How to open a cannabis dispensary

How to Open a Cannabis Dispensary in Maryland

Here is the process of starting a dispensary in Maryland through our comprehensive guide. Find out the steps to obtaining a dispensary license in Maryland.

Want to open a dispensary in Maryland but need to know exactly how to go about doing this? If you want to enter the booming cannabis market in Maryland, you're in the right place to learn everything you need to know before opening a dispensary there. With the legalization of adult-use cannabis in 2023, Maryland offers an exciting opportunity for dispensaries to thrive in this rapidly growing industry.

Maryland has been at the forefront of cannabis reform, legalizing medical marijuana in 2014 and decriminalizing recreational use in 2021. Today, the state boasts over 153,000 registered medical marijuana patients, and the cannabis market was projected to reach $1 billion by the end 2024, according to Marijuana Business Daily.

In this guide, we'll cover Maryland dispensary licensing, financing, choosing the right location, cannabis regulations, and more. Whether you're a seasoned cannabis entrepreneur or new to the industry, our blog post will equip you with everything you need to succeed in opening your own dispensary in Maryland.

At-A-Glance: Key Points to Note If You Want to Open a Dispensary in Maryland

  • Medical Marijuana in Maryland: Fully legalized with a comprehensive program established.
  • Recreational Marijuana in Maryland: Legalized as of November 8, 2022, with sales commencing on July 1, 2023.
  • License Availability: The second round of licensing for Maryland cannabis businesses is expected to start on or after May 1, 2024.
  • Application Fees: Applicants must pay a fee, which is $5,000 for a standard license or $1,000 for a micro license.
  • Market Potential: Research indicates that Maryland's cannabis market could reach $1 billion in sales by 2024, with adult-use sales making up a significant portion.
  • Regulations and Local Laws: Vary by municipality, with different rules regarding consumption and dispensary locations.

Is Marijuana legal in Maryland?

 In Maryland, cannabis is legal for both medical and recreational purposes. The state has seen an increase in registered medical marijuana patients and a flourishing cannabis market.

The path to cannabis legalization in Maryland has been marked by significant milestones. In 2014, the state took its initial step by legalizing medical marijuana through the passage of House Bill 881. This allowed patients with certain conditions to access medical cannabis from licensed dispensaries.

Following that, in 2017, Maryland expanded its medical program with Senate Bill 949, broadening the range of qualifying conditions and enhancing patient accessibility.

Then, in 2021, Maryland decriminalized recreational cannabis use with the approval of Senate Bill 708, permitting individuals to possess and grow limited amounts of marijuana for personal use.

These legislative advancements have laid the groundwork for the thriving cannabis industry in Maryland.

Types of Maryland Medical Cannabis Licenses and Associated Fees:

  1. Grower License: Permits cultivation of cannabis in a commercial facility.
  • Application Fee: $6,000 ($2,000 for stage 1; $4,000 for stage 2)
  • Annual License Fee: $125,000
  • Combined Grower and Dispensary License: Application Fee - $11,000 ($3,000 for stage 1; $8,000 for stage 2), Annual License Fee - $165,000
  1. Dispensary License: Allows the sale of cannabis for medicinal purposes to patients and caregivers.
  • Application Fee: $5,000 ($1,000 for stage 1; $4,000 for stage 2)
  • Annual License Fee: $40,000
  1. Processor License: Enables the processing of raw cannabis plants to create products such as concentrates, topicals, and edibles.
  • Application Fee: $6,000 ($2,000 for stage 1; $4,000 for stage 2)
  • Annual License Fee: $40,000

Maryland Adult Use Cannabis License Categories

In Round 1, the Marijuana Control Agency established specific quotas for standard and micro cannabis licenses:

  • Micro Licenses: There are allocations for 24 grower licenses, 24 processor licenses, and 8 dispensary licenses.
  •  Standard Licenses: The quotas include 16 grower licenses, 32 processor licenses, and 75 dispensary licenses.

Round 2 will introduce on-site consumption licenses for both standard and micro cannabis licenses.

Both standard and micro licenses permit businesses to engage in cannabis cultivation, processing, or retail sales. Micro licenses cater to smaller businesses with limited cannabis operations, and micro dispensaries have the additional option to provide delivery services to patients and consumers.

How to get a dispensary license in Maryland in 2024?

All eligible applicants, meeting the minimum licensure requirements, were entered into a randomized lottery based on license type and the county or region of their application submission.

On March 14 2024, MCA conducted a license lottery for the social equity licensing round. A total of 174 applicants were selected across the micro and standard grower, processor, and dispensary categories.  

In May 2024 or later, the MCA will announce the commencement of Round 2, which will include the availability of standard and micro cannabis licenses, potentially including licenses for on-site consumption.

Converting Medical to Recreational Cannabis License

Starting July 1, 2023, businesses already selling medical cannabis had to request to change their licenses to rec-use if they wanted to sell cannabis to adults. These new licenses last for five years and let businesses grow, process, and sell cannabis to people aged 21 or older.

