Opening a medical dispensary is a terrific chance for entrepreneurs who aren’t afraid to roll up their sleeves, cut through a lot of red tape, and give over some cash up front.

A dispensary will allow you to be a forerunner in a rapidly growing national business.

According to Marijuana Business Daily, mail order marijuana, dispensaries and retail establishments made between $6.5 and $8 billion in sales in 2019.

You’re bound to have a lot of questions when it comes to how to start a cannabis-related business. People frequently inquire:

  • How much does it cost to open a medical marijuana dispensary?
  • What are the legal requirements for opening a marijuana dispensary?
  • Is marijuana a lucrative business?

I’d like to operate a dispensary, but I’m not sure where to start.

Let’s take a look at what you’ll need to get going.

1. Examine the risks and variables that determine eligibility.

Recognizing the legal risks

There remain risks, despite the growing number of states that have allowed medical (and recreational) marijuana use. The federal government still considers marijuana to be illegal.

The federal Controlled Substance Act classifies medical cannabis as a Schedule 1 substance. This indicates it’s a prospective drug-use product that can only be suggested rather than prescribed.

Because there isn’t much case law on the subject, dispensaries’ true legal status (under federal law) is murky.

This can make it difficult for a dispensary to stay inside legal bounds, perhaps exposing your company to legal problems.

(This is one of the reasons we recommend include a lawyer with experience in this type of enterprise when putting up your team.)

Financial dangers

It’s no secret that starting a business requires a significant financial commitment. When it comes to cannabis retail, there are some additional obstacles to overcome in terms of acquiring the necessary financial backing.

Traditional means of obtaining money in the cannabis sector have proven to be extremely difficult, and most banks will not even allow you to transact your cannabis business through them owing to the dangers.

This may require you to run your firm on a cash basis, making you more vulnerable to theft.

It will require some ingenuity on your part, as well as possibly the entirety of your savings, to get things started. A dispensary might cost anywhere between $250,000 and $750,000 to open.


Do you have the necessary qualifications? Local governments have a list of “must-haves” for dispensary owners, as well as red flags that will automatically reject you.

NORML provides a great website for researching marijuana legislation and license requirements by state to see if you’re eligible and what you’ll need. A few standard needs are as follows:

No felony convictions are allowed for the owner, investors, or license holders.
The placement of the dispensary must be at least 500-1000 feet away from schools, churches, and other prohibited areas (varies by state)
A detailed business plan including a description of property ownership, costs, and business permits, among other things, is required.

All safety rules are followed.

2. Find out about policies, legality, licensing, costs, and location.

So you’re pretty sure this is the right fit for you, but you still have some questions.

Now is the time to do some study and find out the answers to those burning questions.

  • What are the dispensing and use laws in my state?
  • Are state laws going to safeguard my business?
  • What are the costs of opening a marijuana dispensary?
  • What kinds of permits and applications are necessary?

State Statutes

Cannabis use and dispensing laws differ by state. The NCSL claims that

As of June 24, 2019, (National Conference of State Legislators):

A total of 34 states, the District of Columbia, Guam, Puerto Rico, and the US Virgin Islands have established full medical marijuana/cannabis programs that are open to the public. (For more information, see Table 1.) 12 states have approved measures to authorize the use of “low THC, high cannabidiol (CBD)” products for medical purposes or as a legal defense. For further information on those initiatives, see Table 2. Comprehensive medical marijuana programs do not include low-THC programs. To determine if a program is “complete,” NCSL utilizes criteria comparable to those used by other organizations studying this issue:

  • Use of marijuana for medical purposes is exempt from criminal sanctions.
  • Marijuana can be obtained through home cultivation, dispensaries, or any other system that is likely to be developed.
  • It enables a wide range of strains or products, including those with more than “low THC,” as well as the smoking or vaping of marijuana products, plant material, or extract.
  • Isn’t a limited-time trial offer. (South Dakota and Nebraska have restricted, closed-to-the-public trial programs.)

Taxes, licenses, and insurance


Paperwork. It’s probably the least interesting aspect of launching a new company, but it’s typically the most crucial.

You want that paper trail of protection when launching a dispensary.

So, what exactly are the requirements? That is dependent on your location.

Let’s have a look at the requirements in California:

  • Individuals and companies interested in selling cannabis or cannabis products will need to apply for a seller’s permit, just like any other business selling goods. When applying for a cannabis dispensary license, this is a must.
  • Licensing period for cannabis: There are two kinds of them. Non-temporary (up to 120 days) and temporary (up to 120 days) (which must be renewed every 12 months)
  • Licence to operate a cannabis dispensary: Nonrefundable application fees for dispensaries normally vary from $1,000 to $5,000, with registration or annual fees often ranging from $5,000 to $20,000.

To be authorized for a Florida dispensary license, you must have the following plans in place:

  • Cultivation Plan Marijuana Processing and Manufacturing Plan Business Plan
  • Employee Handbook Financial Plan Environmental Plan
  • Plan for Fire Safety and Inventory Control
  • Plan for Keeping Records
  • Plan for Patient Education
  • Product Safety Plan
  • Suitability of Proposed Plan Security Plan Staffing Plan
  • Plan for Transportation
  • The costs of obtaining a driver’s license and paying taxes differ from one state to the next. Drastically.

