service
This point may seem obvious, but excellent customer service doesn’t just happen. It’s the product of the tone you set as an owner, and of the temperament and preparedness of each budtender who interacts with a customer. Dispensaries aren’t grocery stores: you’ll likely spend far more time educating customers than processing their purchases. Every single question your team is asked is an opportunity to make a great impression on a customer. When your staff offers expert advice and valuable insights, customers remember. And when they tell their friends, your dispensary gets free advertising just for being knowledgeable and pleasant.
By the same token, every time your staff deals professionally and responsibly with a problematic or intoxicated customer, it makes an enormously positive impression on everyone else in the store. Go out of your way to recognize when your staff steps up at times like those.
Smoother Operations Through Technology
Your POS system can put valuable information at your budtenders’ fingertips, replacing binders and guesswork with straightforward answers to customers’ questions. That keeps customers moving through your store instead of lining up at the service desk. More importantly, it keeps them focused on what they’d like to buy rather than on their doubts about their ability to make a wise choice. Some dispensaries even put tablets out on the floor, each of them displaying the store’s (information-packed) website, as a way to help customers answer their own questions. Integrating your inventory management and POS systems adds even more value for your customers.
Product Merchandising
The way you arrange and display your products has a huge impact on sales. Regardless of the specific tone you want to set for your store, your products should be neatly and logically organized. Each type of product should have its own area—otherwise, customers will quickly become frustrated. Many of them know just enough about cannabis to have stopped by in the first place. If your edibles are scattered around the store along with various strains of flower, they may well start to feel like your shop isn’t for them.
To see if your product merchandising is up to speed, imagine yourself as a customer with absolutely no knowledge of cannabis. What would you like to see first? If you know the effect you’re after but don’t know which strain will achieve it, how can the store’s layout help you find what you’re after? Answer those questions, and you’ll be well on your way to making your dispensary comfortable for everyone.
Photo Above: Patrick fighting for fair cannabis & hemp regulations – Helping write policies for the Department of Agriculture’s new cannabis & hemp bill in Florida.
Chapter 10: Dispensary Tech
Most retail operations depend surprisingly heavily on their technical infrastructure. Cannabis dispensaries tend to be even more reliant on technology, largely because a digital environment makes it easy to perform the analysis and generate the reports needed to confirm compliance with local, state/provincial, and federal laws.
At a bare minimum, you’ll need a number of computers, a WiFi network, a point-of-sale (or POS) solution, and a robust inventory management system. Because your advertising options are limited, you’ll also want to invest in a website, which can also support e-commerce functions for online ordering. You can build on this core to add CRM, ERP, and HR platforms, but for most dispensaries, the basics are sufficient.
As you plan and implement your technology infrastructure, pay careful attention to these factors.
Photo Above: Chronic Guru dispensaries are both welcoming and warm.
Compliance
Cannabis operations, especially in the US, occupy some disputed legal ground. The regulatory agencies responsible for vetting new cannabis businesses are also responsible for ensuring that they are run properly, and that they keep close tabs on their inventory. That’s what makes compliance so vital: you may be asked on short notice to demonstrate that you have kept track of every bit of product, and you’ll be expected to document your compliance completely.
A good inventory management system will get you most of the way there, producing reports on the information regulators need. A POS system can complete the picture by tracking sales and linking them to inventory levels.
Reliability
When so much of your operation is tied to your digital infrastructure, you don’t have time for system crashes. Even a brief amount of downtime can cost you revenue, disrupt your supply chains, and throw your compliance procedures out of whack. Be sure that the reliability of each part of your digital infrastructure is well documented by its supplier, that each part of your system is supported by multiple points of redundancy, and that all important data is backed up to a secure cloud-based data repository. Core functions should also operate in offline mode to help keep things going when technical hiccups affect your business.
Added Value for Customers
Nothing promotes customer satisfaction like quick and smooth transactions at the point of sale. Newer POS platforms offer extra support for the retail experience through enhanced product details that help budtenders respond to customers’ questions, and e-commerce solutions can support in-store and curbside pickup. Your website is a perfect place to share product information and your own reflections on the cannabis trade. Even your inventory management system can help answer questions about stock levels and future availability when you integrate it with your POS system and website.
Ease of Use
The most fully featured software isn’t worth much if it slows down your budtenders’ interactions with customers. You’ll also need to spend more time training your staff on overly complicated software than on easier-to-use alternatives. Given the high turnover rates common to most dispensaries, that’s time and money you won’t get back again. A well-designed retail system is also easy to use. Try looking into software that is built expressly for dispensaries, but also try every piece of software you consider, and be honest about its usability.
Computers and Other Technology Equipment
You’ll need at least one computer to help your budtenders serve customers and record payments, and another in the back to handle inventory management. Beyond that, you’ll need a receipt printer and maybe a barcode scanner. Some dispensaries invest more heavily in tech than others, and some even offer tablets for in-store use to promote a more independent, self-serve experience for their customers. Finally, you’ll want a good modem and a wireless router to establish your WiFi network.
Data Security and Privacy
A data breach can ruin your reputation, and poor data-security measures can put you at odds with regulators. In Canada, that boils down to ensuring that your systems are compliant with the Personal Information Protection and Electronic Documents Act. In the US, it’s a bit more complicated, since each state issues its own data-security rules. Get to know the data-security standards that apply to you, and confirm that your system meets or exceeds them.
With careful planning and some research, you’ll build a technology system that makes the customer experience more friendly and efficient, and that helps you spot trends as they develop. It may be yet another significant expenditure, but getting your tech systems right can save you far more in the long run.