On the first day of selling adult-use cannabis, 94 out of 100 existing medical dispensaries switched. Together, they made $3.6M from adult sales and over $900K from medical sales.

In total, Maryland shops sold over $10.4M worth of cannabis over the three-day weekend, serving both adult and medical customers. 

Start by Planning your Dispensary business in Maryland

 To plan your Maryland cannabis business effectively, follow these key steps:

  • Form a business entity: Establish your formal business structure in accordance with Maryland's cannabis laws. Obtain tax ID numbers and open a business bank account at a cannabis-friendly institution. Consider securing business insurance.
  • Write a comprehensive business plan: Develop a detailed dispensary business plan that addresses growth strategies, partnerships, team composition, vision, and more. This plan will undergo scrutiny by the Maryland Cannabis Administration (MCA) as part of the application process. Ensure your plan demonstrates a likelihood of success and includes provisions for employee working conditions, operational safety, diversity, and equity.
  • Include essential components in your business plan: Your plan should cover aspects such as the physical location of your dispensary, funding sources, procurement strategies for cannabis products, revenue forecasts, staffing structure, diversity and equity initiatives, environmental and community impact considerations, marketing strategies, safety and security measures, technology use (e.g., point-of-sale systems, digital menus), and any other relevant details.

Note: The regulatory body overseeing cannabis in Maryland is now known as the Maryland Cannabis Administration (MCA), previously named the Maryland Medical Cannabis Commission (MMCC) before recreational legalization.

Find the Perfect Location to Set Up Your Maryland Dispensary

When selecting a location for your Maryland dispensary, consider these factors:

  1. Compliance with state regulations is paramount, as dispensaries must not be within 500 feet of schools, childcare centers, playgrounds, recreation centers, libraries, or public parks. Additionally, dispensaries cannot be within 1,000 feet of another dispensary under the same title.
  1. Municipalities in Maryland have varying regulations regarding cannabis businesses, so it's essential to thoroughly understand local laws. While a location is not required to apply for a dispensary license, including it in your business plan is advisable.
  1. To find the ideal location, collaborate with a local real estate professional specializing in cannabis real estate and utilize public resources such as city zoning and administration offices.
  1. Focus on spaces that align with your business plan, offer adequate space, are conveniently located for foot traffic or parking, allow for future expansion, and fit within your budget. Consider renovation costs and evaluate local competition to ensure your dispensary's success.

Securing Funding for Your Cannabis Dispensary

After you've outlined your cannabis business plan, it's time to establish a realistic budget for your dispensary in Maryland.

Your dispensary business expenses typically fall into several categories:

  • Real Estate: Consider upfront costs as well as ongoing rent or mortgage expenses. You may also need to budget for initial renovation expenses too.
  • Licensing/Application Fees: Factor in the cost of obtaining your license in Maryland. Unlike annual licensing fees, Maryland follows a 5-year renewal process.
  • Operational Costs: Account for day-to-day expenses like utilities, professional fees, marketing, and other miscellaneous costs.
  • Hardware, Software, Security, and Other Tech: Include costs for necessary technology, which may involve monthly or annual subscriptions.
  • Staffing Costs: Budget for hiring employees, covering salaries, benefits, taxes, and related expenses.
  • Inventory Costs: Plan for the expense of sourcing and purchasing your cannabis products.
  • Taxes: Be prepared for significant tax obligations, as cannabis businesses are heavily taxed and have limited write-off options.

Now, where will you find the funding? Consider these options:

  • Self-funding: Use your personal savings or other legal means to finance your venture.
  • Friends and Family: Seek loans or investments from close contacts to meet capital requirements.
  • Partnerships: Consider forming partnerships where each partner contributes resources.
  • Loans: Explore personal or business loans but be transparent about your industry and funding needs.
  • State Programs: Investigate assistance programs like the Maryland Department of Commerce's Cannabis Business Assistance Loan/Grant Fund.
  • Private Funds: Look into private equity, angel investors, or venture capital to secure outside investment.
  • Crowdfunding: Explore crowdfunding platforms to gather support from the public.
  • Brokers: Consider cannabis-specific brokerage companies to help secure funding for startup expenses and equipment. 

For the cost to open a dispensary in Maryland, estimates range from $250,000 to $1 million. However, the actual figure depends on various factors specific to your business.

Read our blog post on How Much Does It Cost To Open A Cannabis Dispensary to learn more.

Designing Your Maryland Dispensary Layout

Creating an efficient and welcoming layout for your Maryland dispensary is going to be important for providing a positive customer experience and maximizing operational efficiency.

