Opening a cannabis dispensary can be a very lucrative business endeavor, as the cannabis industry keeps booming. But before you set sail for that adventure, you need to put all the costs on paper to see if you can afford it.
Here are all the costs that come with opening a dispensary.
Total Startup Costs
All the startup costs for opening a dispensary can amount to approximately $1 million.
The average cost is $656,000, but you may need to invest only about $150,000 initially. However, there are many dispensaries worth a staggering $2 million in startup costs!
Your initial costs depend on a wide range of factors, such as the location, staffing, upfront renovations, and whether you purchase or rent/lease the space.
Let’s take a closer look at all the things you would need to pay for.
Getting a License
Before paying for anything, you need to apply for a license for opening a dispensary for cannabis products. Application and licensing fees vary from state to state because cannabis business laws by state differ.
On average, getting a dispensary license costs around $5,000. However, some states charge a tiny fraction of that, such as Louisiana ($150). New Jersey shoots them through the roof, requiring a whopping $20,000 for the license alone.
Additionally, there’s a non-refundable fee when applying for the license that can range from $1,000 to $10,000.
Keep in mind that you need to renew your license every year.
Legal Fees and Insurance
To make sure you comply with your state laws, correctly calculate your taxes, and handle all the other legal stuff, you’ll need a legal team in your corner. You’ll also need to get insurance for your business and hire an accountant.
All of that should cost you around $50,000 every year.
Renting or Leasing Costs
Unless you’re going to purchase real estate, you’ll need to think about leasing or renting. These costs depend on the location you choose for your store, its size, and the general state it’s in.
Renting a space typically ranges between $100,000-$150,000 per year. However, you can also rent it for as little as $3,500 a month.
Again, many factors come into the equation, especially if there’s a lot of foot traffic near the location.
Inventory & Interior Design
All the necessary renovations and interior design can cost you about $50,000. That includes furniture, shelving, storage, refrigerators, and all the other necessary items for a dispensary.
You’ll also need to put aside around $25,000 for business equipment and supplies, including POS terminals, label printers, packaging containers, gloves, etc.
Keep in mind that you’ll also need to make deals with suppliers who will regularly stock up your inventory.
Security & Surveillance
You don’t want to skimp on the security for your dispensary, so consider getting top-notch surveillance cameras and metal detectors.
Security hardware would cost you from $1,000 to $2,500, plus the installation costs that range between $300-$500.
If you want an excellent, high-converting website for your dispensary, be ready to hire an expert web designer.
Web design costs depend on the designer and the look you want, so they can go between $1,000-$100,000.
Make sure you do your homework beforehand, as you can get a beautiful, professionally-looking website for as little as $2,500, including web hosting.
Staffing & Marketing Costs
Unless you plan on selling at your dispensary on your own, you’ll need to think about employee salaries. Staffing will be your most significant expense.
First, you’ll need to hire cashiers, store managers, administrative staff, and security guards. You may need to put aside up to $200,000 per year for all the salaries.
Promoting your cannabis retail store is key to success, as it can help you draw more customers to your door and boost your revenue. The better your marketing campaign is, the better results you’ll get.
Make sure you invest in both offline and online marketing. You can set up an effective marketing campaign for about $25,000 annually. Of course, you can invest more if you can afford it, in which case you’ll get even more leads and customers.
When you look at all these costs right now, opening a dispensary for cannabis products may seem like a costly step. However, you wouldn’t pay for everything we’ve mentioned at once, and it doesn’t even have to be that expensive.
As you’ve seen, you can do it for a little north of half a million dollars. Just make sure you conduct a thorough research first and create a business plan with all the cost estimates. Only then will you know if you can afford it and turn your dispensary into a real success.
Interesting related article: “What is Cannabidiol?“