How Much Does It Cost to Open a Dispensary

Find out the costs associated with opening a marijuana dispensary in the US. Consider dispensary license costs, premises costs, advertising costs & more.

If you’re looking to open a dispensary in the US - whether it’s for medical cannabis or recreational cannabis - it’s always a good idea to plan and budget for the costs associated with this.

Naturally, it’s important to note that the specific cost of opening a dispensary very much depends on the state you’re in and the laws and regulations around cannabis.

The overall costs depend on what type of dispensary you want to open as this means you might have to get different types of licenses.

In this blog post, we’re going to take you through the costs you must consider when you’re planning your budget for opening a cannabis dispensary in the US.

Opening a Medical Cannabis Dispensary

Firstly, we’re going to look at how much it might cost to open a medical cannabis dispensary in the US.

Currently, medical cannabis is legal in 38 states in the US. However, to dispense medical cannabis to patients, you’ll have to be registered under your state’s scheme for medical cannabis.

In every state where medical cannabis is legal, there is a governing body which deals with the rules, regulations and licenses required to dispense medical weed.

Generally, the application fee for getting a license under this governing body can cost anywhere from $250 onwards. For example, in Minnesota, the application fee to become a medical cannabis retailer is $250.

The cost of getting a cannabis license differs from state to state. For example, in California, you'll start by paying $1,000 for the application, which you can't get back if it's denied. But in Colorado, you need $5,000 for the application and an extra $2,000 for the license itself.

Usually, across the US, you'll spend about $5,000 in total, but it can be more, even over $10,000. Conversely, in Florida, it costs $60,830 to get a license, to be able to open a medical cannabis dispensary.

But remember, without a license, you can't start your cannabis business – so this is a cost you'll have to handle.

In some states, there are only a limited number of licenses available. This means you might have to buy one from someone who already has it. It can be good because you might get the whole business for one price.

If you want to open this type of dispensary, it’s a good idea to research the costs of getting a license in your state.

Getting a Premises for your Medical Cannabis Dispensary

When you’re opening a medical cannabis dispensary in the US, one of the most important costs to consider is getting a store or premises.

Whether you buy your chosen place, or if you decide to rent it, this is a cost to factor in.

If you want to buy a place, it can cost between $128 and $393 per square foot. Renting might be a better choice – it could cost you anywhere from $3,500 to over $10,000 a month, depending on where and how big the place is.

After you've got your place, you'll need to set it up ready to dispense weed. You must think about this when you're deciding where to put your dispensary. Strip malls are cheaper to fix up compared to buildings on their own, but they're also less flexible.

According to Grow America Builders, here are the costs:

  • Strip mall: $500,000 to $850,000
  • Building on its own: $350,000 to $1,000,000
  • Building from scratch: $900,000 to $3,500,000
  • Fixing up an old building: about $600,000, give or take $100,000

Overall, starting a cannabis business costs a lot of money, especially at the beginning. You'll also need around $50,000 for things like furniture, counters, art, and displays. And remember, prices for labor and materials are going up, so keep that in mind for the next few years.

The premises you choose, and its location, can massively impact the success of your medical cannabis business.

Location is important, because there can be laws and regulations around where you can open a dispensary. For example, you might not be able to open a medical cannabis dispensary within a certain radius of an addiction program center, depending on what state you’re in.

In addition, you want to open your dispensary in an area where there isn’t a lot of competition, to ensure the success of your business.

These are all good things to keep in mind when deciding where to open your business, as well as the costing side of things.

The Costs of Setting up Shop

Once you’ve got your premises, there are costs associated with setting it up and getting in the equipment, shelves, and systems for patients to be served.

The people in your store should enjoy their experience as much as possible, and this means putting a lot of time and effort into setting up your premises to optimize this.

From creating an efficient flow for people to walk through your store with ease, to keeping them entertained while they wait, there are several different ways to optimize your customer’s journey and experience.

One of the biggest ongoing costs will be paying your staff. At the beginning, you'll be paying wages without making any profit, and only later will your income cover these costs.