Here are some key considerations to keep in mind when designing your dispensary layout:

  • Compliance with Maryland Cannabis Regulations: Ensure that your dispensary layout complies with all state and local regulations regarding cannabis retail establishments. Maryland has specific requirements regarding security measures, signage, and the separation of retail areas from restricted zones.
  • Customer Flow: Plan your layout to facilitate smooth customer flow from entry to checkout. Consider the placement of entrance and exit points, waiting areas, product displays, and checkout counters to minimize congestion and enhance navigation.
  • Product Display: Strategically showcase your cannabis products to attract customers and encourage sales. Consider using display cases, shelves, and signage to highlight featured products and provide information about strains, potency, and effects. Make sure that products are easily accessible to customers and comply with packaging and labeling requirements.
  • Waiting Area: If required by regulations or space constraints, create a designated waiting area for customers to queue before entering the retail area. Provide comfortable seating, reading materials, and digital displays to keep customers informed and entertained while they wait.
  • Consultation Area: Designate a private consultation area where customers can speak with staff members or receive personalized recommendations. Ensure that the consultation area offers privacy and confidentiality, with adequate seating and lighting for comfortable discussions.
  • Security Measures: Implement robust security measures throughout your dispensary layout to safeguard both your products and your customers. This may include surveillance cameras, alarm systems, secure storage areas, and controlled access to restricted areas.
  • Accessibility: Design your dispensary layout to be accessible to all customers, including those with disabilities or mobility limitations. Ensure that aisles are wide enough to accommodate wheelchairs and that products are displayed at accessible heights.
  • Branding and Atmosphere: Infuse your dispensary layout with your brand identity and create a welcoming atmosphere that reflects the values of your business. Consider elements such as lighting, decor, music, and scent to enhance the overall ambiance and differentiate your dispensary from competitors. 

Maryland Dispensary Regulations 2024

In Maryland, dispensaries must adhere to specific regulations that affect their appearance and operations:

  • Operational Hours: Dispensaries are limited to a maximum of 12 hours of operation per day, with opening hours not permitted before 8:00 a.m. and closing no later than 10:00 p.m.
  • Licensure Display: Dispensaries may be obligated to prominently exhibit valid proof of licensure within their premises.
  • Consumer Education: Dispensaries are mandated to prominently display consumer education safety information as provided by the relevant regulatory authority.
  • Age Restrictions: Dispensaries must clearly present minimum purchase age and identification requirements to customers.

Maryland regulations introduce several sourcing factors to consider:

  • Reserved Potency: Medical patients should have priority access to high-potency products, and dispensaries must maintain a sufficient inventory of medical cannabis items.
  • Concentrate Restrictions: Concentrated products exceeding 10mg THC per serving or 100mg per package are restricted to qualified patients and registered caregivers exclusively.
  • Social Equity Commitment: Adult-use dispensaries are required to dedicate a minimum of 25% of shelf space to cannabis brands and products from social equity licensees and growers/processors without shared ownership with the dispensary, demonstrating a commitment to promoting social equity in the cannabis industry.

Technology for your Maryland Dispensary

Crafting your technology arsenal is an important step for cannabis entrepreneurs, ensuring seamless operations and compliance with regulations. While some tools are indispensable for adherence, such as robust security systems, others enhance the overall customer journey.

Consider these essential technology components for your dispensary:

Network Infrastructure: Lay the foundation with a reliable network setup to support seamless communication and data transmission.

 Hardware Essentials for Dispensaries:

Software Solutions:

  • E-commerce platforms for online sales
  • Payment providers to facilitate non-cash transactions
  • Digital menu displays for intuitive browsing
  • POS systems for transaction processing and compliance management
  • Self-service kiosks to streamline customer interactions
  • Loyalty programs to incentivise repeat purchases
  • CRM systems for customer relationship management
  • HR and payroll tools for efficient staff management
  • Accounting software for financial tracking and reporting
  • Analytics tools for insights into sales performance

While you may not require every cannabis-specific technology solution, prioritize investments in tools that ensure compliance and enhance the customer experience, aligning with the needs of modern shoppers.

Marketing regulations for your Maryland dispensary

In Maryland, ads about cannabis or related things must follow certain rules:

  • They can't lie or trick people. 
  • They can't target or interest people under 21.
  • They can't show things that make cannabis look cool, or encourage using it to get high.
  • They can't advertise on TV, radio, internet, or in print.
  • They can't put ads on buildings or public places.
  • They can't let others use their logos or names for ads that don't follow the rules.
  • Also, cannabis websites must check if visitors are at least 21 before showing anything about cannabis. If someone's under 21 and needs info, there should be a different way for them to see it.

Another thing: Maryland doesn't allow offering cannabis as prizes or rewards in games or contests.

Need Cannabis Dispensary Digital Signage?

Digital signage is an effective way for cannabis dispensaries to engage customers and enhance the retail experience. Many dispensary owners use digital screens in their stores. They're handy for showing what products are available when you can't display them traditionally.

 To learn more about cannabis digital signage read: The complete guide to cannabis digital signage



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