Marijuana Dispensary Startup Costs
As more and more states legalize the use of marijuana, either for medical or medical use, the demand for the herb continues to grow – no pun intended. This increase in demand has created the need for more dispensaries and opened up multiple business opportunities for young entrepreneurs.
The marijuana business is set to hit over $7 billion in 2016 and you’ll be wanting to know what it takes to get in on the action.
Opening a marijuana dispensary, like any other business, requires some startup capital to get the business up and running. There are multiple variables that determine how much you would need to get started. To give you an educated idea on how much you’d need, we’ve broken the costs down:
- Licensing & Application Fees
- Cannabis Growers & Cultivator Fees
- Business Expenses
Now, some of you are reading this just wanting to get a ball park figure, which is difficult to give due to the different variables. That being said, before getting into the different variables, the general recommended amount of startup capital you’d need to open a dispensary is $100,000 to $300,000.
Licensing & Application Fees
To get started, you’ll need to apply for a marijuana dispensary license which incurs an application fee which is usually non-refundable. Each state’s application fee differs and also varies for recreational versus medical marijuana dispensaries. The average cost of the application fee is about $5,000 for most states which have legalized the distribution of marijuana for medicinal purposes. In most cases, however, the application fees for producers or growers are much higher – we’ll discuss those fees later.
While the application fees don’t vary that much across the states, the licensing fees can vary significantly. For example, in Colorado the base licensing fee is only $3,000 but in Illinois the license for a dispensary costs $30,000 and if you want to produce or grow, the fee goes up to $200,000!
Additionally, when applying for the license, many states will require you to show proof that you meet their minimum startup capital requirements. So, while this isn’t necessarily a startup cost, you may need to prove that you have enough liquid assets to meet their minimum requirements. In Nevada, for instance, you need to show that you have at least $250,000 in startup capital to qualify for the license.
Cannabis Growers & Cultivator Fees
As mentioned above, if you are opening a dispensary but also want to grow or cultivate your own product, the fees are much higher. Many of the states which allow the cultivation of marijuana for medicinal purposes have licensing fees well over $50,000.
Maryland, for example, is $125,000 and the growers’ license in Connecticut is $75,000 with a $25,000 application fee.
Marijuana Dispensary Business Expenses
Business expenses can vary greatly as well depending on location, product and how big you want to go. Here are a few things you will need to consider:
- Money for rent, plus any down payment required for the location you choose.
- Display cases for your products.
- Security system or security guard.
- Money for employees, unless you will be managing it all yourself.
- Office supplies, labels, containers, a POS system, etc.
- Money for a sign or logo and any marketing
- Money for the inventory
If you’re going bare bones on everything, you could probably get by with $5,000 to $10,000 but you’d want to make sure that you have enough money set aside for several months rent while you get up and running.
If you’re not sure whether you’ll have enough startup capital to make your new dispensary successful, we would recommend speaking with a business consultant or CPA before you get started.
For assistance getting additional funding, we have an option for additional funding that no one else has in the industry. Check it out.