Running a cannabis dispensary requires several staff members, such as budtenders, a store manager, a security team, and more. If you pay industry-standard wages of $10 to $20 per hour, you can expect to spend around $250,000 annually on wages alone.

You'll also likely need to hire professional services, such as accountants, lawyers, and bankers, which could add up to around $50,000 per year. Additionally, budgeting around $10,000 to $25,000 annually for marketing and advertising is essential – this is necessary for attracting customers and should be seen as an investment in generating revenue.

Weed: To grow or not to grow?

The decision about whether to grow your own product is a big one.

Growing your own can save money in the long run because you're not paying someone else. But it's also risky, and it costs more upfront to start both a dispensary and a growing business at the same time. This is something entrepreneurs often overlook when figuring out how much it costs to open a dispensary.

If you choose not to grow your own, you can expect to pay between $500 to $1,500 per pound for the product.

Opening a Recreational Cannabis Dispensary

Now that we’ve looked at some of the costs associated with opening a medical dispensary in the US, it’s time to explore the costs around opening a recreational cannabis dispensary.

Again, there are different licenses you need to get to open a recreational weed dispensary or retail shop.

The cost of applying for a license can differ depending on the state you’re in. For example, in Minnesota, it costs $2,500 to apply for a license, and then the license itself costs another $2,500, and if you want to renew your license later on, this will cost $5,000.

Always look at the laws, rules and regulations around opening a recreational cannabis dispensary in your state. You should also budget for how much it’ll cost to get the licenses you’ll need to open your business, and how much it might cost to renew.

Setting Up your Recreational Cannabis Dispensary Store

Once you’ve got the licenses you need to open a recreational cannabis dispensary in your state, it’s time to consider the things you’ll need to set up your store.

As well as finding the right premises that meets all the rules and limitations around where you’re allowed to open a recreational cannabis dispensary or retail store, once you’ve found that premises, you’ll need to get the equipment to kit it out.

Just like with opening a medical cannabis dispensary, it’s important to optimize your customers’ experience when they’re in your recreational cannabis store.

They need to be able to walk around the store properly and enjoy their experience while they’re shopping.

With the right equipment and layout in place, you’ll be able to ensure that your customers have a good journey at your store, which makes them far more likely to shop there again, as well as recommending you to their friends.

General Costs to Consider

When you’re opening a cannabis dispensary in the US, whether it’s for medical or recreational cannabis, there are lots of costs to consider, in addition to what we’ve already discussed above.

For example, in most states, you’ll have to adhere to rules around the packaging of your products, which often requires more thought and budgeting to work around and stick to.

Also, you need to promote your products in a way that’s in line with regulations. This is also something to consider when it comes to your budget.

You'll have to cover the costs for website design, development, and hosting, which can amount to around $2,500. Additionally, installing security systems, including multiple camera feeds and metal/weapon detectors, could cost approximately $67,500. Furthermore, you'll need to invest in specialized computer software to oversee and handle your dispensary's inventory, employee salaries, and revenue, which might total around $7,000.

How much should I budget to open a Cannabis Dispensary?

According to Safe Habor Financial, anticipate startup costs ranging from approximately $750,000 to $1,000,000, with the potential to escalate to several million depending on the property selected.

Is it worth opening a cannabis dispensary given the high startup costs?

The Cannabis industry has witnessed staggering growth since the Pandemic. And we think it’s going to grow even more. Based on research, (projections from Statista), total revenue from cannabis is expected to reach $39.85 billion in 2024. Many cannabis dispensaries report an excess of $1m in revenue each year.

Digital Signage for Cannabis retailers

If you’re opening your medical or recreational cannabis dispensary and you’re looking for a good way to promote your products, adhering to the guidelines of your state, it’s time to check out Seed Technology.

At Seed Technology, we’re the go-to digital entertainment software for cannabis retailers. This means that we offer TV Menus and Self-Service Kiosks to help you educate your customers about your products and what you offer, whilst staying in line with regulations.

So, if you’re in the process of opening a dispensary in the US, it’s time to get in touch with Seed Technology.

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