Medical Marijuana: How to Open a Dispensary
The business of marijuana is growing as more states and countries legalize it. With forecasted sales of up to 7.3 billion dollars by 2022 in the U.S. alone, it provides an excellent opportunity for entrepreneurs who are willing to take the path less traveled.
Opening a dispensary can be a highly profitable venture for those who want to sell medical marijuana. However, although it has been legalized, medical marijuana is highly regulated, and budding entrepreneurs face a number of significant challenges before they can open their doors.
What do you need to open a dispensary? We will take you through the basics of how to open your own dispensary, including the key step of compliance.
How to Open A Dispensary: The Basics
Like any business, opening a dispensary involves carrying out thorough research on the viability of the business. Before going through the steps of how to open a cannabis dispensary, a wise entrepreneur starts with a business plan.
- What are the startup and operating costs involved? Keep in mind items such as rent, initial and ongoing inventory, marketing, and more.
- How will your business cover these costs? Some states require proof that you have the money to open a dispensary. This could be anywhere from $150,000 to $500,000. Consider dispensary loans, personal savings, or venture capitalists to fund your undertaking.
- What pricing strategies will you employ in your dispensary? Finding ways to maximize profits while keeping prices competitive should be your objective.
- Your target customer will influence a lot of the above strategies and should be clearly defined.
A clear picture of the “whats” and “hows” is essential to navigating the numerous challenges of starting a venture. Among these, one of the biggest hurdles cannabis entrepreneurs face is compliance. To avoid being shut down even before you start, your business has to satisfy some stringent requirements.
Understanding the Laws
Though marijuana continues to be legalized across the country, strict laws and numerous licenses prevent just anyone from setting up shop. Furthermore, many states have drafted their own regulations as there are no clear laws outlined by the federal government.
Make sure to do proper research on the marijuana laws in your state before you open a dispensary. The type of dispensary you want to open determines the kind of license you will apply for. Dispensaries can either be medical or recreational, and recreational dispensaries are regarded as retail businesses. Only 11 states permit the sale and consumption of cannabis for recreational purposes, while more than 30 have introduced legal medical cannabis legislation.
On the one hand, recreational dispensaries are not legally allowed to provide medical advice. On the other hand, medical dispensaries can only suggest, not prescribe cannabis as it is classified as a Schedule 1 drug under the federal Controlled Substance Act.
The best way to ensure your business complies with the latest laws and regulations is to hire a registered agent service.
Most states require a track and trace system to be implemented as part of the opening dispensary laws. Each state has a preferred seed-to-sale tracking provider, though dispensaries are typically able to choose which system they’d like to use.
BioTrack’s all-in-one cannabis and hemp traceability system, launched in 2010, was the first of its kind. It has extensive tracking and reporting capabilities that assist state and local governments with enforcing regulations, collecting taxes, verifying product quality, and preventing illegal cannabis diversion and inversion.
It is currently used in 38 states including Alaska, California, Colorado, Washington, D.C., Louisiana, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, Ohio, and Oregon.
Recently, BioTrack was awarded the contract for seed-to-sale tracing in Puerto Rico, too.
Inventory and Staffing
Effective management of your marijuana inventory is important not only for the smooth flow of the business but also for compliance. Key steps in ensuring your business is efficiently stocked include:
- Identifying reliable, high-quality suppliers with reasonable pricing. The quality of your product will hinge on your suppliers. Remember that you will need a separate license if you plan to grow your own cannabis.
- Ensuring all your product is compliant with the regulations of your state.
- Developing standard inventory procedures and documenting everything.
- Incorporating tools for more accurate and reliable inventory tracking. Cannabis software such as BioTrack’s dispensary Point-of-Sale solutions, yield forecasting, and conversion tracking can help you run an effective business.
When it comes to staffing, your dispensary should have highly trained personnel who continually expand their knowledge. Most states also require at least one licensed medical professional on your team. Consider hiring a compliance officer to make sure you stay above the law at all times.
Picking a Layout
While compliance with laws and licenses forms a vital part of the start-up process, business owners need to remember that the dispensary layout will determine the experience your customers have in the store, which significantly impacts sales.
As such, while exploring the concept of how to open a dispensary, keep layout top-of-mind. A well-thought-out layout will enhance a customer’s visit and ensure the purchasing process is streamlined. Remember, though, state laws mandate how you can store and display your products. As a result, make sure you understand those laws before choosing a layout.
There are four common dispensary layouts:
- Bank model
- Pharmacy model
- Mobile model
- Kiosk model
Each comes with its own advantages and disadvantages, and ultimately what you choose will depend on your brand and products (and state regulations).
Set Your Business up for Success
Product, compliance, layouts, and personnel: these are the how to open a marijuana dispensaries’ pillars. Make sure you do things right with BioTrack. We have been providing seamless and comprehensive seed-to-sale software integration for over 10 years. Contact us to learn how we can help your business grow.