For example, in Louisiana, the licensing fee is $150, yet in New Jersey, the fee is a whopping $20,000!

A detailed comparison of each state may be found here.

Also keep in mind that most states need you to register your business if the trade name you choose to do business differs from the legal name.

For example, if your registered firm is called Three Brothers, LLC, and you sell products under the trade name Three Tigers, you won’t be able to function legally in most states. This is due to the fact that your registered name and your business name are distinct.

Fortunately, resolving this issue is not difficult. You can simply file a “doing business as” (DBA) certificate with your state (and/or municipal government) to register your actual trade name. “Assumed name,” “fictitious business name,” or “trade name” are all terms used to describe DBAs. Here’s a great resource that describes what a DBA is, the state requirements for DBAs, and how to file a DBA for your company in all 50 states and territories.


The greatest method to protect your hard work against fire, damage, and theft is to purchase business insurance.

You’ll want to insure your investment with the following coverage:

  • Landlords and states frequently mandate general liability insurance. This guards against a wide range of damages and injuries.
  • Inventory and dispensary equipment are covered under product liability.
  • Medicine: Medicinal coverage covers inventory against fire and theft both in your physical location and during transportation from the manufacturer to your storefront.
  • As this exciting industry expands, so do the insurance providers eager to protect your company’s assets.


It’s medicinal, but it’s not a prescription drug.

FDA tax exemptions do not apply to medical cannabis because it can only be advised, not prescribed.

This implies that the product will be subject to a state tax. Below is a sample of state tax requirements; a complete list can be found here.

3. Cannabis education

You now have a firm grasp of the hazards and requirements associated with opening a dispensary.

You’re anxious to get your hands dirty and jump right in.

Make sure you understand your product before you start signing those application checks.

It’s critical to educate yourself about the many types of cannabis, as well as your customer base and how your product will benefit them.

Hemp Staff contributes

Customers may be apprehensive about trying medical marijuana when they arrive. This is especially true if it is their first time using cannabis. Your duty is to reassure them while also demonstrating which goods are most effective for their situation.

Clients must come to trust you and your knowledge when working at a dispensary. They acquire that trust by purchasing things that you propose and which are effective. As a result, you should arrive at interviews ready to provide outstanding advise and exhibit your plant knowledge.

Take a dispensary training course to get a thorough understanding of the products you’ll be selling. This will educate you and your employees about cannabinoids and which ones to recommend based on the needs of your clients.

Cannabinoid Guide by CannLabs

Oaksterdam University was the first cannabis institution, founded in 2007, with educational origins dating back to 1995. OU has a global alumni base of nearly 40,000 people. Their classes are primarily focused on providing a comprehensive overview of the cannabis industry, from business to botany. Oaksterdam takes pride in being a pioneer in cannabis dispensary training, emphasizing that the new world of cannabis shops can be both transformational and transactional.

4. Come up with a business idea

Entrepreneurs who take the time to prepare a business plan are 2.5 times more likely to follow through and get their company off the ground, according to research.

As previously said in our guide on how to start a business:

The sections of a traditional business strategy are as follows:

  • An overview of the report. This part summaries the overall strategy, hence it is often written last. This is the first thing everyone reading your plan will see, therefore it’s crucial.
  • An overview of the industry. This section provides a high-level overview of the industry sector in which your company will operate. It offers information on important companies, industry trends, and sales projections.
  • Analyze the market. This section examines your product or service’s target market. It includes an analysis of your market segments, as well as their geographic location and needs. This part demonstrates to everyone reading that you have a solid understanding of the customers or clients you intend to sell to or serve.
  • Analysis of the competition. Which of your direct and indirect competitors do you have? How do they now address the demands of your target market, and how will your product or services be differentiated?
  • Plan for sales and marketing. What is your one-of-a-kind selling point? How would you market your company and persuade your target market to buy? This section delves deeper into issues like these.
  • a strategy for management This section describes the legal and management framework of your company. It identifies your leadership team as well as your future workforce requirements. If you intend to seek funding, you should also include a description of your advisory board.
  • Plan of action. This part contains information about your business’s location, facilities, equipment, and the kind of employees you’ll require. Suppliers, production procedures, and other operational information are also listed here.
  • Make a budget. This section is dedicated to all things monetary. An income statement, a balance sheet, and a cash flow statement are the three major financial documents that go here in any corporation.
  • Exhibits and Appendices Here you can put anything that supports your business idea, such as market studies, legal agreements, product images, and so on.
    A good business plan will walk you through each step of beginning and running a company. Check out Legally Rooted’s detailed medical marijuana dispensary business plan.

Read this complete tutorial on how to build a business plan for more actionable ideas and free downloadable business plan templates.

5. Obtain funds

Any firm can be difficult to finance. Obtaining funding for a medical dispensary might be a full-fledged headache.

