One of the most common questions we get is “What does it cost to open a medical marijuana dispensary?” This is really a tricky, almost impossible question to answer. It is possible to give ball park estimates but even these can be hard to pin down. To cast a broad net, let’s say $50K at the lowest end to $1M+ for a high end sleek retail location.
Opening a storefront dispensary typically comes at a relatively high cost, especially when compared to a cultivation operation or delivery service (where you can start small and expand as necessary). The location is the biggest factor to consider and what tenant improvements/upgrades are needed. Also, with applications becoming so competitive, you may need to hire a professional consulting team to better your odds – this alone could cost above $50K (depending on location complexity of the application). The stakes are higher with a storefront and you could lose out if you open in the wrong place (and don’t plan properly).
The Major Expenses, and How to Manage Them
– Legal Compliance The Medical Cannabis Regulation and Safety Act created a spider’s web of things to do before the first joint or edible slides across the counter. We recommend you find an experienced consultant to help you.
– Premises Costs Do you plan to rent a location or go for the gold and buy your retail location? Given our current regulatory environment, there is not an easy answer. Maybe see about a lease with an option to buy, this way if things take off as you expect you can look at owning the location long term. If you want to be more nimble, use freestanding counters and storage units, as opposed to specialized fixed counters, to make it easier to move later.
– Inventory The initial (and ongoing) stock of inventory including flowers, edibles and concentrates can be expensive. Your storefront dispensary must have a variety of options available for patients (or they will seek alternative providers). However, financially speaking, we want product “just in time” for cash flow and to keep our inventory fresh. The solution is reliable suppliers that can deliver quickly, and create your display so it looks full even if it is not.
– Employment Costs – People expect decent salaries, and the government has its hands out too. Our guidebook has loads of useful information that you really do need to know. We recommend you start your business hands-on to control your staffing cost, and try to avoid giving employment agencies recurring annuity income.
Those are the four major costs to consider when opening a storefront dispensary. Your actuals can swing quite wildly when comparing downtown urban versus a smaller rural town. The three rules of real estate are location, location, location. There is a correlation between dispensary costs and potential profitability.
Please email us if you need help and are serious about moving forward. We have a partners that work hands on with potential dispensary owners and have a stellar record with getting approvals (in multiple states).