Chapter 11: Creating a Security Plan for Your Dispensary
Cannabis dispensaries are especially vulnerable to security risks. But that doesn’t mean that their security plans need to be all that elaborate. Cannabis retailers follow the same general security plans as any other retail establishment, for the same reasons: to give everyone a safe and secure environment while protecting the company’s assets and meeting all legal requirements.
Here are the three primary components of any retail security plan, including yours.
Site Security
Cameras, alarms, access controls, and security personnel form the basis of a good site-security system. Dispensaries that deal mainly or solely in cash may face a very real threat of armed robbery, and certain aspects of their security systems—the location and angles of security cameras, for example—should reflect that.
More often, though, the most serious security threat to dispensaries is more subtle. Some customers have sticky fingers, and may look for ways to distract employees long enough to shoplift items. Employees themselves, even those who pass their background checks, can be guilty of pocketing cash or product. A comprehensive security system can limit or stop those threats before they impact your business.
Be sure that your system is capable of archiving security-camera footage for at least the time required by law. If this puts a strain on your resources, third-party security services offer storage solutions that will keep you compliant.
Product Security
Many cannabis customers prefer to pay in cash, even in stores that support card payments. Chances are that no matter where your store is located, you’ll have plenty of cash on hand, not to mention plenty of product. You’ll need to secure them both in locked vaults or safes.
Your display cases should also be as secure as possible. That means shatter-proof glass and easily locked doors. After closing time each day, you’ll want to bring your entire stock into a locked vault or other space, so be sure that your plan includes enough room for every last bit of product in your store.
Not all employees need the same level of access to the same resources. The more limited the access to a given space, the more secure it will be. In a pinch, employees can always ask to be let into areas for which they are not authorized.
Policies and Procedures
We’ve talked so far about cameras and alarms, safes and locked vaults. But the real key to any retail store’s security is its employees. A comprehensive security policy backed by well-thought-out procedures and plenty of training is the single best step you can take to avoid security breaches from external and internal sources.
Above all, your procedures should include extensive auditing provisions. Plan on auditing inventory on your sales floor each and every business day, and storeroom inventory at least once a month. Your goals are to account for every single ounce of cannabis that enters your facility, and to match it with either a receipt of sale or with your standing inventory.
You won’t be able to draft and implement your security plan on your own, so hire a security consultant with plenty of experience in retail settings. They can help not only with technical issues like alarms and surveillance equipment, but also with the policies and procedures that keep everyone on the same page.
Chapter 12: Filling the Shelves
So far, we’ve looked at everything you’ll need to open a dispensary. We just haven’t talked about what you’ll be dispensing. Your relationships with suppliers are crucial, and the rules governing cannabis suppliers can be a bit tricky, especially in the US. We’ll start by looking at how dispensaries source their flower in the US before looking at the more relaxed approach taken in Canada.
Photo Above: Focusing on top shelf, high quality product reinforces your clients decision to continue doing business with you.
Sourcing Cannabis in the United States
If you’ll be opening a dispensary in the States, you’ll need to source your flower from an authorized supplier or, if your location permits it, grow your own. Some jurisdictions, like Colorado, require medical dispensaries to grow their own product, but allow recreational retailers to outsource that end of things.
If you’ve been planning to cultivate your own cannabis, it might be time to re-think your assumptions. You likely won’t be able to match the skills and experience of established cultivators, and you almost certainly won’t be able to come close to matching their operational investments. You’ll also likely be limited to a certain range of strains. Integrated supply chains can be more efficient in some settings, but not, by and large, in the retail cannabis industry.
To provide the widest possible range of strains and products, most cannabis stores rely on licensed suppliers. Your supplier can make or break your business. Here are a few things to consider when deciding who you’ll work with.
Wholesale Marijuana
Authorized marijuana cultivation is an established industry by now, and the best wholesalers tend to have established track records that you can research. If you find mostly positive information about a given company but also a few voices of discontent, feel free to ask them about why some customers seem less than totally happy, and what the wholesaler has done to address the problem. Also look for wholesalers who specialize in the strains you’d most like to feature in your store. Be sure to confirm that they can deliver the quantities you’ll need, both to get started and to fulfil your long-term vision. You should also check their licensing status with relevant authorities. We’ve found that Chronic Guru ticks all the boxes for our company; you’ll need to find the wholesaler that fits your needs best.
Derivative Products
Edibles, extracts, concentrates, and other cannabis derivatives require manufacturing capabilities beyond the reach of most dispensaries. Their popularity is still rising strongly, though, and profit margins on these products have followed suit. Look for established brands in good regulatory standing. You might also ask whether a given distributor can prepare white-label products—cannabis-related items manufactured to the same standards as the wholesaler’s other products but carrying your store’s branding.
Sourcing Cannabis in the Canada
Aside from Saskatchewan, recreational cannabis is cultivated and distributed in Canada by producers whose efforts are coordinated by the government. In most provinces, the agencies responsible for overseeing alcohol and gaming now handle cannabis-related matters as well, directly helping producers and retailers form strong supply chains. Here’s what the system looks like in various provinces.
In British Columbia, retailers order their stock from the Liquor Distribution Branch. A similar process governs distribution in Ontario.
Alberta’s provincial Gaming and Liquor Commission purchases cannabis products directly from producers and distributes it to licensed retailers. Manitoba’s Liquor and Lotteries Corporation does the same.
Newfoundland and Labrador’s CannabisNL also buys directly from licensed producers and distributes wholesale cannabis products to retailers, but also serves as the province’s sole point of online cannabis sales.
Saskatchewan, we mentioned, is the exception. Only there can retailers purchase cannabis products directly from authorized producers (or, for that matter, from other retailers). This freedom extends to producers based in other provinces, as long as they are registered in Saskatchewan and pay provincial excise taxes.