Due to the fact that marijuana is still illegal on the federal level, it is more difficult for medical marijuana dispensary operators to get loans, merchant accounts, or other forms of finance to meet operational costs.

The cost of creating a dispensary varies greatly based on the criteria of the county, city, and state.

The average startup investment ranges from $250,000 to $750,000. This amount can cover everything from insurance to employee hire to storefront rental.

Congratulations if you’ve been able to get an investor willing to put this much money into your business. Don’t worry if this isn’t the case; there are alternative options!

Is it possible to use traditional banking?

In a nutshell, most likely not.

Most financial institutions will not contemplate investing in an effort to safeguard themselves because cannabis is banned on the federal level.

A dispensary is a high-risk business, and even if you were able to locate a lender willing to help you, the higher costs and fees may soon make doing business with them unprofitable.

explains Merchant Maverick:

The Federal Deposit Insurance Corporation insures banks. The FDIC will not cover a bank that collaborates with corporations that break federal law. Medical marijuana stores are included in this category. Instead of taking on this risk, most banks just avoid cooperating with cannabis-related businesses.

When collaborating with enterprises in the cannabis market, a bank may face legal concerns. For example, receiving deposits from a medical marijuana store could result in a bank being prosecuted with money laundering. Despite the fact that the chances of this law being executed are small, lenders are unwilling to take that chance.

Alternative Sources of Funding

If banks and other financial institutions turn you down, you’ll need to think of other ways to get your firm off the ground.

Sure, obtaining money can be more difficult, but it is feasible, as hundreds of small business owners will confirm!

It’s possible that you’ll have to be a little inventive!

Funding using your own money

As the cannabis sector grows, equity finance is becoming more prevalent.

The practice of obtaining funds through the selling of shares is known as equity financing.

Companies raise funds by selling stock in their company in exchange for cash. Equity funding for your new firm might come from a variety of sources, including personal friends and family members as well as investors.

Venture capital, angel investors, and crowdsourcing are the three main types of equity investment discussed by Fundera.

VC (Venture Capital) is a

Snoop Dogg’s Casa Verde Capital is one of a few venture capital firms that focuses only on cannabis startups. These firms may be worth a look if you’re over the seed funding stage. A list of VCs can be found at New Cannabis Ventures, and a fast Google search can also yield some results.

Angel Investors are individuals who invest in small businesses.

Cannabis has piqued the interest of angel investors, just as it has piqued the interest of VC firms. To find your angel, go to AngelList, which has a section dedicated to assisting entrepreneurs in finding angel investors who are interested in investing in marijuana. Try tapping your network or any angels you’ve previously worked with to see if they can send you in the correct path offline. There are also cannabis industry conventions and gatherings, and it never hurts to go to one to see who you might connect with.


Crowdfunding has recently gained popularity as a means of supporting startups. Indiegogo and Kickstarter are the two most well-known platforms. Some cannabis enterprises have been permitted to raise funding on Indiegogo, for example. Weed startups have also been approved by StartEngine, a lesser-known marketplace. Finally, CannaFundr and Fundanna, two marijuana-specific platforms, are available.

Debt-based financing

Startup expenditures financed by debt, whether through loans or company credit, can be difficult to come by – but emerging alternative lenders have been able to help entrepreneurs acquire the funds they require.

Loans for Individuals

You may be eligible for a personal loan to help with start-up fees if you have a strong credit score and consistent income.

Because the industry, time in business, and use of funds aren’t taken into account for loan approval, many entrepreneurs opt for personal loans.

You must, however, indicate how the monies will be spent.

Using a Credit Card

A business credit card is a good (though expensive) solution (especially if you don’t pay it off on a monthly basis). They can be used to cover regular expenses, cover an unexpected expense, or cover starting fees.

Last but not least

Opening a medical cannabis business can be a lucrative venture, but keeping track of its money can be difficult. However, there is some good news! It is possible to obtain the funds you require, and as the industry grows, so will investors’ eagerness to see that growth directly benefit them.

6. Form a group

Much more than stylish décor and a diverse product assortment is required to run a successful dispensary.

“If everyone is pushing forward together, success will take care of itself,” remarked Henry Ford.

When it comes to putting together the finest team for your company, you should consider two categories of people: your professional support staff and your day-to-day employees.

You’ll be on the fast route to success if both groups are trustworthy and knowledgeable.

Professional Assistance

The truth is that your dispensary will have a lot of moving parts that require support that your customers are unaware of.

As a business owner, your primary concern is that everything is done correctly, with all of your I’s dotted and t’s crossed.

A lawyer and a CPA are two of the most important people to have on your team, as they are in most firms.

Dave Emmett, a blogger, writes,

Knowing how to create a dispensary can be difficult; it frequently necessitates dealing with a lot of red tape, and it’s helpful to have someone who can ensure you’re following the rules.

Given that dispensaries are required to conform to strict tax rules, it’s best to engage a skilled specialist to keep track of the figures.

Many dispensaries hire a compliance officer, who makes it their career to ensure that all regulations are followed to the letter.